Reinventing the Music Industry, But Not Enough to Combat Piracy
‘The amount artists are being paid in royalties is unfair, Spotify’s payment to content creators doesn’t equate to the value of their work….’ We have all heard the heavy criticism of streaming platforms across broader media in recent years. Yet the critics arguments are all missing a key element of the platform’s worldwide success: how Spotify has revolutionised the way we consume music, and in doing so pioneered a path for overcoming music piracy. But this quest to overcome digital pirates is more complex below the surface, with multiple studies indicating streaming services can actually encourage pirating rather than replace it.
A Path for Revolution
As we witnessed Sanity and Brashs disappear from shopping centres in the early 2000s, the question of where consumers were sourcing their music emerged. People were getting tech savvy. Illegal downloading and YouTube to MP3 sites were infecting computers with viruses across the world as consumers realised they could freely download the hottest tracks with relative ease. What was apparently the answer to this escalating problem? The innovative streaming service, Spotify.
“Spotify transformed music listening forever when it launched in Sweden in 2008. Discover, manage and share over 50m tracks for free, or upgrade to Spotify Premium to access exclusive features including offline mode, improved sound quality, Spotify Connect and ad-free listening.”
The New Age Business Model: Streaming Services
So how did Spotify take over the world of music? Well, the answer is relatively simple: the company’s clever use and understanding of the affordances offered by new digital technologies. Instead of fighting the digital revolution, Spotify embraced it. It created a platform that gave users benefits of sharing with friends and instant consumption through a small monthly subscription fee. Meanwhile, artists get paid royalties. Fast-forward 11 years and Spotify has now become the world’s largest subscription-based music platform, while actually owning no music.
Spotify is a product platform using cross-subsidisation strategies to create ‘network effects’. Put simply, it uses a freemium strategy to get as many possible users on-board their platform, then begins profiting once customers are hooked on the service and upgrade to the paid monthly subscription. The more users onboard, the more powerful the platform becomes. It’s a clever model that has seen the world’s most innovative companies follow in their footsteps, such as Apple Music.
But Spotify isn’t the first to employ this genius model, we have witnessed it across the entire consumer market. Uber is the largest ride-share service, but it owns zero cars. AirBnB is one of the largest accommodation suppliers, but it owns no physical properties. It’s the new age model for business success, and it centres around monetising the affordances of digital platforms. It has usurped traditional methods by offering a myriad of new benefits for consumers.
Spotify is a great example of how digital technologies have evolved into transactional platforms. The multi-sided nature of Spotify contributes to its world-wide success by connecting musicians with audiences. Artists are provided with a platform for content distribution, while offering users hand-picked suggestions to suit their taste. Spotify is the epitome of a successful platform, so why isn’t it acting as an alternative to music piracy?
Combating Piracy
Most would think the affordances of streaming services would reduce the likelihood of music piracy:
“Consumers have access to a large collection of song tracks at essentially no cost; and in both cases, favorite songs can be shared within social networks. Thus, it is expected that the surge of music streaming could reduce the illegal access to music.”
While there is certainly room for more definitive research, current studies indicate that streaming services actually encourage the act of piracy, with claims that people who are comfortable with online technology (including the use of streaming services) are more likely to have the digital know-how to access pirating sites. Such studies concluded that using streaming services increased the likelihood of piracy by around 20% and that in many cases, streaming platforms give pirates the opportunity to sample music tracks, before going to illegally download later.
While it may be acting as a form of encouragement for digital piracy, academic literature suggests Spotify and like-minded streaming services are the best solution to the problem.
It’s history repeating itself. When radio became popular in the early 90s, there was concern that artists would lose income . But low and behold, music was not lost and artists still made their fair share. We now need to come to terms with the fact that streaming services and digitised platforms are the path to the future, as we figure out our next move in the battle against illegal streaming. While streaming platforms continue capitalise on their digital affordances, making music more accessible online and offering a platform for sharing tunes on a social level — I wonder why others have not left YouTube to MP3 sites in their past, as I did long ago. Offering personalised playlist selections, offline availability settings, song preview functions, ‘Hottest 100’ track-lists globally, plus extended artist and lyric information… it’s hard to miss how digital platforms have taken over the music industry. Spotify may not have provided the ultimate solution yet, but the digital affordances offered by such an innovative service might just be the most effective weapon in the continued fight against piracy.
