Money is streaming in, but that doesn't mean we are in a golden era for the music industry

Two reports published this month have painted a largely optimistic picture of the global music industry.

Spotify’s Loud and Clear annual industry snapshot trumpeted how the music-streaming platform had paid out $60 billion in royalties since its foundation nearly two decades ago. Further, it noted that last year it disbursed $10 billion, or more than 15 per cent of that all-time total. The platform said this was the largest payout in music industry history and also noted a “sustained rise” in revenues flowing towards independent artists and labels, the traditional powerhouses of music outside the mainstream.

This month’s Global Music report from the International Federation of the Phonographic Industry, meanwhile, provided wider commercial details. It reported streaming revenues as reaching in excess of $20 billion for the first time worldwide and those paid subscriptions, such as Spotify and others, grew by nearly 10 per cent.

The IFPI, which represents the interests of the recording industry including major record labels, also captured particularly strong growth in this region. As The National noted, Mena revenues increased by more than 22 per cent last year, the fastest-growing region globally. An IFPI executive attributed that growth to streaming, which accounted for 99.5 per cent of total revenue in the region, and a series of strong releases by artists.

Total industry global revenue was valued at $29.6 billion, when other parts of the sector, such as performance rights and sales of physical formats including vinyl, are considered. Vinyl sales recorded an 18th year of growth, albeit from its near-extinction level nadir of the mid-Aughts to now. It is a remarkable comeback for that part of the ecosystem.

While vinyl is not about to be held up as a bellwether for the industry, its return to health mirrors what appears to be a broader resurgence at work in those global numbers. We might now be living in a golden age for music streaming.

That picture is more incredible when you consider that about a decade ago, the broad vibe was one of impending collapse and catastrophic value destruction across the entire industry. Music piracy and file-sharing had been a fact of life since the turn of the century and the effective cost of consumption was estimated to be close to zero.

There was a theory that streaming and monthly subscriptions might be the vehicle to turn the industry around, but there were also question marks about whether there was a mass market.

There were also significant missteps during this period in other parts of the industry fabric, such as U2 and Apple partnering up in September 2014 to gift its Songs of Innocence album to all iTunes users as a free download.

It was called the “largest album release of all time” when the deal was announced, providing songs to hundreds of millions of users, but was swiftly thought of as a failure to read the room. Many iTunes consumers disliked the presumptive intrusion into their feeds and were not afraid to show their anger about it. Industry executives pointed out that giving away music at the very point in the cycle where its value was under significant threat was an ill-thought-through piece of marketing.

U2 and Apple’s mistake now barely warrants an historical footnote, in part because we live in a passive playlist world. A decade on, the idea of something unexpected arriving in your feed is no longer alien nor aggressively policed by consumers. Even if a random song proves unwelcome, I’d guess that most users would press skip and machine-learning would quickly figure out to drop that experiment. We live in a “for you”, “discover” and “suggested for you” world of recommendations now, where songs are placed in your feed without malice. Maybe U2 were on to something with their album title, after all.

It is the passive nature of present-day listening that could, perhaps, represent the most significant glitch in the gilded age.

The IFPI highlighted the growing trend of AI in music as a significant threat to cultural creation. These are essentially machine-generated songs trained on unlicensed sound recordings and capable of quickly creating multiple tracks by ghost artists to supplement passive listening. A road that begins with suggested-for-you content naturally moves towards made-for-you music that blends seamlessly with your likes and lists.

Mood Machine, Liz Pelly’s engaging new book on Spotify’s rise, makes the point that if we let music be “clogged with auto-generated repetitions of what’s come before” then we will shrink the horizons of artists and make it harder in every sense for new human music to be made, which is a point of deep concern.

It might take several years of more data and reporting to know whether this is a genuine inflection point or another footnote in history, however, because the current discourse around AI tends to be fixated on threat rather than opportunity, which may result in an overstatement of liability.

What we do know is that streaming has reshaped the economics of music and of our attachment to artists as well as the real or imagined limits of fandom. What we don’t know is if this is a gilded age or the cusp of something else.