The Business of Music and TV Streaming
April 23, 2019
Over the past ten years, society has adapted to a staggering yet sudden change brought upon by streaming capabilities.
In the domain of television and film, Netflix, Amazon Video and Hulu have become standard purchases since their expansion to streaming as opposed to shipping physical copies of entertainment. In 2018, Netflix reached a threshold of 118 million subscribers worldwide.
Music, however, has experienced a similar boost in streaming in the past 10 years. The iTunes store was a huge step forward in 2003, bringing the music marketplace into the sphere of technology; but along the way, new streaming services such as Spotify and Apple Music have become more prevalent.
According to the most recent data, Spotify currently has 75 million paid subscribers, and Apple Music has 56 million.
Movies/television and music share one primary variable in response to the rise of streaming – the reduction of the need for higher-priced, less convenient, individual copies of these goods.
For the consumer, this is great news. As streaming technologies have become more accessible, people have gained more convenience in their pursuit of music, as well as falling prices for individual songs as well as albums.
As more songs were purchased online, iTunes dropped their prices from $1.99 to $1.29 several years ago, and a select few even fall under a dollar.
Streaming in music caused an especially large change in the ways the market affects the artist. In a report done by CNBC in 2018, it was found that Spotify pays its copyright holders approximately $0.006 per stream on their service.
If we travel back in time to the dominant era of CDs, it was reported that Michael Jackson signed his deal for “Thriller” to pocket $2.45 for each sale of an album. “Thriller” sold approximately 66 million copies, leading Jackson to make over $150 million.
At Spotify’s rates, however, this equates to less than four million dollars.
A similar case was made by David Crosby (via Twitter) last year, as he claimed that “[record] companies made a deal to sell out the artists by agreeing to a very very low rate in return for which they got ownership share in the streaming companies.”
Overall the expansion of music, streaming, and further strides in digital capabilities have a positive effect by making music more available to consumers, while negatively impacting the artists.
For movies and TV, this digital age is more about general convenience than negative effects for anyone. It is much easier for a person to sit down on their couch at home and pull up Netflix rather than go out to a movie theater.
The idea of streaming was brought about by the convenience created for the customer. Being able to pay a low rate each month for unlimited shows and movies was revolutionary, saving consumers both money and time.
Unlike music, however, these services minorly diminished the profits of regular studios, as they already released their films and movies through a different platform before making a contracted deal with streaming services.
While streaming has a correlation with the decrease in box office sales, these studios are still making money long after the movie leaves theaters due to the longevity of online accessibility.
These services have (almost) completely removed the need for physical DVDs. As easily exemplified by the fall of video rental stores, Netflix and Amazon Video have diminished the need to purchase and own a $20 movie.
The changes in technology over the past twenty years have vastly altered the ways that entertainment reaches its consumers. While certain artists and companies have lost money during this shift, the entertainment market is shifting, similarly to many other mediums, towards convenience.