We are very much living in a post-Napster music world. But rather than reflect upon how Sean Parker sent the music business into a downward spiral, let us focus on how modern companies, like Apple and Spotify for instance, are attempting to restore life to an industry once pronounced dead.
Piracy is by no means a small issue — a study conducted by Frontier Economics found that the global impact of pirated products in 2008 totaled approximately $650 billion each year, and estimates predict that in 2015 the figure will be closer to $1.77 trillion. But changing consumers’ behavior with regards to piracy is no easy task. Simply put, piracy – the illegal practice of freely downloading copyrighted work – is too convenient, inexpensive and risk-free to be unpopular. Surely, there are anomalies like Ross Ulbricht – the founder of Silk Road – that engage in illegal Internet activity and are arrested. However, the average pirate of movies, TV and music can find comfort in knowing that the resources required for their apprehension would not be commensurate to the value of their bounty. Artists recognize this issue, but if they were to engage in a civil lawsuit, again, the time and money spent on locating the illegal downloaders would tower over the potential monetary outcome. This is precisely the reason that piracy has spiked so dramatically over the years, while the music industry has plummeted; people are not afraid to download content illegally — after all, why pay when you can get it for free? It is at this point, however, that music-streaming companies become all-important, as they have found a formula to monetize the cornerstone of piracy.
What music-streaming companies attempt to address are the problems that pirates face; viruses, poor quality files, and slow downloads are only a handful of the many issues accompanied by pirating. And, while the more advanced computer user can avoid all-too-common Malware infestations, the vast majority of music listeners have neither the computer competence nor the patience to put up with such annoyances. The point, therefore, of music streaming is to provide a simple-to-use service without the glitches and illegalities of piracy, which has proved to be quite an effective strategy for the industry’s leading music mogul: Spotify.
Spotify’s mission is to bring the profit back to the music industry through online streaming. Essentially, the company offers two basic models: paid subscription and unpaid subscription—both of which generate profit that is then divided amongst artists. According to the Spotify website, 70% of the company’s profits are redistributed to artists in relation to the popularity of their music. The remarkable aspect of the company, however, is not its intricate payout methods; it is its effectiveness in cutting down piracy. Researchers at Columbia University Copyright Infringement and Enforcement found that in areas where a free music streaming service was available, piracy was reduced by 55% for people between the ages of 18-29. Though there are other companies who have contributed to the decrease in illegal downloads, Spotify has made the greatest impact as they control 86% of music streaming in the U.S. alone. It is abundantly clear, therefore, that piracy can be mitigated and that there is a market for legal music. And at the moment, Spotify is not only spearheading the music industry’s return to profitability, but it is also paving the way for new modes of music listening.
Nevertheless, music pirates are not Spotify’s only foes. With competition such as Apple Music, Spotify has only barely embarked on what will be a treacherous fight for music consumers’ monthly subscription loyalty. Whatever the outcome between these two colossal players, however, the pirate industry will endure the same ebbing effect. Back in the early 2000s, gifted computer users changed the way people acquired music, and in turn compensated artists. But, with Apple Music, Spotify, and even Pandora and SoundCloud looming in the mist, the music industry is in for a dramatic overhaul, and eventually a new captain to bring the riches back home and steer clear of pirates.