The Future of Music Retail

​Today’s music consumption has changed significantly in just a few years. Streaming is now the dominant method of music consumption. The Recording Industry Association of America (RIAA) reported streaming in 2015 made up 34% of U.S. revenue. In 2019 that number climbed to an astonishing 80% of revenue, a 133% increase in just four years (Friedlander, 2019). What is more astounding is that digital downloading fell from 34% in 2015, to 9% in 2019, and physical retail dropped from 29% in 2015, to 9% in 2019. This extreme range is just another example of the fast pace of technology and trends. It can happen within only a few years.

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Why has streaming grown at such a fast pace? Streaming is a model that works best for consumers. There are a few types of streaming services, but the most popular is the subscription streaming model. For a nominal fee, a consumer has a vast catalog at their fingertips. Today’s consumers care less about owning music. People still enjoy music, arguably more than ever before, but with each year that goes by, more and more choices are available. Music genres spawn other music genres, and suddenly our musical tastes are overloaded with options. How best to consume all this music at fingertips than with mobile devices such as cell phones, tablets, and laptops. As cell and Wi-Fi networks stream more data at blazing speed than just a few years ago, why would consumers need to keep our music on these devices? Why not stay hard drive space free for more meaningful data like selfie photos and videos.

Unfortunately, subscription streaming is a necessary evil for artists. To get any exposure, you need to be where the listeners are, and that is streaming on platforms like Spotify. This type of model does not work well for the content creators. Payments are much lower, it is not as transparent, and it often gives power to networks and device manufacturers. What works better for content creators in this digital age is the YouTube streaming advertising model. This model offers a better slice of the revenue generated by advertising. There are three different revenue methods, including the YouTube Partner, which grants the artist 55% of the cut, a copyright owner method that monetizes third-party videos, and the YouTube Red income share where income is divided among the creators.

However, the subscription streaming models seem to be the clear winner. Platforms like Spotify and Apple Music dominate the field. This method of music consumption will be the primary way consumers will interact with music. At least for a few more years until another model takes its place. Technology and trends are fast-paced and continually evolving. It is difficult to predict the future, but consumers will not give up their mobile devices, and with 5G cell network expanding in regions, it will be even easier to stream content.

Future predictions are challenging, but there is a good possibility that subscription streaming will continue, but a new platform will emerge. The subscriber share model is one that proportionately divides subscription fee between artists the subscriber listens to most after taking a cut for themselves. If consumers could see just where their subscription dollars were going, they might be more inclined to buy into that type of model to support their favorite artists.