Insight
Adapting to the Music Streaming Era
As we’ve seen, technological innovations have been behind some of the biggest changes the music industry has experienced, including the transition from physical products, like CDs and cassette tapes, to digital.
Beginning during the early 2000s, this evolution has sometimes been a bumpy one with the traditional industry infrastructure of record labels needing to be recalibrated around these music streaming platforms and how we consume music. It has led to seismic shifts in both music distribution, royalty rates and revenue models that both established artists and emerging independent artists have had to adapt to.
Studying music business education including SAE’s Music Business course is an effective way of getting to grips with the history of this digital revolution, the changes to listening habits and what might happen next within the music industry, the charts and pop music.
In our blog, we will explore what success looks like in this new streaming world and how it relies on leveraging user data for promotion, adapting songwriting structures for streaming habits, and diversifying income streams beyond royalties, such as through merchandise and touring.
Are you interested in discovering more about the music business within this landscape? Then contact our team now.
How Streaming Changed the Music Industry
The roots of the music streaming revolution were first planted during the early 2000s with Napster, a disruptive peer-to-peer file-sharing platform, launching to challenging the way new music was distributed. Instead of purchasing music from a licensed retailers, users now had the opportunity to experience illicitly downloading files.
By the mid-2000s, new platforms started to emerge that enabled consumers to legally access music – particularly with Pandora, a developer of personalised internet radio, shaking up conventional norms in 2005.
It was three years later in 2008 when the big game-changing platform, Spotify, launched. This unleashed an explosion of on-demand music options, both free and premium subscription services, as well as opportunities to easily access music from a variety of different regions, compile playlists and tailor listening habits to individual preferences. Simultaneously, in 2015, Apple Music made a bold entrance, seamlessly intertwining streaming into already existing music libraries.
As the years have gone by, more music streaming services such as Amazon Music and Tidal have arrived and become the definitive way for music lovers to engage with their favourite artists.
The Shift in the Music Landscape
The streaming numbers are now impressive with services including Spotify, YouTube Music and Amazon seeing revenues from music streaming increase by 7.8 percent to £2,018.4m in 2024.
The numbers illustrate how consumers love to find new songs and personalised recommendations on these online services. Of course, this has created new challenges and opportunities for creatives but given listeners the opportunity to enjoy millions of songs from their phone.
Consumer behaviours have now moved from ownership to an access model – rather than buying digital copies, many prefer on-demand and this has had an impact on the way that the traditional album is viewed. However, there has also been a revival for vinyl with album sales in this format growing even faster than streaming in 2024, up by 10.5 percent to £196m.
Playlists and algorithms have replaced traditional radio/press as a driver of music discovery. Labels are also increasingly looking to work with artists who have already gained traction on platforms like TikTok, YouTube, and SoundCloud.
Why Music Streaming Services are Popular
Streaming services like Spotify, Apple Music, and others have fundamentally reshaped the music landscape with their on-demand access to a vast library of songs, albums, and podcasts.
Users enjoy a considerable degree of freedom in this space, curating personalised playlists and effortlessly exploring various genres. They can now access as much music as they can listen to via their smartphone devices. The significance of these services goes beyond convenience; they serve as crucial platforms for artists to connect with global audiences, offering independent musicians a space to showcase their talent, something which has only been made possible thanks to the evolution of music streaming.
However, there are also concerns too – streaming platforms generally pay a fraction of a cent per stream (for example, Spotify’s rates are thought to be £0.002–£0.0038 per track), meaning it is tough for musicians and songwriters to generate enough income to survive solely from these platforms.
In fact, only 0.4 percent of artists in the UK make a living from streaming plays of their music, a 2021 survey found (based on data collected between 2014 and 2020).
Key Strategies for Adapting to Streaming
Amid this landscape, it’s obvious that the music industry has significantly changed and continues to evolve all the time. The only way to maintain a career in this sector is to adapt and implement a mindset of continuous learning around these new platforms and tools. Making the most of the music streaming industry era has required artists and labels to pivot from selling physical formats to managing digital presence, focusing on frequent releases, exclusive content, and direct-to-fan engagement via social media.
Whether you are a music business professional or artist, there are some essential strategies to follow to move from the pre streaming era into this new world.
One of the main changes is how music is now released – rather than building up to an album as an artistic statement of intent, some creatives are choosing to keep up a more a regular release cycle. By almost constantly unveiling EPs or singles, they then can ensure they are not only visible in discovery playlists but also maintain their profile across all their digital channels with music and content.
These social media channels can also be utilised to help artists build a brand around their music. By choosing to tell their musical story via social alongside music releases, there is an opportunity to build a deeper connection with an audience and establish a community around them.
Many of these new platforms such as Spotify, Apple Music or SoundCloud also offer analytics to help artists and their teams make increasingly informed decisions about their strategies, touring and release campaigns. If translated effectively, this data will enable greater understanding around listener habits so they know where their audience is and how they engage. Ultimately, this information has huge potential to make music marketing far more effective.
One of the negative impacts of the streaming age is the poor royalty rates for songwriters and creatives. This has translated into artists looking to music licensing as a way to diversify where their revenue comes from. By looking to provide music for sync or generate money from selling merch, then artists are hoping to reinforce income they would have previously enjoyed from sales.
Another impact is in the way artists now approach the creative process. Many are concerned by music fans skipping onto another track if a song’s introduction does not immediately grab their attention. The impact of this can be heard in immediate hooks and shorter introductions to songs.
In fact, research published back in 2017 found that intro lengths had dropped by 78 percent between 1986 and 2015.
Future of music streaming
As we’ve noted, the music industry is one in an almost constant of flux and formats, from vinyl to the minidisc, have come and gone over the years.
It’s likely that music streaming in its current guise will not stay still – instead, only expand and grow.
While artificial intelligence is a controversial topic from the creative perspective, it’s also being used to establish more sophisticated and personalised listening experiences. Music platforms and tools are focusing on creating more user-focused and immersive experiences to engage with users more on a deeper level.
At the same time, there are growing concerns about how current music streaming models put smaller artists at a disadvantage. Many of the conversations surrounding music streaming are now aimed at exploring fairer compensation around payments. There are also worries about how these platforms are being overwhelmed by AI-generated music with Deezer reportedly receiving over 60,000 such tracks on a daily basis.
Ultimately, music streaming is set to expand in the near future. Goldman Sachs’ findings showed how streaming sector will progress from 752 million paid streaming subscribers in 2024 to 1.5 billion subscribers by 2035.
Study music business at SAE
Studying our leading Music Business course will give you a comprehensive education in labels, publishing, management, touring, distribution, and live events.
You will have the opportunity to collaborate with an exciting student body to record your artists, film music videos and begin to plan your own career in one of the world’s most exciting industries.
