Tidal Wave: On-Demand Music Streaming is Displacing Physical Album Sales By: Devan Byrd

Tidal Wave:  On-Demand Music Streaming is Displacing Physical Album Sales

By: Devan Byrd

The technology of the day has everything to do with the tidal wave of change that is revolutionizing the music industry through the way music listeners access artists’ music.  On-demand streaming services like Spotify, Pandora, Tidal, and Apple Music are fighting for the ears—and money—of music lovers.[1]  Customers pay a subscription and in exchange they have unlimited access to a vast chunk of all the music ever recorded.  Accordingly, the music industry has responded to music listeners’ trend toward streaming services by altering artists’ delivery. Giving rise to artist exclusives through on-demand streaming services as a path to market share.[2]  On demand streaming services do not pay musicians royalties for the streaming of their music.  A seemingly essential part of promoting fairness and reestablishing the value of music and what is noticeably absent in the current streaming environment, according to conventional wisdom, is that artist do not make enough money when their songs are streamed.[3]  Like enthusiasts of movies and television series who may pay for a combination of subscriptions to Netflix, Amazon Prime, and Hulu, all of these exclusives will present a similar dilemma to music fans who want to listen to a variety of artists, many of which stream exclusively on competing subscription-based streaming services.  In fact, in addition to the added cost to music listeners, it takes little imagination to forecast the potential impact that artist exclusives through subscription-based streaming services may have on music production.  One would simply need to look to the subscription-based movie and television series services, who are now producing their own exclusive content.

Once upon a time, an artist actually had to sell albums to earn awards and recognition from the Recording Industry Association of America (RIAA).[4]  Today, there are over 7.7 million paying subscribers in the American streaming marketplace.[5]  As if that was not enough evidence of the transformation that is occurring in the music industry, take Tidal for example, the only artist owned streaming service, recently sparking music fans interest in the service with exclusively of two extremely popular albums:  Anti and The Life of Pablo.[6]  Although, popular among the artists’ fans the place of the two albums in the music industry’s official historical record present two stark and contrasting side-effects of on-demand streaming exclusives.

First take Rihanna’s latest album, Anti, which was initially exclusively available through Tidal and reached platinum status less than two days after it was released.  However, the way Anti achieved platinum status was not through Tidal.  Instead, Anti reached platinum status through the one million free downloads that were part of a reportedly $25 million deal the artist signed last year with Samsung.[7]  And Tidal has sold another half million downloads of Rihanna’s album.[8]  In addition to reaching platinum status Rihanna’s song “Work,” featuring Drake, which appears on her latest album, Anti, was featured at No. 1 on the Billboard Hot 100.[9]

Like Rihanna, Kanye West’s album The Life of Pablo, which was initially released on Tidal, is currently at the epicenter of cultural conversations.[10]  And subscriptions to the on-demand streaming service have reportedly surged since the album’s release.[11]  But unlike Rihanna’s Anti, The Life of Pablo is notably absent from the music industry’s official historical record.[12]  The album is not charting because Tidal does not report its streams to Nielsen Music, the company that determines the Billboard charts, and it has not been certified gold or platinum by the RIAA.

In an effort to resolve this charting dilemma Nielsen Music recently decided to expand its calculations to include additional platforms actually used by fans to listen to music.  Thus, these days, Nielsen Music tracks sales in all formats—downloads, CDs, and vinyl—as well as streams from on-demand streaming services, video views on platforms like YouTube, and radio streams both online and on terrestrial radio.[13] And employs a proprietary algorithm that incorporates these various avenues available to access music into Nielsen Music’s charting formula.[14]  Under this improved algorithm, theoretically, if an artist’s single were streamed 1.5 billion times on YouTube, the whole album could be certified platinum.[15]

However, when on-demand streaming services like Apple Music and Spotify do not report the replay data to Nielsen Music it is unable to track the streams.  Take for example Drake’s inescapable “Hotline Bling” video, which Apple Music exclusively featured—a strategy that backfired, because Apple does not report its video streams to Nielsen Music, so there was no chance of the song getting Drake to his goal of being No.1.[16]  This is just another example of the ramifications of artist exclusives, and serves as a cautionary tale for all artists:  The streaming platform you choose through exclusive content just might decide your chart fate.[17]

In addition to exclusive, on-demand streaming services provide artists with a new avenue to deliver recorded music directly to fans.  For example, just last week Kendrick Lamar unexpectedly released untiled unmastered. on Spotify.[18]  An eight track project that is notable for its brevity, in-progress aesthetic, and suggestive of the tidal wave that is altering the environment of the music industry.[19]  By allowing artists to provide their fans with direct access to artists’ exercise of musical genius.  The following morning, untitled unmastered. was available on numerous music streaming platforms, including Apple Music and Tidal.[20]  And Lamar’s fans will find that found that a lot of this material was familiar, because the artist already performed certain tracks on shows like The Colbert Report and The Tonight Show with Jimmy Fallon.[21]

