The complexity of digital streaming

Home / Future Tech
By Sean Marshall
@seanismarshall
Sep 25, 2016,  6:59 PM

A lot has changed over the last three decades because of digital media, the way we access information, our dietary habits and even how we raise our children, but one change that isn't always acknowledged lies in the music industry. We seem to continuously overlook how drastically music has been affected by free and paid streaming. New music is always emerging, and because of the internet, it's more accessible than ever. 

Some people believe that free streaming sites are the future, and that they will only become more prominent as time goes on. Most people counter this with examples of paid download and streaming services like iTunes, which appear to still be popular. But do paid streaming services actually balance out the effects of free streaming, or do they just provide a proverbial pat on the back?

For instance, you might spend 99 cents to purchase a song you like and feel good knowing you did your part to combat music piracy. The problem of starving musicians, you might think, has been solved. Unfortunately, in the real world, free downloading and streaming brings up many issues, both positive and negative, and—as in life—solutions are never quite so simple. 

There are problems like the value gap, a phenomenon where musicians suffer due to the gap between music enjoyed and profits made. Another concern is the emerging trend that artists now have to be masters of multitasking, dabbling in producing, promoting and sometimes brand management just to keep up with online demands. There has even been panic that all physical copies of music will disappear.  

Understanding the value gap

In a 2016 editorial music report, Francis Moore, CEO of the International Federation of Phonographic Industry, explains that the value gap is “about the gross mismatch between music being enjoyed and the revenue being returned to the music community.”

This mismatch is considered to be a major threat to musicians. It isn’t a direct by-product of free streaming, but it is a product of how the music industry is reacting to a digital age where profits aren't as high as they used to be.

To fully understand this, we first have to take a look at how economic value is calculated.

When determining the economic value of an item, it's best to look at what people are willing to pay for it. In most cases, because of free downloading and streaming, people are willing to pay nothing for music. This isn't to say that everyone is using free streaming exclusively, but that when a song is good or popular we want to share it with others—usually for free. When free streaming sites like YouTube come into the mix, a song can be shared millions of times without actually making the musician or music label that much money.

This is where value gap comes into play. Music labels see a drop in music sales, followed by the rise of free streaming, and do what they can to make the same profits that they did before. The problem is that this often causes musicians to lose in the long run. 

Taylor Shannon, lead drummer of indie rock band Amber Damned, has worked in the changing music industry for nearly a decade. His love of music began at age 17, when he started playing the drums. Over the years, he has noticed old business methods changing, and has had his own experiences with the value gap.

He discusses how the industry and many individual musicians still go about marketing their bands the old way. Originally, an aspiring musician would start small, performing at local events in hopes of making enough of a name for themselves that a record label would take interest. 

“Going to a label was sort of like going to a bank for a loan,” he says. He mentions that once a music label took interest in a band, they would foot the bill for recording expenses, new instruments and so on. The catch was that the label would get the majority of any money earned on record sales. “You paid them back on album sales. If your album sold out fast, the label would get their money back and you would make a profit.” 

“That model of thinking was great, but it's about 30 years old now,” Shannon says. Given the vast reach of the internet in the modern day, he argues, musicians don't need to start local anymore. He points out that in some cases bands feel they don't need to look for a label, and those that do don't always make the money back as fast as they used to.

This leaves the existing labels in a bind: they still have to make money, after all. Many labels—like the one that represents Amber Damned—are branching out to influence other aspects of the music world.

“Record labels now pull money from tours. That wasn't always a thing that happened.” Shannon says that in the past, labels were part of tours, but they never drew money from every aspect like they do now. “To make up the costs of low music sales, they take from ticket prices, from merchandise, from all sorts of aspects of live shows.” 

This is where Shannon feels the value gap is present. He explains that in the past, musicians did make money from album sales, but the majority of their income came from live shows. Now that income structure has changed, and free streaming has played a part in these developments.

Of course, this doesn’t mean that record label executives sit around finding new ways to exploit musicians, or that anyone who has listened to a hit song on YouTube is a bad person. These just aren’t the things that people consider when they download music. 

Extra responsibilities of emerging musicians 

Free streaming isn’t all bad. It’s certainly made music much more accessible. Those who might not be able to reach target audiences in their hometown can be heard and seen by thousands via the internet, and in some cases young up-and-comers can get honest feedback on their latest singles.

Shane Black, also known as Shane Robb, considers himself to be many things: singer, songwriter, promoter and even image producer. He feels that the rise of digital media, free streaming and even the value gap can and will cause positive change in the music world. 

Black has always had a love of music. Growing up listening to famous rappers like OB OBrien and having a music producer for a father taught him that music is about getting your message to the people. He spent hours in his father’s studio, seeing little by little how much the music industry changed as time passed.

Black remembers seeing his father record digitally for the first time. He remembers seeing old sound equipment become computerized. What he remembers most of all, though, is seeing musicians take on increasing amounts of work as the years went by.

Black believes that the trend towards a digital age has forced musicians to gain many skills to compete with one another. It’s difficult to see how this can be a positive thing, but he believes it actually empowers artists.

For Black, the constant release of digital tracks has an important benefit: speed. He believes a song may lose its potency if its release is delayed. If it loses its key message, then no matter what happens, no one will listen to it—free or otherwise.

If it means maintaining that speed, Black is happy to take on both musical and non musical roles. He says that in many cases he and other rappers have to be their own PR representatives, their own promoters and often their own sound mixers. Tiring, yes, but this way, they can cut costs and even compete with big names without sacrificing that essential speed.

To make it in the music business, as Black sees it, you can't just have great music. Artists have to be everywhere all the time. He goes so far as to say that “spreading word of mouth and viral marketing are bigger than anything.” According to Black, releasing a song for free is often the only way to get anyone interested in your music. He stresses that this can hurt profits at first, but you almost always make the money back in the long run.

Black can certainly be called an optimist. Despite the difficulties of the value gap, he believes that the positives brought on by free streaming outweigh the negatives. These positives can include things as simple as honest feedback from non-professionals.

“Sometimes you can't trust your friends, family or even fans to tell you you suck,” he says. “People who have nothing to gain from actually giving constructive criticism or even negative comments keep me humble.” He says that with any success, there are going be supporters who pad your ego, but the amount of feedback given by the online community forces him to grow as an artist. 

Despite all these changes, Black maintains that “if it's good music, it takes care of itself.” For him, there is no wrong way to create music, just a lot of right ways to get your message out. If the digital age really is all about free downloads, he firmly believes there will be some way to make it work. 

Impact (ONLY use the 'Paste From Word' button to safely copy and paste text from a Word doc) 

When people think of streaming, they often think of the loss of physical music. This is in part due to the experts that appeared on every news outlet in the late 90s and early 2000s, saying that record stores everywhere were going to be shut down. In fact, it wasn't until 2014 that digital music achieved the same sales numbers as physical music.

In 2014, the International Federation of Phonographic Industry released their global study of music sales statistics. They found that digital sales made up 46 per cent of music revenue, matching the 46 per cent revenue held by physical copies.

It was also shown that 52 per cent of all music is downloaded: a high percentage, yes, but not quite high enough to wipe out physical copies just yet. Additionally, in the last few years, record stores have made a comeback and vinyl is at a 28-year high. According to an RIAA study, “sales of vinyl records were up 32 per cent to $416 million, their highest level since 1988.”

So, not all predictions in the music world are accurate. No one knows for sure what the next big trend will be. What we do know is that digital streaming has contributed to a value gap, and the first step to helping musicians overcome that gap is to be informed about it.  

Public Release Date: 
2016 to 2020
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