The advent of digital music sales initially seemed like it would be the death of the music industry when it rose to popularity in the 2000s. Unexpectedly to many, however, music streaming has emerged as the industry’s savior. Spotify has remained at the forefront of streaming since being founded in 2008 by Swedish entrepreneur Daniel Ek, despite intense competition from the likes of Apple and Amazon. However, can Spotify, and streaming in general, prove itself to be sustainable in the long run? Profitability is yet to be proved and artists are still unhappy with the business model.
Streaming music online dates back to the early 1990s. It was not until the explosion of Napster in 1999, however, that the practice gained attention from the mainstream. Apple launched the iTunes store (which it recently killed) in 2003 and legitimized digital music purchasing. iTunes marked the death of the CD and many feared it would kill the entire industry with it. Physical album sales plummeted. While this trend continued, Spotify burst onto the scene as the leader in freemium music streaming. Their platform allowed listeners to stream any song for free, so long as they didn’t mind listening to advertisements. Their premium plan allows mobile listening, offline downloads, and ad-free listening.
Streaming has proven to be big business. Spotify reported $1.9 billion in revenues in the first quarter of 2019 alone. Furthermore, the music industry has seen sales go from $14.3 billion in 2014 to $18.1 billion in 2018. Clearly, streaming has played a large role in this growth trend.
I would argue, however, that streaming has saved music in an even bigger way. Streaming allows fans access to an unprecedented amount of music. Its radically changed the way we consume and discover music. I believe in the long term, this will be the biggest benefit of streaming to the music industry. Artists can connect with their fans better than ever before. Furthermore, they can reach massive amounts of new fans easier than ever.
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