Streaming is a numbers game. Hundreds of millions of subscribers, tens of millions of licensed songs, dollars and cents trickling down to the creators.
That so-called “value gap” is a debate which, in some quarters, is growing louder by the day. A new study applies the numbers behind streaming in a different way, for an outcome that offers some fresh insights.
Economist Will Page applies the perspective of time to the streaming model for Malbeconomics: Taking stock of the twentieth anniversary of the 9.99 price point.
Published today (Dec. 6), Page identifies an anniversary that’s flown under the radar. It’s 20 years since the streaming business took its baby steps, with a basic offering and a price point that hit the bullseye: $9.99 (or €9.99 or £9.99, depending on where you live).
Spotify, which arrived later in the game, is now a juggernaut in the streaming space, boasting upwards of 381 million users worldwide and 172 million “paid” subscribers, with a licensed library of more than 70 million tunes.
Pricing has remained at the same sweet spot, while the cost for so many other essentials has risen.
On one hand, notes Page, “the falling price in real terms has eroded the incomes of artists and songwriters. But it has also galvanized significant growth, as total consumer spending on music subscriptions rose more than twelve-fold between 2013 and 2021, to £1.2bn – a success story that’s been reflected around the world.”
Few industries can claim that success, he notes. And price may be the key.
With logic, graphs and numbers, Page compares streaming to Malbec wine which, in real terms, provides less bang for buck for the imbiber than it did 20 years ago.
Malbeconomics arrives as the streaming platforms face unprecedented scrutiny in the U.K. following a vocal campaign to lift the royalty rate. A proposed law is being considered by members of Parliament which would require record companies to pay musicians and songwriters a bigger chunk of revenue from the likes of Spotify and Apple Music, as well give British artists the chance to reclaim their exclusive recording rights after 20 years.
Page is author of Tarzan Economics, former chief economist at Spotify and PRS for Music, and visiting fellow at the London School of Economics.
Read his blog post here.