Turns Out Spotify is Neither Good nor Bad for the Music Industry

Depending on who’s talking, whether that’s Taylor Swift or any regular music-lovin’ Joe, you’ll hear wildly differing opinions on streaming. Swift notoriously ditched Spotify when she released 1989 and many credit this to the extreme popularity of the album, while many others have accepted that Spotify and similar streaming services are necessary in an increasingly technological music industry where locating illegal music is just all too easy.

Yet a new study might placate both sides. The study from economist Joel Waldfogel of the University of Minnesota and Luis Aguiar of the Institute for Prospective Technological Studies in Spain analysed countries where Spotify has taken off. Their findings were somewhat surprising. Rather than decimating the industry as has been predicted, it seems Spotify is virtually having no substantial impact either way – good or bad.

By comparing countries where Spotify has flourished with countries where it has yet to make an impact, they found that indeed Spotify is luring people away from pirating as is expected, creating revenue for the industry. However, these profits are minimal, with the average stream giving the industry a revenue of just $0.007 per stream. This means to stream something enough to equal buying the track, you’d have to listen to it over 100 times.

Just as the number of pirates is dropping, less people are buying music than ever before from iTunes and other outlets. Consequently, the pair found the money gained by drawing people away from pirating was in fact offset by the amount of money lost from people streaming rather than buying music.

Rather than precipitating the end of the music industry as we know it, Spotify really hasn’t changed much at all. Yet perhaps this is unfair. Spotify has changed the way we all listen to music and our attitudes towards it, but rather than paving a new and lucrative way forward for the industry, it has neither benefited nor damaged the industry. Considering the polarising views around streaming services, this should be a welcome result to all.