Digital Music

Digital music: Can streaming save music sales?

By Maddy Savage

BBC News, Stockholm

Sweden's DJ Avicii makes more money from streaming than downloads and CDs

Streaming services have reversed the fortunes of the music industry in Sweden and now generate more income than downloads or CDs. But can the model be replicated worldwide?

Felix Persson has written hits for some of Sweden's biggest pop stars

Keyboardist and respected songwriter Felix Persson is nestled into a red-cushioned seat inside one of Stockholm's ubiquitous coffee shops.

This particular cafe is owned by Benny Andersson from Abba, a band with more than a passing influence on Persson's electro-pop group Le Kid, who are also known for their catchy tunes and bright outfits.

Persson is a huge supporter of the dramatic growth of music streaming in Sweden.

"I am on the extremely happy 'Go, yay, we love it!' side of the debate," he says from across the dark wooden table.

"For the price of one album you can listen to as much as you want every month. It is democratic because it has moved the power from the decision makers at radio stations and labels to artists themselves, who can release the music they want on streaming sites and get paid for it."

Some 91% of digital income in Sweden now comes from streaming sites, compared with just 13% worldwide.

The services were the main force behind the Swedish music market's 13.8% growth last year, marking a return to a level last seen in 2005, according to the industry body the IFPI.“When it comes to getting the worth of your work, these streaming sites are definitely not good. I have to have a side job in a bar as well to make a living”

Daniel Oliver

Singer

It was a figure most countries could only dream of, with global music trade revenues increasing by just 0.2%, the first rise since 1999.

The numbers also represent a big turnaround for a nation that used to have one of the highest rates in the world for unauthorised downloads and was home to the notorious file-sharing site The Pirate Bay.

"We were the worst in the class," says Per Sundin, managing director for Universal Music in Sweden at his office in the capital.

"At international meetings, people looked at me like I was something the cat dragged in because I represented Sweden, where piracy had destroyed the market for everyone."

He is now being asked to travel around the world to give presentations on how music streaming has transformed the record industry in his country.

"I am 100% sure that this is the future. Streaming services will be the next step for global music consumption," he says.

Spotify the difference

Continue reading the main story

Music streaming

                            Subscription services are the fastest growing area in digital music

                            In Sweden they make up 91% of digital revenues

                            Worldwide the figure is 13%

                            Rapidly growing areas include India and the Netherlands

                            But 57% of global recorded music sales still come from physical products such as CDs

                            This is down from 74% in 2008

By far the most successful streaming site in Sweden is Spotify, a Swedish company, which launched in 2008, a year before tough new laws to combat illegal downloading were introduced. More than a third of the country's population is registered with the site.

The walls of its new Stockholm premises are covered in street art and vintage concert posters and there is a bar for hosting gigs, a computer games room and even a football field.

"Spotify really started [in order] to combat online piracy, so I would say we didn't create a behaviour that didn't exist, we just transferred it to a legal medium," says the company's chief product officer, Gustav Soderstrom.

Spotify's Gustav Soderstrom says his service can rekindle a love of music

"It offered the same principle that you could get music for free, but all the music was licensed and it was better than the piracy networks because you didn't have to wait for the whole file to download before you could listen to it."

He believes the reasons the site has proved especially successful in Sweden include the affordable, widespread access to some of Europe's fastest and most accessible broadband services. The size of the population also helped.

"Sweden only has about 10 million people and so you reach a tipping point where so many people are using the service that the social aspect of music works really well. You can share a playlist... which wasn't really possible technically with the piracy networks."

Royalties rip-off?

Worldwide, Spotify now has more than 24 million active users in 25 countries. Six million of those pay for the premium service, which removes adverts between tracks and offers and mobile access to playlists, even when the user is offline.

Continue reading the main story

Other major streaming services

In the US, PandoraOne and Rhapsody are attracting more users thanks to the smartphone and tablet boom

In South Korea, where streaming is also booming, major sites include Bugs, Mnet and Soribada

French firm Deezer, is available in 182 countries

Smaller European brands WiMP and rara.com are also performing well in Europe

On Tuesday, it is announcing its first markets in Asia and South America and increasing its presence in Europe. But it faces tough competition as it works towards the goal of becoming a "global product like Facebook".

There are existing rivals such as French business Deezer, already available in 182 countries. And tech giants Apple and Google are preparing to launch streaming services.

Streaming services make their money from adverts or monthly subscriptions from premium users. For Spotify, the fees are about $15 (£10) in Sweden and the UK and $10 in the US. The more a track gets clicked on, the more it earns for the rights holder, be that a label, artist or composer.

