The finances of streaming have been a hot topic for the music industry since the services first arrived on the scene. But most of the discussion so far has been partial views, such as the financial results announced by labels or the changes in income for individual artists. A new working paper published by the National Bureau of Economic Research adds some hard science to the conversation.
The paper examined the impact of Spotify on both music sales and piracy. The pair of investigators examined the role of the streaming platform between 2013 and 2015. Their calculations found that 137 Spotify streams reduce track sales by one unit. However, they determined that the reduction in piracy offered by Spotify about offset the losses in track sales for a “revenue-neutral” impact on the industry.
“While song-level evidence, including a controlled experiment elsewhere on non-interactive streaming, show positive relationships between streaming and track sales, aggregate-level evidence indicates the opposite relationship, that interactive streaming at Spotify displaces track sales,” the authors said. “Hence Spotify is better viewed as a form of bundled sales than as a promotional channel.”
The full paper acknowledges some of the big challenges in analyzing the role of streaming. For instance, the authors write that popular songs on streaming services may also be more popular as downloads at the same time. The authors recommended further studies to better investigate the song-level relationship between streams and sales and to see the aggregate impact of non-interactive music services on music sales.
Since this article is still in progress and hasn’t been peer-reviewed yet, there is room for the findings to be altered. But the initial statement that streaming has had a neutral impact on the recorded music industry is helpful. It’s a promising first step for other researchers to start gathering hard data, which offers much-needed context to the anecdotal experiences artists and songwriters have with streaming.