Almost a year ago, a conglomerate of ultra-famous musicians—Jay Z, Beyoncé, Rihanna, Kanye West, Arcade Fire, Coldplay, Nicki Minaj, Alicia Keys, Jason Aldean, Madonna, Jack White, Calvin Harris, Daft Punk, Deadmau5, J.Cole, and Usher—joined forces and purchased the music-streaming service Tidal.[22]  The idea: to raise awareness and support for the music industry by re-establishing the value of music.  These artists believe that technology companies who began on-demand streaming services have become more important than musicians when it comes to song distribution.  Thus, this on-demand streaming service placing musicians in charge—at least nominally of the company—which will have a great but perhaps intangible effect that makes the service better than other streaming services.  If artists are actually able to realize higher payouts from Tidal, the company may start a revolution.  However, the revolution has not yet occurred because Tidal lags way behind its competitors with just over one million subscribers.[23]  By contrast, Tidal’s competitors Spotify has more than 75 million users, including 20 million paying subscribers, and Apple Music has about 11 million.[24]

Additionally, the artist-partners forcing this potential revolt do not exactly look like they have been handed a bad deal by the current music landscape.  In fact, these artists’ work and public presentation have often emphasized just how much cash they make every day.  Thus, it seems that music-industry justice is needed, it is needed for new and niche artists.  It is possible that Tidal will be able to provide this justice, but it is equally as possible that they will find that the justice that come with this new platform is perhaps intangible.

The music industry is in a stage of growth and adaptation.  It is unclear how the artists will reclaim control over fair compensation for music listener’s accessing artists’.   However, one thing is for sure, a tidal wave of technology has permanently altered the fabric of the music industry.  And the wave’s impact is being felt by both artists and music listeners.

[1] Sam Sanders, Jay Z’s Music Service, Tidal, Arrives With A Splash, And Questions Follow NPR (Apr. 1, 2015) http://www.npr.org/sections/therecord/2015/03/31/396634244/jay-zs-music-service-tidal-arrives-with-a-splash-and-questions-follow.

[2] Id. See also Spencer Kornhaber, Tidal:  Long Live mIllionaire Musicians The Atlantic (Mar. 30, 2015) http://www.theatlantic.com/entertainment/archive/2015/03/tidal-viva-la-millionaire-musicians/389120/.

[3] Anastasia Tsioulcas, Is Tidal Changing How Fans Talk About Music? NPR (Mar. 1, 2016)  http://www.npr.org/sections/therecord/2016/02/29/468558863/is-tidal-changing-how-fans-talk-about-music.

[4] Anastasia Tsioulcas, Forget Selling Albums—Artists Can Now Go Platinum Via Streaming NPR (Feb. 2, 2016) http://www.npr.org/sections/therecord/2016/02/01/465178626/forget-selling-albums-artists-can-now-go-platinum-via-streaming (RIAA determines whether an album goes platinum or gold.).

[5] Tony Gervino & Andrew Hampp, Jay Z on Competing With Jimmy lovine: ‘I don’t Have To Lose … For You Guys To Win’ Billboard (Mar. 30, 2015) http://www.billboard.com/articles/business/6516945/jay-z-jimmy-iovine-streaming-tidal.

[6] Tsioulcas, supra note 3.

[7] Spencer Kornhaber, Rihanna’s Anti Capitalism The Atlantic (Jan. 29, 2016) http://www.theatlantic.com/entertainment/archive/2016/01/anti-capitalism/435411/.

[8] Tsioulcas, supra note 4.

[9] Tsioulcas, supra note 5.

[10] Id.

[11] Id. See also Charlotte Hassan, Kanye May Have Single-Handedly Doubled Tidal’s Subscribers … Digital Music News (Feb. 24, 2016) http://www.digitalmusicnews.com/2016/02/24/tidal-subscriber-numbers-surge-after-exclusively-releasing-kanyes-album/ (Although the official number of Tidal subscribers have not been released yet, the number of subscribers is rumored to have increased from around one million to two and a half million.).

[12] Tsioulcas supra note 5.

[13] Tsioulcas supra note 3.

[14] Id. (Under Nielsen Music’s modified algorithm, 1,000 streams are now the official equivalent of ten single track sales or one album sale.  Gold status are awarded after the equivalent of 500,000 sales, and platinum on 1 million sales.).

[15] Id.

[16] Id. (“Take for example Drake’s inescapable “Hotline Bling.”  Last fall, when the video for “Hotline Bling” was released, Drake was saying how much he was thirsting for a No. 1 on the Billboard Hot 100.  He wrote about his desire very publicly.”). See also Anastasia Tsioulcas, Drakes’s ‘Hotiline Bling’ Aims At No. 1, And Misses. Why? NPR (Oct. 27, 2015) http://www.npr.org/sections/therecord/2015/10/27/452248402/drakes-hotline-bling-aims-at-no-1-and-misses-why.

[17] Tscioulcas, surpa note 15.

[18] Anastasia Tsioulcas, There’s A New Kendrick Lamar Project Out, But It May Sound Familiar Already NPR (Mar. 5, 2016) http://www.npr.org/sections/therecord/2016/03/04/469172187/theres-a-new-kendrick-lamar-project-out-but-it-may-sound-familiar-already.

[19] Id. (unsurprisingly each track is titled:  untitled, followed by a date)

[20] Id.

[21] Id. (including the live performance done with the show’s bands)

[22] Tscioulcas, supra note 4 (Artist-partners signed a “declaration” of co-ownership for a reported three percent equity in the company.). See also Gervino & Hampp, supra note 5 (With the remaining stakes reportedly owned by Jay Z, another investor, and the record labels.).

[23] Tsioulcas, supra note 4.

[24] Id.

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