Music streaming has become one of the most popular and relatively inexpensive ways to listen to music today worldwide, availing listeners access to a vast array of artists and music genres, via music streaming platforms like Spotify (who are reported to have over 100 million songs alone according to the demandsages.com report from the first quarter of 2023).
Music streaming is no different in the UK, with about 39 million monthly subscribers streaming about 113 billion times per year according to the Competition and Markets Authority (CMA) report published in November 2022.
As Sarah Cardell, the Interim Chief Executive Officer (CEO) of the CMA, noted after the report’s release, “Streaming has transformed how music fans access vast catalogues of music, providing a valuable platform for artists to reach new listeners quickly, and at a price for consumers that has declined in real terms over the years.”
According to an analysis conducted by the BPI last year, nearly 1,800 tracks were streamed more than 10 million times on streaming services in the UK in 2021 – which is more than five times higher than the number of tracks that reached the same threshold five years earlier. Ofcom also reported data from BPI’s Yearbook of 2022 indicating that the majority of revenue for the UK recorded music industry was coming from music streaming services with an increase by 57.0% (from £468m in 2018 to £735m) in 2021.
Notably the percentage of revenue stayed the same between 2020 and 2021 (66%), but overall consumer spending on music streaming subscription has increased by a whopping 64.4% from 2018-2021 (£812m to £1,355 m) although year-to-year spending did decrease.
The Indie’s Dilemma
This fast rise in music streaming however, has raised concerns among UK’s indie artists and songwriters as to how they would earn a sustainable income from music streaming.
According to music streaming calculators found on MusicGateway.com and Purecalculators.com, it seems that for 2 million Spotify streams, an artist would earn between £4,000-£6,000 (which for an established artist is chicken change; although these are only rough estimates and depend on a variety of other factors).
However, the first concern of the indie artist is getting their music discovered by potential fans, and/or record labels. With that added to competition and choice, from the sheer amount of music available, most indie artists do not get a profitable number of streams per month, as there are other economic factors that reflect on music streaming, uncommon to other products like groceries. For instance, the monthly price of subscription to music streaming services came down by 20% between 2009 and 2021, as continually improving technology keeps making it easier for more creators to record and distribute to streaming services without being signed artists. This means that music streaming does not keep up with the inflation rate.
Consequently, only 0.4% of artists (i.e., more of the well-established artists) are able to reach the number of streams required to create a viable source of income according to the CMA report. The 3 major labels Warner, Sony, and Universal still hold a combined stranglehold on more than 70% of market share in music streaming, also being dependent on streaming platforms like Spotify to distribute their music, with indie labels only holding around 25% overall.
Considering all these changes brought on by music streaming, new artists are having to get innovative about their approach toward breaking into the music industry. This has included creating more bargaining power, by establishing a dedicated fanbase and a viable online presence while waiting for their big break of a record label approaching them.