The term “breakage” dates back to a time when records were made of shellac and could break during transport. Of course, a label could no longer sell these records, and so clauses were included in the label contracts at the time to ensure that breakage was not considered when calculating the artists’ share. However, the…

In addition to the pro-rata and user-centric models discussed in detail in part 14, there are other alternative approaches to distributing streaming revenues among rightsholders. These models, as well as the concept of equitable remuneration used in the distribution of radio and TV royalties, will be examined in more detail in this part of the…

In addition to the pro-rata and user-centric models for distributing music streaming revenues, which were highlighted in part 15, a model negotiated between the French music streaming service Deezer and Universal Music Group has recently attracted a lot of media attention. However, it is not the user-centric model that Deezer has advocated in the past,…

As we saw in part 14 of the series on the streaming economy, most music creators receive so little revenue from streaming music that it is economically irrelevant. To understand this better, we need to look at the accounting mechanism for music streaming revenues. The most common model is the pro-rata model, which distributes revenue…

Although the disputes between some superstars and Spotify have ended in favour of the Swedish streaming service, Swift & Yorke have nevertheless revealed weaknesses in the business model of music streaming from the point of view of the artists. The main beneficiaries of the streaming economy are the music majors, and little falls to the…

In the US, the advance of music streaming has revealed the limitations of the existing copyright system, which was still entirely focused on the record economy. In particular, the mechanical rights that had to be obtained by labels when a musical work was recorded defied the logic of music streaming. This caused legal uncertainty not…

Music rights are the main fuel of the music streaming economy. Music streaming services need licences to use the rights in order to launch and sustain their operations. As we have already seen in the case of Spotify, the major rights holders – labels and music publishers – demand princely sums for licensing their music…

Spotify has repeatedly been criticised for underpaying artists, while keeping around 30 per cent of its revenue from music streaming. The campaigns against Spotify by Radiohead frontman Thom Yorke and Taylor Swift, which resulted in the two superstars boycotting Spotify for years, attracted massive media attention. This blog post aims to shed light on the…

The key to understanding the music streaming economy is the business model of the music streaming services, which has emerged in the negotiations between the major music rights holders and Spotify. It is based on advance payments that a music streaming service has to pay to the rights holders, which are offset against the revenues…

On 3 April 2018, Spotify went public on Wall Street in New York. However, the path to this IPO was anything but straightforward and was unavoidable, as Spotify’s economic survival without the IPO would have been more than questionable. For cost reasons, it was not a classic IPO, but a simple listing with no subscription…

Spotify is by far the world’s leading music streaming service. This success was anything but pre-programmed, and aside from the marketing skills of its two Swedish founders, it was mainly chance that brought Spotify to this position. Spotify has its roots in the P2P file-sharing community and owes its rise to some extent to the…

This blog post takes a closer look at the music streaming services that have been forced to shut down and disappeared from the market. It is the story of a market consolidation that is not yet over and that will end up with a few platforms forming an oligopoly, similar to the record and music…

German music streaming service SoundCloud was originally conceived not as a streaming service but as a social media platform for musicians to share and promote their music over the internet. However, under pressure from the major rights holders, SoundCloud had to mutate into a fully licensed music streaming service, which then ran into economic turmoil.…

Tidal, originally founded in Norway as WiMP, is a good example of a high-fidelity music streaming service that has struggled economically since it was bought by superstar rapper Jay Z and has since changed hands several times. This part of The Music Streaming Economy series tells the story of Tidal/WiMP and takes a closer look…

As we have seen, Spotify was not the pioneer of music streaming. Other services, such as RealNetworks/Rhapsody or MOG, had been around for a long time when Spotify arrived. The French music streaming service Deezer also went online before Spotify and temporarily worked its way up to become the second largest music streaming service in…

The international music streaming market is firmly in the hands of technology companies, and it is telling that Spotify also defines itself as a technology company rather than a digital music distributor. Before Spotify entered the streaming market in 2008, the three major tech companies, Amazon, Google and Apple, competed primarily in the music download…

2008 is rightly regarded as a watershed year for the music streaming industry, with Stockholm-based streaming service Spotify launching in October. It was also the year that the fourth generation of mobile telephony (4G LTE) became widely available in many developed countries. This laid the foundations for the music streaming boom: Mobile broadband technology (4G),…

Part 1 of the blog series highlights that the Scandinavian countries are the world’s music streaming avant-garde due to a well-established broadband Internet infra-structure, a high smartphone penetration rate and domestic business innovations (see also part 2). The most influential Scandinavian business innovation was Sweden’s Spotify, which was launched in October 2008 at the culmination…

A series of blog entries tells the story of how the Scandinavian countries have become the forerunners of the music streaming economy and highlights the background of this development. In the second part of the series on Scandinavian’s way to a music streaming economy technological and business innovations that fostered music streaming are highlighted. The…

It’s no accident that Spotify was launched in Sweden during the culmination of the The Pirate Bay lawsuit in 2008. Spotify was promoted as the legal alternative to P2P files haring and the Swedish music consumers were the perfect test market for such a Freemium music service. Sweden’s neighbouring country Norway was in a similar…