Media and Communication Industries - How popular music industry is changing in response to digital d

The transnational globalisation expanding from Anglo-background countries to other countries in the world and vice versa exerts a profound impact on various industries (Thussu, 2010). The music industry is not the exception. With the advent of technological convergence, several media systems have been increasingly evolving and collaborating with one another to produce content in multiple formats (Cunningham & Turnbull, 2014). So as to respond to the changes in digital music distribution, industry practitioners have to embrace and adjust to them. This essay shall analyse the influence of digital distribution on the popular music industry and examine the stark example of Spotify and its fallout and its recent reconciliation with Taylor Swift while considering consumer and industry practitioners’ perspectives.

The rise of digital distribution has caused a disruptive innovation to the music industry, which possesses an ability to displace the currently dominating supply chains by the major record labels and distribution companies (Krumsvik & Storsul, 2013). First, through new media channels and business models proposed by digital distribution, musicians and their fans can now engage directly with one another without the interference of intermediaries (Shane, 2014). Many independent artists who have no or little connection to sign exclusive contracts with record labels, can now work directly with the distribution companies. Rather than being passive information recipients, artists in this era are now “produser” who can proactively engage in the participatory media to both produce and consume digital content (Turnbull, 2014). Moreover, thanks to the development of digital distribution, music streaming services such as Spotify, iTunes, and Amazon Music, serve as profitable platforms to supplement artists’ regular income. Besides conventional income from physical album sales, live performance, and merchandising, artists now can utilise these platforms to earn more royalties for their music. Also, besides from over 5 million Australians who visit radio or music sites monthly, these platforms enable domestic artists to get exposure to more of the global audience (RoyMorgan, 2018).

However, many challenges arise concurrently as the direct or indirect consequences of digital distribution for the Australian music industry. They may include concerns about the inability of the recording industry to construct a comprehensive, affordable digital downloading system; the industry structure characterised by an over-supply of musicians and an under-supply of recording labels, radio stations, live venues, audiences; and copyright laws which give rise to music piracy (Homan, 2014). According to the latest online copyright infringement survey from the Department of Communications, music piracy in Australia currently decreased while the lawful streaming content was on the rise. The report’s findings also indicated that high-quality, convenient, and reasonable priced music streaming services, such as Spotify, can motivate consumers to turn to paid services rather than conducting the act of piracy (Bushell-Embling, 2018).

Along with the technological development that facilitates the emergence of music streaming services, Spotify has proved its stance as being one of the leading pioneers in the industry. Launched in 2008 as a free-to-use service, Spotify now has a customer base of 180 million people over the world (The Guardian, 2018). Its business model corporates a subscription-based strategy and the company generates its revenue from paid subscriptions and advertisements. Spotify offers two main versions of a free service and a premium service. While the customers who use the free version have certain limitations namely advertisements, shuffle only access, and the reduced quality of tracks, Spotify premium valued at $9.99 per month offers benefits of enjoying high-quality music without the internet connection and advertisement interruption (Sydeek, 2018). Spotify has successfully achieved a conversion rate of approximately 20 percent (Wikström, 2014).

To look on a larger scale in the media and communication industries, many companies share the same business model with Spotify, while some others operate under other business models. Along with the subscription – based business model that Spotify or Netflix use, there are two other main business models utilised in the industries. Firstly, the advertising/advertiser-funded model is adopted by Facebook, Youtube, and other commercial free-to-air TV. Unlike Spotify who only gets 10% of its revenue from advertising, Facebook gains 90% of its revenue from advertising and the rest from selling playing credits for games. Secondly, creative practitioners or owners of specialist equipment or facilities work accordingly to the fee for service model. Besides the three main business models in the industries, business models namely tax-payer funded utilised by public service media like ABC or SBS or income earned from trade in intellectual property rights utilised by content creators, publishers, distributors, and exhibitors should be taken into consideration as these business models all have interchangeable impacts on one another (Spurgeon, 2018).

