Evidence that streaming is crippling music sales in the past year has been revealed in the end of year report by Nielsen Music.
U.S. figures released by Nielsen Music show music sales have taken a dramatic downturn in 2014 with digital sales reversing for the first time ever. Digital album sales were down 9% in 2014. Digital song sales were down 12%. However streaming plays were up 54% in 2014.
Spotify founder Daniel Ek has always claimed that exposure via streaming services such as his own would increase music sales. The Nielsen Music figures show that the opposite is true. Streaming mortally wounded the music industry in 2014.
In the past 12 months the value of Spotify has increased by billions of dollars. A year ago it was estimated that Spotify was worth around $10 billion. The 54% increase in streaming in the past year has given Spotify an estimated increase in value of around $5 billion.
Q. So why aren’t the major labels concerned? A. Because they are all major shareholders in Spotify.
BMG (Sony), Universal Music, Warner Music and EMI have a combined share of around 10% in Spotify. If the value of Spotify goes up, so does the value of the labels. Win / Win … or is it?
It is expected that Spotify will head for an IPO (Initial Public Offering) sooner rather than later giving the labels a potentially massive profit on their investment when Spotify floats. However, those gains won’t trickle down to the very people who created the value in the first place … the artists.
Artist agreements with the labels do not include a profit share, just a royalty on individual sales. By “gifting’ deals to Spotify in return for a percentage of the business, the labels have sacrificed revenue to artists for their own gain. Effectively artists are being screwed by the very people who should be looking after them.
Of course, there is nothing illegal in what is happening here. It is just all just smart business, especially for the executives of the corporations who stand to personally gain millions in bonuses for creating new wealth in their conglomerates.
The music industry can no longer argue that illegal downloading is destroying the business. People don’t need to steal music when it is handed to them for free (all legal of course) through an advertising supported model that generates minimal income with even less payment for the content creators.
Artists and their managers need to close the loop-hole that is allowing their very own distributors to block them out of new revenue streams. That 1980s UK alternative rock band’s name was actually a prophecy. Pop really did eat itself!
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