Can Music Streaming Bear Fruit?

For the music industry, Spotify marked something of a turning point in getting consumers to pay for music online, though the merits of its business model are still hotly contested. But as the recent release of Tidal demonstrates, there are still plenty of ‘newcomers’ trying to mix it up…

Turning Tidal

For any commercial venture, it’s worth bearing in mind that convenience usually trumps quality – so you can only bet on winning with a quality card if you already have an offering that is at least roughly as convenient as the competition.

The fact that vinyl sales have increased significantly over the past few years could be interpreted as an audiophile revolution, fuelled by a growing undercurrent of listeners who are dissatisfied with the audio quality of digital downloads. However, it’s more likely that other factors (such as rampant hipsterism, collectibility, tangible large format artwork) are driving the renaissance of the ‘black crack’. Nonetheless, there is obviously a feeling amongst musicians that the high-fidelity marketplace is a significant one – Neil Young’s Pono player is just one example of this belief.

With the release of Tidal, Jay Z seems to think that higher quality audio is a key selling point that will lure punters away from Spotify and other incumbent services (along with a general ethos of providing more equitable distribution of earnings to the artists involved). This seems unlikely in itself; while people may like the idea of higher quality streams, in reality relatively few people are able to distinguish a 320k mp3 from a FLAC file in an everyday listening environment.

Slicing The Pie

So it seems that marketing will be essential to Tidal’s success, if it is to convince users that the platform is worth 20 quid per month (double a Spotify subscription). But what is it up against?

YouTube is a huge factor in the online music debate; though Google is apparently investigating ways to add a paid component, it really doesn’t need to as it can monetise the user traffic through advertising (which benefits Google directly, but is not a particularly compelling proposition for artists). Google also has its Play offering, which pretty much provides the same sort of service as Spotify (though Play rates for artists are more in line with those of Tidal, with Spotify requiring much higher interaction levels to achieve the same artist payout).

Recent reports suggest that Apple is looking to prioritise music streaming over downloads, which would add extra spice to the contest; Apple and Beats have a huge amount of potential leverage here. As revealed in a developer preview of iOS 8.4, the imminent operating system has given iTunes Radio centre stage in a new music app.

But as the industry vies for consumer attention, how are the artists themselves faring? As this infographic from Information is Beautiful outlines, you do need to have quite a large fanbase in order to earn minimum wage from any of the current digital platforms…