With the 65th Grammy Awards in Los Angeles on Sunday, Feb. 5, here’s a look at how we get our music these days:.
U.S. music formats
Today, 68% of adults use a music streaming service of some kind. According to Global Web Index, Gen Z leads the way with the highest average streaming times, accessing their favorite tracks across multiple platforms.
Streaming platforms are web-based services that allow users to listen to high-definition music without having to download and store large files.
In 2021 paid subscription format accounted for 57% of total revenues with $8.6 billion of a $15 billion total.
In the 1970s, vinyl sales were 66% of all music format revenues. But by the 1990s, sales dipped to less than 10 million units and 0.1% of market share.In 2021, an estimated 17 million units were sold and vinyl was 6.9% of total revenue.
Headwaters of the stream
The basics of music streaming were laid in 2001 by peer-to-peer file sharing system Napster. Apple’s iTunes followed a couple of years later. Spotify, in an attempt to combat music piracy, was founded in 2006 by Swedish duo Daniel Ek and Martin Lorentzon.
Who are the streamers?
Spotify’s annual Culture Next Trends Report in 2022 said 18-24 year-olds played more than 578 billion minutes of music on its app. “16 billion more minutes than Millennials,” the report said. Other statistics on Gen Z: 68% of them like listening to and watching media from early decades; 67% use podcasts and music to cope with stress and anxiety and 59% believe “life was better before social media,” the report said.YouTube has its own Culture & Trends report on Gen Z, both as YouTubers and viewers. Among its findings: 85% of Gen Z have posted video content online and 65% are more interested in content “that’s personally relevant to them” rather than simply “the content that lots of other people talk about,” the report said.
Types of streaming services
Paid subscriptions: Advertising drives free users toward monthly subscription packages, which are typically between $10 and $15 a month.
Advertising: Advertisers pay for exposure, with ads played every 15 minutes for 30 seconds. They also can include sponsored playlists and homepage takeovers.
With 350 million active users, and revenues of almost $6 billion in 2018, Spotify is the global leader in music streaming.The company’s 150 million paid subscriptions account for 91% of the company’s revenue. The other 9% comes from advertising. Spotify has the most paid users but YouTube has 2.5 billion users.
Many industry critics argue that music is no longer about creating something for pure enjoyment, but rather about using a formulaic approach in the hands of tech giants to make more money.
Showing the money
According to Trichordist.com, a site that is against artist exploitation, Spotify is paying about $3,300–$3,500 per million plays. The site also says YouTube’s Content ID shows a whopping 51% of all streams generate only 6.4% of revenue. This is the value gap. More than 50% of all music streams generate less than 7% of revenue.
Here’s what artists receive per stream, according to Trichordist.com’s 2019 data, in order of market share by revenue:
The Weeknd’s song, with 3.3 billion streams, has been out 1,169 days. On average, to be the most streamed song on Spotify, it has been streamed 2.82 million times per day or 117,621 streams an hour.
Spotify keeps a playlist of nearly all songs with more than 1 billion streams. As of this month, at least 357 songs have reached the milestone.
Sources: Recording Industry Association of America, Spotify, YouTube, Musically.com, visualcapitalist.com
Source: Orange County Register
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