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Throughout the past ten years, the music industry has increasingly embraced digital media formats for music distribution. The adaptability of business models to the digital format, however, has been volatile at best. When methods of distribution for music were primarily physical—vinyls, tapes, and CDs—record labels had more control over their product and how it would be consumed by the masses. As the music industry becomes more decentralized and more streaming services are popping up, a power struggle is occurring between record and indie labels, recording artists, and consumers over the value of music in this day and age.
Streaming services are becoming the norm for digital music consumption. These services have been founded from several different countries, ranging from personalized online radio stations like Pandora, to mass databases of licensed songs like the Swedish service Spotify, and music social networks like 8tracks. Pandora and Spotify employ a "freemium" model, where listeners can stream their favorite tracks for free and their streams collect royalty fees for artists and labels; advertisements then serve as revenue for the service. However, the services also employ monthly payment services which gets rid of ads and unlocks many more features for the consumer. Other services, such as Rdio and Deezer, offer free trial periods and limited amounts of free services, but mainly require monthly payments for full access to services.
Music streaming services, particularly the "freemium" model, have been a source of controversy. Artists and labels have harbored complaints against almost all aspects of these services, from the miniscule rates that streams pay to artists, the contribution of streaming services to diminishing record sales, and the decreasing value of overall albums. Most of the money from royalty payments from streams goes to the record label as opposed to the artist. Thus, many artists claim that having their music available for free gives listeners less incentive to buy their records, giving artists less revenue. Indeed, just last year, total revenue from streaming services surpassed income from CD sales for the first time. To retaliate, current artists such as Taylor Swift, Björk, and Thom Yorke have infamously pulled some of their music off of Spotify, and veteran artists such as Garth Brooks and King Crimson refuse to even bother with the service. Music companies are also now starting to crack down on "freemium" services. Grooveshark, a service started in the early days of the streaming phenomenon, recently shut down after it faced several lawsuits for its large database of unlicensed music. YouTube videos featuring songs and concerts that are not put up by official companies like Vevo or by record labels are being pulled down.
Despite the controversy, streaming services are more popular than ever. Spotify has over 60 million users, with 20 million of these users paying the monthly fee for its premium service. Yet it is not even the most popular service. YouTube, SoundCloud, and Pandora are currently dominating the streaming industry, with strong consumer bases in international markets. Although some streaming services are still struggling to make profits because of their business models, the value of physical assets in the record industry is continuing to sink, as the popularity of streams is surpassing that of purchases; thus, music experts are pointing toward the inevitability of streaming as the preferred tool for music consumption.
As the streaming market continues to dominate, more players are joining the market. Two especially noteworthy services have now joined the music arms race: TIDAL and Apple Music. TIDAL, purchased and promoted by Jay Z, offers a paid streaming service that also features exclusive content from artists as well as high-fidelity sound for an additional fee. The goals of TIDAL are to provide a more personal experience for users, connect them with the several artists who back TIDAL, including Calvin Harris and Madonna, and also distribute a larger share of profits to artists. So far, TIDAL has been met with skepticism and the service has not been especially popular in terms of downloads and subscriptions. Having been recently launched, it may take a while for TIDAL to overcome the adversity, if it does at all. However, just a little over a week ago at the WWDC event, Apple announced its own psif streaming service. Apple has been at the forefront of innovation in the modern music business, having invented the iPod for music storage and playback, the iTunes store for music purchasing, and iTunes Radio for music discovery and radio services. With Apple Music, the company also hopes to also revolutionize the streaming market. Apple Music will contain a Connect service between artists and their fans, a twenty-four hour radio station hosted by the famous DJ Zane Lowe based on the Beats Radio service that was purchased by Apple, playlists curated by famous artists, and a music database that will also incorporate users' iTunes libraries. Apple Music will also pay a larger share of royalties to artists based on number of streams than other services currently do.
Although most current streaming services try to stand out in the market by advertising distinct features, most of these services are quite similar. Thus, streaming services are trying innovative techniques to get customers to pay up for their music. Apple Music's attempt at making an "experience" for listeners, instead of just providing a database of songs, will be able to give it a significant advantage in the streaming market. Another plus for the service is artist approval; musicians like Trent Reznor and Pharrell are assisting in developing features for Apple Music, similar to how TIDAL has the backing of several big artists. More artist approval helps marketability of these services to fans and musicians who are concerned where the direction and value of music is going.
The music industry appears to be going further in the direction of streaming services, and for these services to gain profits and approval, they will have to appeal to artists and stand out to consumers. With more services joining the market and more features being added to these services, it will be exciting to see where the future of music is headed.
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