Return to site

From albums to singles and from sales revenue to streaming revenue

· Music,Music Industry,Artist Management,streaming service,Marketing

In an industry where there is infinite competition it is of growing importance to keep attracting the attention of the consumers. Streaming services have become more popular over the last years, since 2010 Spotify’s active users have grown from 15 million to 100 million by the end of 2015 (Aguiar & Waldfogel, 2017), leading to nearly all the music being available to everyone with an internet connection and smartphone. With all these offerings in the palm of your hand it is impossible for the consumer to know every single offering (Essling, Koenen, Peukert, 2017). This article discusses the shift from albums to singles, the rise of streaming services and its influence on the music industry.

While some people believe streaming is the hero of the music industry in the fight against piracy, others are worried about the low payments from streaming services and the displacement of permanent downloads (Aguiar & Waldfogel, 2017). One way or another, it is safe to say streaming has given the music industry a new impulse. According to music industry analyst and critic Bob Lefsetz, who said the following ‘The revolution has happened. It's just that those with power refuse to acknowledge it. Sales are a dead metric, like counting the number of landlines in a mobile world, it's all about streams.’ (Lefsetz, 2016), aiming at the record labels still going for airplay in an playlist era. So there it is, a logical reason to say goodbye to releasing full albums at once as they’re never all going into the good playlists and the consumers are not going to listen to the whole album.

When looking at the streams Ed Sheeran got on his latest album “÷”, there is a huge difference between the amount of streams on his singles and the rest of the songs on the album; the three singles released from “÷” are “Shape of you”, “Castle on the hill” and “Galway girl” add up to a total of roughly 2,1 billion streams, while the thirteen other songs add up to merely 1,6 billion streams (Spotify, 2017). These facts and numbers contradict the statement that singles are solely a measure to raise and maintain attention (Essling et al. 2017). Surely one of the reason of releasing multiple singles instead of one single and an album makes for more awareness, however, due to streaming services, it is a great way to make revenue as well.

The impact of streaming on overall recorded music revenue depends on the payments per stream and the payments per permanent track-equivalent sales, but also on the rate at which these additional streams displace sales (Essling et al. 2017). A positive relationship is found between streams and sales and between streams and piracy. Where the amount of streams have become more, both the amount of sales and the amount of piracy has reduced (Essling et al. 2017). In 2016 the US revenue from paid streaming has risen from $1.2 billion to $2.5 billion, this suggests that streaming sales are indeed fulfilling their promise of raising revenue more than they displace revenue. The reason of this increase in revenue was driven by a higher per-stream rate (Essling et al. 2017).

With these changes over the last few years in mind we can more or less argue that the music industry is where the marketing industry has been for years. The postmodernism phase where consumers are no longer approachable with set conditions, but is more complex (Christensen, Torp, Fuat Firat). For years the power in the music industry was with the record labels, while at this point the power is at the consumers who decide themselves what they are listening to opposed to the push strategy of radio. More than ever artists and record labels need to carefully observe and listen to their audience about what they want.

For more information on anything related to the music industry, make sure to subscribe to Bob Lefsetz’ newsletter on: https://lefsetz.com/

Sources:

Aguiar, L., & Waldfogel, J. (2017). As streaming reaches flood stage, does it stimulate or depress music sales?. International Journal of Industrial Organization.

Essling, C., Koenen, J., & Peukert, C. (2017). Competition for Attention in the Digital Age: The Case of Single Releases in the Recorded Music Industry. Information Economics and Policy.

Lefsetz, B. (2016, June 22). Playlists not radio. Bob Lefsetz. Retrieved from http://lefsetz.com/wordpress/2016/06/22/playlists-not-radio/

Thøger Christensen, L., Torp, S., & Fuat Firat, A. (2005). Integrated marketing communication and postmodernity: an odd couple?. Corporate Communications: an international journal, 10(2), 156-167.

Spotify (2015). Spotify application. Retrieved from: www.spotify.com

All Posts
×

Almost done…

We just sent you an email. Please click the link in the email to confirm your subscription!

OKSubscriptions powered by Strikingly