Streaming and the Music Industry

spotify.com

The economic principle I am researching is supply and demand In the music industry and how it both drives and shapes the music industry as a whole. In today's blog post I will discuss how streaming services have shaped the music industry.

 In recent years online music streaming services have dominated the market. In 2003 the market for music was controlled by CD´s: producing 94% if the industries revenue. Today 75% of the music industry's revenue comes from online music streaming (Econlife.com).

 Because of this jump from physical to electronic good´s the artists have less control over the price of the music they make. Basically Spotify pay the artists indirectly (by paying the record label) a fraction of their profits that are equal to the fraction of streams that each artist gets. The more streams an artist gets, the more profit they get. Spotify gets its revenues through ads and through those who upgrade to premium.

 Personally I do not like the direction the music industry is moving. The music industry today almost forces artists to put all their music on music streaming services. Songs on music streaming services are in large supply and songs are complementary good to each other: If you're listening to Ed Sheeran Ariana Grande can be a complementary good. If artist do not put songs on spotify they will get little or no attention from consumers.

In my next blog post I will explore why songs are getting shorter.