ICY MAGAZINE

How streaming is changing everything we know about music

Beyoncé made history with her album Lemonade, which was streamed a record 115 million times in its first week. Just one week later, Drake broke that record when his album Views was streamed 245 million times.

The age of streaming music has arrived in full force, displacing both physical (e.g., CDs) and download sales (e.g., iTunes). As streaming has taken hold, U.S. album sales, both physical and digital, have plummeted from a peak of 785 million in 2000 to just 241 million in 2015. The change comes from people switching from purchasing full albums, either online or offline, to listening to individual songs through a streaming platform such as Spotify, Tidal, Napster or Pandora.

This shift has the potential to reshape both the music people listen to and the music that artists create. For example, will the concept of albums survive in the age of streaming, or will artists simply release their best singles? As music fans, we wanted to get a sense of the evolving music landscape. Looking at the academic research on the topic and our own data set of 2,400 top-selling albums from 1992 to 2015, two patterns about music quality emerged.

Digitization has brought new strategic challenges, and falling revenue, to the industry. Yet it has also brought new opportunities to a wider variety of artists. By reducing search costs, the digitization of music makes it easier to discover new artists and albums. Despite early concerns that falling revenue (and online piracy) would reduce the availability of music, research by economists Luis Aguiar and Joel Waldfogel shows that the number of music products created between 2000 and 2008 tripled. Skeptics may worry that quantity is coming at the expense of quality. While music is still an industry associated with superstars, a greater variety of artists are producing best-sellers over time. Looking at the data, the sales going to the top 100 albums has dropped by about 20% over the past 20 years — nontrivial gains for other artists.

With subscription pricing and the ability to easily skip among artists (as opposed to per-album or per-song charges, which were the norm), streaming pushes users to listen to explore new artists. This has the potential to reduce the concentration of the very top artists and albums, while also helping music lovers find what economists refer to as the “long tail” of the industry.

The quantity and quality of music are not the only things that are changing. In 1992 cassette tapes were the predominant form of consumption in the U.S. and albums averaged about 12.5 tracks. The rise of compact discs brought about better functionality to skip around to different tracks and to know what song you were listening to. As compact discs became the norm, the number of songs per album increased, averaging 15.8 at its peak in 2003. Around this time, online music started becoming popular and album length began to fall — today it’s about 14.17 tracks. It has been holding steady for about five years but may still be in flux, as artists are figuring out how to adjust to the streaming age.

While many factors affect album length, this raises the potential of adjusting creative content in response to new modes of distribution. When albums are less popular relative to, say, song downloads, albums might become shorter. “Filler” tracks, less popular songs that are not released as singles, serve a diminished purpose. For example, all 12 tracks on Lemonade debuted on the Billboard Hot 100. For the industry, these changes raise strategic questions, not only about contracts and pricing but also about which types of artists will thrive and what content artists should be producing. Artists like Drake and Beyoncé show that the concept of an album is still relevant, in part because of innovations such as the visual album.

The Chainsmokers show an alternative path to the album. First known for their 2014 hit “#Selfie,” the band has foregone full-length albums and instead released 10 separate singles and official remixes, which have sold 2.6 million downloads and been streamed over 600 million times on Spotify alone. For artists, it is a time of reflection and increased strategic options. And for music lovers, it is time to sit back and listen.

This article was originally published on Havard Business Review.

Categories:   Reviews

Comments