The Future Of Streaming
For the first time in the 21st century, the music industry is growing. After a significant fall in value for 15 years, the RIAA announced that the music revenue in the United States has started to grow and is now valued at just over 8 Billion dollars. While still a far cry from the 21.5 Billion the industry made in the late 90’s, the growth signifies the end of a dark era in music. However, the popularization of streaming services since the early 2010’s managed to create growth in an industry that was once in its deathbed. Responsible for half of the revenue in music today, streaming platforms like Spotify, Apple Music and Pandora were trailblazers when it came to innovation in music. After almost a decade of steady growth for these platforms, one wonders when the next big change will come and what it will look like. Across the globe, entrepreneurs have already begun to develop new platforms that aim to revolutionize the industry once more.
One of the biggest issues that arose with streaming platforms was the unfair division of profits. Spotify for example, uses a system that divides the total of its distributable profit proportionally to the popularity of the artist, independent of what the paying subscriber listened to. While seemingly a fair system, many niche artists claim this unjustly favours the mainstream artists of today. As a response to this, German start-up Resonate was created. Resonate is founded on a much more user-centric system, which means that artists get paid directly from the listener’s individual premium, rather than the pooling system Spotify uses. In other words, Resonate lets users purchase the song immediately or pay a much smaller fee each time the song is streamed and after the 9th stream, the song becomes theirs. Resonate goes one step further and works as a co-operative, meaning users have a say in the decisions the company makes. Put together, these two principals generate a platform that not only is fair in the way it pays artists, but also creates more than just playlists with its users’ input.
In the United States, the public spent an approximate 45 Billion dollars on music in 2018, ranging from albums to concert tickets and artist merchandise. Research showed that out of that public, about 14% were responsible for almost 40% of the total spending in the country. These people, the so-called music aficionados, spend more per month than anyone else in country but ironically, streaming services like Spotify have not been able to capitalize on them. The most popular platforms fail to appeal to this group because of their lack of genre- specific content, something which new start-ups have begun to address.
Tyler Lenane and his team set out to create a platform that focuses on the genre that has the most loyal fans according to Billboard, metal and for them, Gimme Radio is the answer. Though the start-up believes they are more than a streaming platform, in reality, it works based on similar principles which have been developed to fit better with metal fans. The platform focuses on engagement with users, something that more generic services don’t do. In order to cater with the interest of fans, Gimme Radio provides 24/7 radio as well as online shows from metal’s biggest stars. In a way, Lenane’s start-up gives insight into a possible future for streaming, in which platforms prefer to target niche markets, rather than trying to reach as many people as possible.
Start-ups like Resonate and Gimme Radio have only given us a small window into the future of streaming services. Consumer tendencies are hard to identify, specially in an industry as globalized as music. Because of that, music entrepreneurs face the challenge to not only innovate, but to also put user-input in the centre of their strategy. Ultimately, the fast-paced dynamic between supply and demand in the music industry will be responsible for the success or failure of the existing platforms and the ones that are yet to be launched.