Long Form Feature of the Month #5: The History of Music Streaming By Neo Mongeau November 15, 2019
Music streaming platforms such as Spotify have completely changed how we listen to music. These platforms redefined how people listen to music. If you knew someone who grew up in the ‘90s and you asked them how they listen to music, they would probably answer with a line similar to “an mp3 player” or “a sony device”. How did we go from such ancient technology to an instant source of music? Well, it started in the 2000s when artists in the music industry were tired of record labels. Record labels at this time wanted more control over the artists and their work. This lead to a major lack of cooperation and collaboration between the two. This issue caused the music streaming industry to boom. However, there were earlier attempts that were not as successful as attempts in the 2000s. In 1993 the Internet Underground Music Archive launched. The IUMA archived MP3 files and allowed people to download those files. The IUMA was, unfortunately, a failed attempt as no one wanted to wait through the slow upload and download times. This archive was in the early ‘90s after all, upload speeds and download speeds were nowhere near as fast as they are today. It was a good attempt as a few groups such as the punk band Sublime got record deals from it. But in the end, it disappeared as nobody wanted to invest in it.
Early Music Streaming Platforms The first successful attempt at a proper music streaming platform was Last.fm. Last.fm launched in January of 2002 and established the future of other music streaming platforms. It did this by using algorithms that recommended music based on what you listen to. This is now a formula that most platforms use. After Last.fm established the basis for streaming platforms, Pandora came around and established the “freemium model”. This model established another basis for most streaming platforms. This model being the service is free to use, unless the user wants to pay in order to remove ads and access other features. The music streaming industry had another company that came in and changed the system after Pandora. This company that changed the system was Soundcloud, Soundcloud changed the game as it launched as an online audio distribution system. This system was designed for artists. Artists themselves were the ones who distributed their tracks to people for free. Soundcloud’s system changed the industry due to a social aspect that was added to the application. This social aspect is similar to MySpace. This system essentially allowed artists and fans to communicate with each other. Fans could leave feedback to the artist and this allowed much smaller artists to get their work seen. Feedback also allowed artists to fix issues in their music, bettering themselves and allowing more people to enjoy their music. As artists could look at their feedback and use their own listeners’ advice. Then in October of 2008, the infamous Spotify application launched in Europe. Spotify launched to deal with music piracy issues. At the time music piracy was a major issue since other streaming sites failed to deliver to their customers’ needs. Music piracy back in the day was also an easy process. A person could download a torrent which allowed them to download music onto anything they wanted. Spotify sought to fix this. Spotify, like Soundcloud, completely changed the streaming system. Instead of artists being paid by download, artists are paid per stream. This means every time a person listens to that song they are paid a small amount of money. However, part of Spotify’s business model is the same as the last system. This being to pull revenue from advertisements and establish a premium service. Spotify truly offers an endless amount of music to the people who use their application. The version that's available for download for computers allows the user to play any song of their choosing. Previous applications failed to do this, because of this, the application became pretty popular very quickly. However, this feature was only for premium subscription users on mobile devices. This allowed Spotify to gain a lot of revenue as people bought subscriptions for this feature alone. More people listen on mobile devices, causing revenue to pour in. By the year 2011, Spotify had already gained 10 million users in Europe. The company went through the complicated process of international licensing and launched in North America. It became an immediate hit just like it did in Europe. At the time, Spotify was the best quality product since it added features that people actually wanted, like choosing the songs they listen to.
Newer Streaming Services Business Model’s
Spotify’s premium subscription allows a person to remove ads, choose any song they want for mobile devices and download music so they can listen to music whenever and wherever they want. Downloading music also allows a person to listen to the music they want with no service on their mobile device. This service is 10 dollars a month, with this and ad revenue combined together, the company is making plenty of money. The amount adding up to a staggering 422 million a year.
How Music Streaming Services Pay Artist
Older streaming services differed in how they paid the artist. Instead of paying an artist per stream like Spotify does, services paid per download. Every service did this, then Spotify came in and changed the system. Primarily for the better, as paying an artist per stream maximizes how much an artist is paid. An artist on Spotify is paid roughly around $0.006 to $0.0084 per stream. The payment depends on numerous things, such as monthly listeners that the artist has and if they have deals with the company itself. This system allowed smaller independent artists to be paid. Independent artists being paid was a hard thing to accomplish until Spotify launched. Every artist has an equal chance to be paid.
How Newer Streaming Services Handle Copyright: Spotify also changed how streaming services handled copyright, mainly for the better as Spotify’s systems allow a lot more music to be added onto the app. Spotify has two types of licenses for copyright. These licenses being sound recording license agreements and musical composition license agreements. These licenses cover the artists themselves. The only issue that can be found with this system is the overall money spent, as Spotify has paid 9.76 billion since its launch. However, ad revenue and subscription fees help make this money back. Because of this it is not even looked at as a major issue. The streaming platform of Spotify also has deals with certain record companies. This helps with their copyright system. These record companies are the big three that most people and companies deal with, Universal Music Group, Sony Music Entertainment Group, and Warner Music Group. Each of these companies holds more than 5% of the company as well. All these lead to more revenue and copyright protection. The record companies help deal with the process of overall music rights licensing. This means they work with other labels to help solve copyright issues. This massive system establishes firm copyright protections. Essentially the whole process has benefited the company and allowed for more artists to join the system. More artists mean more money and the entire process continues. Spotify also has a second copyright system, this being composition licenses. Composition licenses have two subcategories or licenses that Spotify secures. These being performance rights and mechanical royalties. Performance rights are paid to the publishers of songs and mechanical royalties are paid to the songwriters or artists themselves. This process helps secure the artists, publishers and the company of Spotify itself. Mechanical licenses and Composition licenses have more processes that go into them. It gets much more complicated. But overall, the easy summary is that they deal with payments. The list of people who need to be compensated is extensive. However, the three big record companies that Spotify deals with should help with this entire process. Due to music streaming, the music industry has changed, majorly. Overall it’s not a bad thing as the music industry has changed for the better. Music streaming has halted online music piracy. People can now choose the music they want to listen to. Audiences can enjoy all the music they want without anything stopping them. Maybe an ad or two stops their music for a few seconds, but they still get to choose what they want to listen to and when they want to listen to it. Listeners also have gained a universe size of music. This has helped the industry have plenty of new music. This new music is being found by plenty of people, allowing smaller artists to gain traction in the industry. Smaller artists help the music industry, as more and more people listen to music and the industry gains more money from those smaller artists. The entire process of streaming music has changed over the years. This process has been redefined, made better for the listeners and the companies. The industry is better off with this system continuing. People are better off with this system continuing, as we can now be brought together with music even more than in the past. Music is anywhere and whenever a person wants.
Welcome to Kimball High School’s journalism web page, Jags Journal. Our class has every grade level, and we select each article that appears on the site. We conduct research and interviews in preparation for writing each article. We cover school events, pop culture happenings, sports activities, and news that is happening around us. Come back every Friday for new articles and the word around campus. If you have any ideas, please stop by and talk to us in H9. Go Jags!