Music Economics

How Do Americans Find Music?

by Sophie Harris

People may spend the most money on live music like I said in my previous post, but how do people find the musicians they want to spend money on?

Through online stores like iTunes or streaming sites like Spotify.

But how did we get here?

And what is the economic controversy surrounding these places?

Napster

napster.jpg

Before the 1990s, people were mostly limited to radio if they wanted to discover new music.  In 1999, however, everything changed.

Brothers John and Shawn Fanning and investor Sean Parker had a very different concept of Napster than what it turned out to be.

Napster’s purpose was peer-to-peer (P2P) MP3 file sharing. So if you were to discover a new song that you’re obsessed with, you can send the file of the song to your best friend for free instead of waiting to hear it on the radio again or buying a cassette of it and sharing it.  Napster had thousands of files you could choose from for free across every genre.

It seemed like a blessing that all the songs were free, but the problem was exactly that. It may not seem like a problem on the surface, but the fact that 80 million users were sending each other music for free was an infringement on music copyright laws. Musicians across the globe were upset because Napster caused them to lose a significant amount of profits.

“We’re elated. Sharing is such a warm, cuddly, friendly word … this is not sharing, it’s duplicating.” -Metallica drummer Lars Ulrich

Napster was sued and shut down in 2001. But its legacy made a huge impact on the music industry, thanks to Steve Jobs.

iTunes

iTunes_logo_black

Jobs discovered through Napster that people liked downloading individual songs instead of waiting to hear them on the radio or buying an entire album where they didn’t like half the songs.

Two years after Napster shut down, Jobs opened iTunes as a way for people to still be able to download individual songs online, but while giving the artists the money they deserve. Customers could buy individual songs for 99 cents (nowadays for $1.29).

Streaming Sites

Spotify-new-logo-Monthly-Playlist-Indie-Underground-Aaron-McMillan-730x396

Streaming sites like Spotify are different from iTunes. With streaming sites, you pay for a subscription instead of individual songs. The artists are still payed for their music through the amount of times their songs are played.

Unfortunately, artists aren’t paid as much through Spotify as they are through iTunes, but Spotify is interactive. Based on your listening habits, Spotify can generate suggestions of artists you’ve probably never heard of but will most likely fall in love with. That’s why streaming sites are so popular among small artists – it helps them build up a fanbase, with whom they can communicate through sites like Twitter.

Controversy

Some bigger artists aren’t fans of Spotify because they don’t need to be discovered – like 2016’s highest paid musician, Taylor Swift. Taylor dropped jaws when she took her music off of Spotify and has publicly shamed the site. Taylor equates Spotify to illegal sites and piracy:

“In my opinion, the value of an album is, and will continue to be, based on the amount of heart and soul an artist has bled into a body of work, and the financial value that artists (and their labels) place on their music. Piracy, file sharing and streaming have shrunk the numbers of paid album sales drastically.” -Taylor Swift

Despite the uprising against Spotify that caused a lot of negative attention, Spotify has made a point to prove that its model is beneficial to those who are just getting started who actually need the money for each time their songs are played.

Sources:

ABC News

Andrew Flowers of FiveThirtyEight

Anthony Bruno, Upfront: Digital Entertainment – Internet: Profits From Profiles

Jack Linshi of TIME

Lizzie Plaugic of The Verge

Mark Harris of Lifewire

Spotify

Steve Knopper of Rolling Stone

Cover photo courtesy of Roger Ho for Rolling Stone

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3 thoughts on “How Do Americans Find Music?

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