But like many of its international rivals, it faces continued criticism from performers who say their songs need to be played hundreds of times to generate the same kind of income that they would earn from a single download or CD sale.

Record shop owner Larry Farber has had to branch out into coffee and books

Last year, US-based cellist Zoe Keating released her earnings in a public Google document, saying she had received just $281.87 (£179.70) after her songs were streamed 72,800 times on Spotify.

For Daniel Oliver, a successful Icelandic singer living in Sweden who had a number one last year, "the positive thing is you get really good exposure and you can approach your fans really easily".

"But when it comes to getting the worth of your work, these streaming sites are definitely not good. I have to have a side job in a bar as well to make a living."

However, Spotify has now become the biggest source of income for some of the country's most popular artists, such as Stockholm-based House DJ Avicii who signed with Universal Music Sweden in August 2010 and has had five hits with the label.

"Spotify offers a proven revenue generator through streamed music," says Avicii's manager, Ash Pournouri.

"In Sweden, where the reach is greatest, the major labels are dependent on Spotify to bring their financials up to the levels of past glory days."

Vinyl revival

Not everyone is as sold on streaming, however. And even in some major economies such as Japan and Germany, three quarters of music is still sold in a physical format.

"I don't download and I don't stream and I know that is partly because I am of an older generation," says Larry Farber, who runs a music, film and book store on the edge of the hip Sodermalm area.

"It does feel like physical music is mostly dying. I will sometimes be in the store and just think, 'What am I doing?'"

Most industry experts agree that the trend towards digital music is unlikely to be reversed, but even Spotify's Gustav Soderstrom has admitted that he understands "the need to create some physical manifestation of something you really like".

He says he wasn't a real "music aficionado" when he joined Spotify and his growing record collection demonstrates how streaming sites work to expand users' musical passions and horizons.

"That is kind of my personal mission, to take boring people like myself and get them back into enjoying music."

BBC News – 16^th April, 2013.

More on the music industry...

History of Music Production

For as long as people have had ears, there has been a live music industry.  As long as there is an audience, there is an industry.  Playing music and receiving something of value in return for a listen, has been happening for centuries.  But when did music production actually start?

 

In 1857 Leon Scott invented a clever gadget which could record sound onto a piece of paper.  This discover led to Thomas Edison, in 1877, creating the phonograph.  This clever machine could record and play back sound.

 

There were developments continually made around this discovery for the next 36 years.  By 1903 this had become a 12 inch record, made from shellac, a resin from the female lac bug of India. This record could play 78 revolutions per minute and could take around 4 ½ minutes of music recorded through ribbon microphones.

 

In 1948 Les Paul recorded the first sound-on-sound overdubbed, or multi-track recording, with a  track called ‘Lover (When You’re Near Me)’. This meant music performances no longer needed to be live. It did mean, however, record labels needed to bring composers and musicians together.  Thus creating a real industry, complete with talent scouts or Artist & Repertoire Representatives (or A&R reps).

 

During the Second World War, communication was greatly improved.  Whilst this was used to be successful in war, the music industry realized it could be used to further itself.  The machine used for Morse code, become an early synthesizer – something able to change tone.  By 1960 (and in time for Elvis Presley) the music industry was really taking off (they even discovered electric guitars).

 

The 1970s saw the introduction of the compact tape cassette.  Over the next 20 years, we would move from medium from vinyl long-playing (LP) records through to compact disks in the 1990s.  Alongside side this was the up and coming computer revolution. This would shape the way we make, listen to and buy music, as personal computers to become widely available to the public.

 

In reaction to the Cold War, this strange new thing was created. It was to be called the WorldWideWeb  - the Internet.  Although it could not be commercially used until 1995, when Amazon and eBay were established, its potential was being recognised.   People realized you could now share files.

This marked the removal of geographical restriction on distribution of recorded music: you did not need to go to your local store to collect your favourite record any more (providing the online store had what you wanted).

 

1999 saw the end of the 90s and the birth of Napster.  This was a public portal which allowed access to music, via MP3.

 

Now look where we are: you hear a song you like, you google the lyrics, then you listen to it.  Nowadays, you don’t even have to buy the song.

 

 

Music Industry

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Future Of The Music Industry from SheridanC

Evalutation question 7

Looking back at your preliminary task, what do you feel you have learnt in the progression from it to the full product? 

Compare your final piece to your prelim task.  Consider:

• How you have improved.
• What you have learnt.
• How you got from the original point to where you are now.
• What you had to learn.
• What you would do differently now.
• Are you pleased?

Remember: You have progressed and have developed as designers, be proud of this and talk about your awesomeness!