The shifting economics of streaming
2016 saw streaming’s paid-for subscription numbers hit the 100m mark, a result of what Mark Mulligan of MiDIA Consulting called “a steady but clear evolution” in the music industry landscape that would continue to modulate in 2017 and beyond.
“Revenues are growing, artist and songwriter discontent is on the wane and label business models are changing,” Mulligan wrote. “But 100 million subscribers does not by any means signify that the model is now fixed and set.”
Chaos and innovation
John Paul Titlow at Fast Company predicts “chaos and innovation” in the streaming ecosystem throughout 2017 and beyond as “streaming services, labels, and artists will all have to renegotiate their relationships with one another.” These renegotiations will be conducted against a shifting backdrop – a continuing music subscription boom, a reckoning over revenues that no longer favour services and labels, and a climate that seems to finally be empowering artists. (Thank you, Frank Ocean.)
This climate could see more artists bypassing labels and working directly with streaming services to provide exclusive content, a direct by-product of putting more resources into artist relations. “Catering to artists has increasingly become a priority for streaming services,” wrote Titlow. The direct contact could see a slice of revenue previously slated for record labels going to the artist instead.
An end to safe harbor?
However, depending on this combination of organic growth and a strategy shift from streaming services is hedging on a precarious bet. The safe harbor legislation that has previously favoured streaming platforms is about to change, which many hope will underpin a system whereby artists are more easily and readily compensated for use of their content.
Already in Europe, the proposed copyright directive dictates that service providers “must take proper measures to allow rights’ holders to manage the use and access of their protected works,” wrote Michael Kostaras of Berklee’s Music Business Journal. In the U.S., the consultation period for DMCA’s safe harbor provisions “reportedly received over 92,000 written submissions of public commentary on the matter.” Both pieces of legislation have vague timelines – the EU will “discuss” the proposals early this year, while the DMCA timeline is unclear.
So, what does 2017 hold for the economics of streaming? What impact will changes to DMCA have on the use of copyrighted works on streaming platforms? What changes to licensing and legislation will have the most impact, especially on artists who still want a fairer deal? Do the 100 million paid-for subscriptions signal the end of free streaming?
“100 million subscribers might not mean the world changes in an instant,” wrote Mark Mulligan, “but it does reflect a changing world.”
Music 4.5 The Economics of Streaming is a half-day seminar taking place in New York on 23 March 2017, and will examine the business of streaming, the latest developments around music licensing, the implications of digital service providers’ different business models, legislative reform, as well as the impact of the ad-market dynamics on per-stream rates for artists, record labels, publishers, and collective rights management organizations.
Book your tickets now.