The Hidden Cost of Streaming Music
- kamillojrh
- 4 hours ago
- 6 min read
By Kamillo J. Ramirez-Hernandez
The Illusion vs. Reality
Each day thousands of individuals hit play on one of their favorite songs. Platforms like Spotify, Apple Music and other music streaming apps provide access to practically any piece of music ever written. In many cases, listening to music via music streaming websites and applications seems like a flawless example of the modern technological advancements. However, behind the scenes of music consumption via platforms like Spotify, there is a constantly growing financial problem affecting the creators of all music available today.
It is often claimed that streaming apps are beneficial for musicians, providing exposure and increasing the probability of getting recognized. In reality, streaming websites fail to ensure fair compensation of artists' efforts and leave them at the mercy of their music consumption figures. As an independent artist myself, I can say that even a song receiving hundreds of thousands of streams cannot translate into reasonable income in the real world. Despite some benefits of streaming, its economic aspect is clearly skewed in favor of the platforms.
One of the main issues associated with music streaming is that creators receive minimal amounts of money as payments for each stream. For each single stream of his/her music, an artist receives somewhere between $0.003 and $0.005. As it becomes obvious, receiving 100,000 streams does not make much sense because of the small sum artists receive in the end. To receive an income comparable to minimum wage, an artist would need millions of streams. As it is claimed by PBS NewsHour, many musicians state that streaming is not a good way to make money ("Musicians Push Back on Dwindling Payments").
Such statistics create a strong contrast between the perception of music streaming and its economic aspect in real life. For the consumers, a lot of streams are perceived as a sign that the song's creator has earned a decent sum of money. Nevertheless, there is always less to the story than meets the eye.
How the System Works
The main issue of such low payments is the fact that the money does not go directly from streaming service providers to the artists. Instead, the income generated from songs is split between several parties that include recording agencies, record companies, distributors, and licensing agencies, according to Lewis. Only after all the cuts, a small sum comes back to artists.
Thus, artists are forced to sign agreements with record companies in order to survive. Record companies not only provide support in terms of marketing and tour funding, but also cut a great deal of profits made by selling a musician's work. Unlike artists under contract, independent artists need to pay all the expenses related to production and advertisement. As an independent artist, it can be said that I am forced to balance music-making with the expectations of streaming platforms.
As it becomes clear, streaming is a great instrument for exposing artists but not for compensating their work. As it is stated by Tencer, only 30% of musicians are satisfied with streaming revenues (Tencer). Recognition is not something that pays bills or helps to record new music. Unfortunately, recognition is not equal to money and thus does not guarantee the possibility of having a sustainable career in the music business.
The Value of Streaming
However, the proponents of music streaming claim that the technology provides musicians with opportunities they did not have previously. The fact is that streaming enables musicians to spread their music across the globe without getting signed to the record company. Additionally, streaming provides users with access to all sorts of different music almost instantaneously, as it is noted by The Guardian (Snapes). Thus, streaming is considered a great instrument for artists in terms of spreading information about them, which in turn increases their popularity.
Undoubtedly, the benefits of streaming platforms can hardly be questioned. As an independent artist, I have personally benefited from the ability of streaming apps to distribute music to people all over the world. Moreover, streaming makes it possible to reach the audience without spending lots of money on marketing and tours. Still, there is always more than that.
One should note that the system created by the streaming platforms puts a lot of burden on artists. These individuals are constantly expected to come up with new tracks, record and publish them in the hope that some day they will get noticed. As Byrne claims, there is not much transparency when it comes to calculating music royalty (Byrne). The fact is that many musicians do not understand the way streaming royalty works. Hirwani suggests that artists need to become more aware of this problem (Hirwani).
It can be said that the economic aspect of streaming platforms creates a situation in which artists get no benefits from it apart from publicity. Meanwhile, the industry generates millions of dollars annually. According to The International Federation of the Phonographic Industry, the revenue reached $8 billion last year, according to RIAA (Tencer). In other words, one might wonder how many artists receive the lion's share of those earnings.
Thus, the industry is organized in a way that only the top artists earn enough money while the others have to struggle hard in order to earn something despite having lots of listeners. It looks like a game in which a small portion of musicians receive millions while the rest get nothing. However, this system has already been working for a long period of time now.
The bottom line is that streaming platforms provide their users with access to the music in exchange for income generated from the process. The platforms benefit because they manage to get their users to listen to music they want to promote. In reality, however, they are not interested in the economic welfare of the artists because that goes against the logic of the system.
There is always something valuable in exposure even for independent musicians. In any case, visibility opens doors and provides opportunities for an artist to establish contacts and find partners willing to help with promotion or finances. Unfortunately, visibility cannot be used for making a living or developing one's skills. Thus, there is no way an artist can rely solely on streaming for financial survival.
This aspect of the problem can lead to serious changes in the future. First of all, fewer people will choose to become musicians if they have doubts regarding their potential income from playing music. As a result, less creative content will be provided in the future. This situation can affect the future development of the music industry in a bad way.
From the listener's point of view, the problem of music streaming is not so easy. People are using these platforms on a daily basis to entertain themselves, which results in the generation of profit for streaming services. Obviously, it is impossible to change the current situation simply by using other sources of music. However, there are other options. One can visit concerts or buy merchandise from artists.
Moreover, supporting artists by attending their events and writing positive reviews online is helpful as well. Another important thing is to purchase albums or songs on sites such as Bandcamp. Finally, increased public attention may result in changes in the industry, forcing the platforms to adjust to users' demands.
Works Cited
Byrne, David. “Open the Music Industry’s Black Box.” The New York Times, 2 Aug. 2015, https://www.nytimes.com/2015/08/02/opinion/sunday/open-the-music-industrys-black-box.html.
Hirwani, Peony. “What the Music Industry Doesn’t Talk About Enough: Streaming Royalties and Transparency.” Rolling Stone India, 2023, https://rollingstoneindia.com/music-industry-royalty-transparency-opinion-column.
Lewis, Frances. “Slipping Through the Cracks: How Digital Music Streaming Cuts Corners on Artists’ Royalty Revenues Globally.” Brooklyn Journal of International Law, vol. 43, no. 1, 2017, pp. 297–.
“Musicians Push Back on Dwindling Payments from Streaming Services.” PBS NewsHour, 2024, https://www.pbs.org/newshour/show/musicians-push-back-on-dwindling-payments-from-streaming-services.
Snapes, Laura. “Do Streaming Services Pay Artists Fairly?” The Guardian, 2021.
Tencer, Daniel. “7 in 10 Musical Artists Dissatisfied with Streaming Music Payouts, Survey Finds.” Music Business Worldwide, 19 June 2024.
“Music Revenue in the U.S. 2023.” Recording Industry Association of America, 2024, https://www.riaa.com/u-s-sales-database/.
“Global Music Report 2024.” International Federation of the Phonographic Industry, 2024, https://www.ifpi.org/resources/
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