Along with Spotify’s tremendous success in the past few years, many rival streaming services such as Apple Music and Tidal make the competition more heated in the industry. They have similar business models and pricing strategies with Spotify; however, there are some conspicuous differences noted. In terms of subscriptions, Spotify offers a free version of the app for an unlimited amount of time, while Apple Music is subscription-only after its initial trial period of 3 months and Tidal offers a 30-day free trial to its subscribers Compared to the user-friendly app of Spotify on every device, the Android app experience for Apple Music is not as smooth as the iOS one and the design layout of Tidal is not as straightforward as Spotify’s (Pendlebury & Blanco, 2018).

Spotify determines the royalty per stream to be paid to the right holders and artists based on their contracts, the country in which the song is played and the currency value (Sydeek, 2018). According to the research conducted by The Trichordist, Spotify paid $0.00521 per stream for its artists in 2014, then dropped to $0.00397 in 2017, which translated to $3.97 for 1,000 streams (Jolly, 2018). This unreasonable price which “undervalues” the art is one of the reasons why Taylor Swift decided to remove her 1989 album and other music catalogs from Spotify in 2014, which clearly illustrates how M&C industries are changing in response to digital distribution.

As popular her chart-topping songs were on Spotify, she decided to part with the music streaming site, reasoning with the statement that she did not “agree with […] the perception that music has no value and should be free.” Various perspectives from both industry practitioners and citizens had then arisen. On the one hand, some music consumers condemned her move as shortsighted since digital music platforms in this era could extend the presence of her songs to more a global audience. Others praised this move as a savvy way to boost her physical album sales (Ellis-Peterson, 2014). On the other hand, industry insiders provided more extensive perspectives regarding her decision to part with Spotify, in light of the music industry itself and herself. First, piracy had risen as one of the concerns. According to Spotify Global Head of Services, Troy Carter, “A lot of it is going to be pirated.” When examining the torrent index metasearch engine Torrentz2, we can see that multiple torrents of her Reputation album had a combination of 1,648 seeders with 573 illegal leechers, while R.E.M.’s newest album released on the same day, only got 77 seeders with 17 leechers (Sanchez, 2017). Regarding Spotify, since Swift took down her music catalogs from the site, it experienced a sharp decline in terms of visits; however, recovered quickly (Rosenstein, 2014). Other websites like Billboard.com also benefited from 3.4% of all search visits from Taylor Swift-related keywords when mentioning this fallout (Rosenstein, 2014). Nevertheless, this incident did little, or even no harm to Swift’s popularity as proved by her website traffic. Compared to average daily desktop visits in October, Her official website traffic rocketed by 820% compared to average daily visits on November 3rd, 2014 when she parted with Spotify (Rosenstein, 2014). Moreover, Swift’s presence continued to soar throughout other social platforms including Twitter, Instagram and other music sites like iTunes. It is also vital to note that while Taylor Swift had more competitors on Spotify, she impressively outran in the competition on iTunes, in which the majority of overall users paid to download music legally (Rosenstein, 2014). Nonetheless, Swift decided to collaborate with Spotify again in 2017, in celebration of her “1989” selling over 10 million albums.

Ultimately, although Spotify had not been blown drastically by the fallout with Swift in 2014, it was under more scrutiny than ever following the rift with Swift as many professionals in the industry had long been questioning how fairly Spotify, and other music streaming services, compensated their artists and other right holders with just $0.00397 per stream. However, streaming services like Spotify, brought along with digital distribution, undeniably remained as viable platforms for artists to promote and extend their global presence. This could be one of the underlying reasons why even artists with big enough fandom like Taylor Swift decided to work in hand with Spotify again.

All in all, the growth of digital distribution is incessantly impacting on the media and communication industries in general and the music industry in particular. Moreover, the fallout of Taylor Swift with Spotify has served as a stark example of how the industries are changing in response to digital distribution. Nevertheless, in order to support the ever-growing expansion of the music industry with digital distribution, proactive government, industry policy, and investment should prioritise “a fair copyright framework, music in education, a strong live music touring circuit, Australian music content, and music export,” said CEO Dean Ormston (Brandle, 2018).