This week the online music streaming space got a little bit more crowded with products and commentary. YouTube launched its own music following/sharing service, YouTube Music Key. Simultaneously, Spotify CEO Daniel Elk published a response to the accusation that Spotify cheats artists out of royalties that kicked up dust after Taylor Swift removed her recently released album 1989 from the music streaming service two weeks ago (more on Elk’s rebuttal). His main rebuke was that Spotify compensates artists more than most other music-selling mechanisms today and that they need to evolve with the changes to how people listen to music. He also used the opportunity to throw competitor Grooveshark under the bus, accusing it of facilitating music piracy. Wednesday night Grooveshark EVP of Communication James A. Pearson wrote a scathing response to Elk, naming all the reasons that Grooveshark is not a pirating service. (Check out our report on the competitors in this space)
A sampling of community insight polls on this competitive landscape show that members largely believe there will be a consolidation across the space and that we will see significant change in the streaming radio model as it stands today.
Elk strongly rejects the accusation, stating that Spotify has paid over $2B in artist royalties, with $1B of those payouts made in 2014. He projects that artists like Taylor Swift stand to earn upwards of $6M via royalties on the platform. He also states that, because Spotify premium subscribers spend $120/year on the service, they are more valuable than what the average listener paid previously per annum for music. What Spotify does is democratize earnings across various earnings by optimizing for user ‘discovery’ new music over old music. Music listeners now rarely listen to a whole album, and rather than draining $13.99 on a whole CD for the 3 songs you actually want, this model pays artists for those songs you want to listen to, and not the other 7 tracks you don’t. At the end of the day, the way that people listen to music has evolved and artists need to be at the forefront of understanding listener trends.
(P.S. Taylor Swift’s PR team has said that the move wasn’t ‘royalty’ driven, but rather out of concern that some fans might be embarrassed if they pay for the album when their friends can get it for free).
Below are the results to some of the more popular polls on Owler regarding the music streaming industry.