Digital Service Providers (DSPs) have long been the source for how we consume the music we love; however, the monetization of this utility has become rather complex. According to A Product Story podcast produced by Spotify discussing the origin of the app, its competitive advantage rooted itself in its accessibility. Spotify was created in Stockholm, Sweden as a result of the surge in musical piracy post Napster. Swedish creatives and entrepreneurs realized the hole in the music market and wanted to exploit. From the desktop to mobile devices, Spotify uses its open API software to allow users to stream music on a server without download. This completely changed the way users enjoyed listening to music and opened the door for others to follow suit.
Disclaimer: I do mention Spotify a great deal in comparison to its competitors, like Apple or Amazon Music, but this is because they are leading the market – 30.5%. However, the realities affecting Spotify are impacting the entire market.
Unfortunately, what was once Spotify’s critical market appeal, has become its ultimate crux. In 2022, Spotify reported a $246 million loss and has issued a need to “become[..] more efficient.” Ironic for a Scandinavian country. The cause – royalty rates increase and a push for better artist representation. The streaming system is in long need of a facelift as it is too cheap to stream hitting the three major players, artists, their labels, and the streaming services themselves. As a result, a new model is in the works, tiering off streaming by price.
To get into the meat and potatoes, this new model may be beneficial for the parties listed above but it is a little less than attractive to its consumers. And, just like Spotify’s origin, companies are beginning to see an opportunity in the market. All-purpose streaming site, Twitch, and music platform, Side Door Access, are answering the market’s prayers.
Twitch began as a streaming service for gaming viewership but has since transitioned through gamification as a way to consume all forms of media. Therefore, bypassing the archaic DSPs, and I say this satirically.
How it works: an artist just goes on there and streams. Simple but the nuanced features of Twitch are intriguing. An artist streams their music and allows viewers to enter the stream. Streamers treat it almost as a game/concert, donating bits as currency, cash, and emotes to these artists. And, because Twitch users are statistically long-term streamers who enjoy the “point granting” feature and discovery process of finding an artist to throw all their loyal bits to, this platform is rather efficient. Especially for lower to mid-tier artists who have long struggled within the streaming market. Additional features include, channel point redeeming status, raid train, and Soundtrack. Once a streamer reaches a specific level of streaming, they can begin inputting their opinions and preferences to artists, making the process all the more fun and inclusive. Raid train is essentially a digital music festival where Twitch artists will link another artist to the end of their set to create a continuous stream of music with various artists. Once Twitch users gain a liking to specific songs, they can compile them into the Soundtrack feature. Popular Twitch artist Danielle Allard is a testament to this innovation’s legitimacy as she is making a serviceable salary, using this platform as her main source of income, now only working in her previous line of work part-time.
Moving on.
Side Door Access is a platform that connects artists to their fans that may want to host a live show. Another solution-driven response to the under-representation of lower to mid-tiered artists; their mission being to serve the needs of an artist and achieve decentralization. “To date, Side Door has facilitated 2164 shows and 764 artists have earned $1,204,018. Using “Show Calls” artists and hosts are connected as the artists express availability and a pitch for booking or a host can create an in-need post. This technological disruption modernizes and returns a sense of authenticity that was seeming to be lost within the streaming wake. As a result, artists are gravitating to this method to reach exposure and growth, rather than use expensive algorithmic tools on DSPs.” How does it make money: Side Door takes 10% of net settlement revenue after taxes and P.R.O. remittance (if/when applicable), plus a $2 processing fee for the ticket purchaser.
Streaming platforms still remain top dog as you can see by Danielle Allard only receiving 946 listeners per month on Spotify. But, these platforms are fractured and unwanted realities are present, which spawns need for innovation to suit all parties involved – artists, labels, fans, and the method of consumption. Digital innovations like Twitch music and Side Door are not the only new entrants to solving these issues but are successful ones, prompting a true threat to the old model entirely.
Citations
http://support.sidedooraccess.com/en/articles/6446703-what-is-a-show-call
If you don’t have over 1,000 monthly Spotify listeners, are you even a legit artist anymore? I’ve never heard of Danielle Allard before, but I am distant from the Twitch world of things. Her most recent Twitch video only got 127 views. I wouldn’t really consider that music at that length, to be honest.
Hey Maddy, I’ve heard a little bit about the issues with Spotify and other streaming platforms. I had a prof. talk about how they won’t be able to keep this up, for both the business itself and the artists/creators it represents. I wonder what kind of exact change will need to be made, along with where we will end up because of it. I’ve definitely taken advantage of the ease of access of all these platforms, so I hope the change won’t be too drastic for us consumers.
I am going to be sad if the current way of streaming changes. I understand the complexities between the artist, streaming services, and the royalties required, but I hope that this fight doesn’t turn back and hurt the consumers who have become all too familiar with the current pricing tiers.
I was actually surprised to learn that Spotify and other music streaming services was the first time people started spending more on music than since about the 1980s. So, the models still need some tinkering, but it’s probably better than Napster where the returns were 0.
As long as Spotify doesn’t end the grandfather clause I have where I pay $10 for Spotify and Hulu, they’ll be my go-to for music streaming. $20 a month for Spotify for some better audio is crazy to me. However, it is what Spotify customers are asking for and I’m sure people will pay $20 for it (especially after seeing some people pay $8 for Twitter). Personally, I have been on and experimented with the music side of Twitch. I love going into streams and just asking them to play the Free Bird solo. I mostly get denied though because it is a difficult solo. I do not believe Twitch is a great place to go to for exposure as an artist. It’s already difficult to become huge on the platform as a content creator, so to do it as an aspiring artist I imagine it is much more difficult. I’d argue TikTok is the best place to start off if you want exposure and to grow as an artist. Greatest example is Lil Nas X. He was always uploading his music to soundcloud hoping to blow up but to no avail. That was until he started posting edits to Old Town Road on TikTok and ultimately took off as an artist.