The Business of Music in the Digital Age: The Good, The Bad, and The Ugly

Sep 29, 2024

4 min read

The music industry has experienced a dramatic shift over the last two decades, driven by digitization and media convergence. Streaming platforms like Spotify, Apple Music, and YouTube have revolutionized the way music is distributed, consumed, and monetized. With music more accessible than ever, traditional business models are facing new challenges. In this post, I’ll explore how these changes impact artists, listeners, and the broader culture. Drawing from my own playlist, I'll reflect on how some of my favorite tracks are being shaped by this new era in the music business.

Music has always been my escape, a way to connect with different emotions and moments in life. There are certain songs I just keep coming back to, songs that feel timeless no matter how many times I hit play. But as I’ve spent more time thinking about how I enjoy music, I’ve also started to wonder how the artists behind these tracks are impacted by the way we listen now, especially in the streaming age. So, I thought I’d explore this by looking at three songs that have been on heavy rotation for me:

The Songs:

Tennessee Whiskey – Chris StapletonRecord Label: Mercury NashvilleStapleton is under Universal Music Group (UMG), one of the biggest record labels in the world. His soulful, bluesy voice gives "Tennessee Whiskey" a unique feel that resonates every time I listen.
El Rey – Vicente Fernández
Record Label: Sony Music LatinThis iconic ranchera anthem, sung by one of the greatest voices in Latin music, is produced under Sony Music, another giant in the industry. Fernández’s voice just takes me to another world every time I hear "El Rey."
Sacrifice – Bebe Rexha

Record Label: Warner Records
Bebe Rexha’s energetic pop vibe is hard to ignore, and "Sacrifice" always gets me pumped. She’s signed to Warner Records, completing what they call the "Big Three" labels in the music industry.

Each of these songs is different in genre, feel, and mood, but they all have something in common: they’re all produced by some of the biggest music companies in the world. I used to think that being signed to a massive label meant artists were raking in the money, but with streaming platforms dominating how we listen to music, it turns out things aren’t quite that simple.

Breakdown of Costs and Royalties:

Now that we’ve identified the record labels and their owners, let’s dive into how the money flows when you stream these songs.

Cost to Stream: If you’re using a paid service like Spotify Premium, you’re paying around $9.99 per month for unlimited access to millions of songs, including these three.
Royalties for the Artist:Streaming services like Spotify pay between $0.003 and $0.005 per stream to artists. Let’s break this down for each of the songs:
- Chris Stapleton (Tennessee Whiskey): For 1 million streams, Stapleton would earn between $3,000 and $5,000.
- Vicente Fernández (El Rey): The same rate applies—$3,000 to $5,000 per million streams.
- Bebe Rexha (Sacrifice): Bebe Rexha would also earn between $3,000 and $5,000 for 1 million streams.
Revenue Distribution: Unfortunately, artists don’t get to keep the full amount. Streaming platforms like Spotify keep about 30% of the revenue. The remaining 70% is split between record labels, publishers, and the artist. Signed artists, like the ones above, may only receive 10-15% of that 70%. Let’s see how this works:
- Chris Stapleton: Signed to Mercury Nashville, Stapleton likely receives just 10-15% of the revenue after the label’s cut.
- Vicente Fernández: Sony Music Latin takes its share, leaving Fernández with a similar percentage.
- Bebe Rexha: Warner Records retains a large portion, giving Rexha a small share of the earnings.

The Good, The Bad, and The Ugly:

The Good:Streaming services have democratized access to music. Listeners can instantly access millions of songs from a wide range of genres and cultures. For independent artists, this has provided a platform to reach global audiences without relying on traditional gatekeepers. Artists like Chris Stapleton, Vicente Fernández, and Bebe Rexha can distribute their music globally with minimal barriers, reaching millions of new listeners.
The Bad:While music is more accessible, the payout per stream is incredibly low. Artists make fractions of a penny for each stream, and for many musicians, streaming revenue isn’t enough to sustain their careers. They must rely on touring, merchandise, and other revenue streams to make ends meet. The uneven distribution of earnings, where major labels take the majority of revenue, leaves many artists struggling.
The Ugly:One of the biggest criticisms of the streaming era is the issue of playlist payola. Streaming platforms curate playlists that often determine which songs become popular. In some cases, labels or artists pay to be featured on these playlists, skewing what listeners are exposed to. This can marginalize independent artists who don’t have the same financial backing to promote their music.

Conclusion

Digital media has reshaped the music industry, offering both opportunities and challenges. Here are three key ways it has made an impact:

1. Wider Access to Music Distribution

Platforms like Spotify and YouTube have opened the doors for independent artists to share their music globally without needing a major label. However, this ease of access has led to oversaturation, making it difficult for new talent to gain visibility in a crowded marketplace.

2. Changes in How Artists Earn

Streaming services have overtaken physical album sales as the main way people listen to music. While this shift has broadened accessibility, it has also reduced the amount artists earn per stream. As a result, many musicians now depend more on income from live performances, merchandise, and other ventures.

3. Closer Fan Connections

Social media has given artists direct ways to connect with their fans, strengthening loyalty and support. Platforms like Patreon also allow artists to earn directly from their audience, though these income streams remain supplemental to traditional revenue from labels and streaming.

Digital media has made music more accessible and given artists new ways to engage with fans, but it has also disrupted traditional revenue streams. As the industry continues to evolve, fair compensation remains a key issue for musicians.