It is 12:25 p.m. on a Thursday and freshman Juwan Nelson is walking to his class at the University of Georgia. He still has a way to go before he makes it to his class and decides to pass the time with music. He takes his headphones out of his pocket, untangles them and plugs them into his phone.
A couple years ago, chances are he would have performed this same ritual and navigated toward one of two options: iTunes, to listen to purchased music, or to his phone’s standard music library, to listen to music that could’ve been acquired under several circumstances, including illegally.
But Nelson does neither. He takes out his phone, clicks on a green, circular icon and begins listening. He is using Spotify, a streaming service that, along with Pandora, Rhapsody and others, is taking the music industry by siege.
“I started using Spotify in November of 2014. A friend told me about it. I’d never used it before, but as soon as I used it I knew that it would be something that I would like,” Nelson said.
While his opinion might have represented a radical thought when Pandora was created in 2000, or even in 2006 when Spotify was founded, Nelson’s mindset has become increasingly more popular, which has been reflected in the sales – or lack thereof – of physical albums.
The compact disc industry experienced a drastic drop in sales in 2014, as only 140.8 total CDs were sold last year, setting a new low in the history of the statistic and breaking the mark set by the mere 165 million copies sold in 2013. Only two 2014 albums, Taylor Swift’s 1989 and the Frozen soundtrack, went platinum by the year’s end.
“I buy physical copies because I want to support an artist or this is something I really want to have, but for people who aren’t as heavy in to music that’s kind of irrelevant,” says University of Georgia student Maceo Maddox.
This represents the continuation of a growing trend, as the music industry has experienced a steady decline in revenue since the early 2000s; since the turn of the century, every subsequent year has experienced a drop in monetary value, with the exceptions of 2005 and 2012, where the industry received a modest boost. (Source: The Current)
The numbers for hip-hop were even more sobering, as CD sales dropped a whopping 29.6 percent in 2014. A 2014 hip-hop release was eventually certified platinum, as J. Cole’s 2014 Forest Hills Drive was the lone project to reach the milestone – in late March 2015.
“CD’s are cooked,” said David Barbe, director and lecturer of the Music Business Program at the University of Georgia. “CD’s don’t sound as good as vinyl, and they aren’t as portable as an iPod or phone full of downloads.”
At least some of that is owed to the pedigree of hip-hop releases from 2013, as hip-hop sales mainstays such as Jay Z, Kanye West, Eminem and Drake released albums. Compare this to the relative anonymity of artist releases from 2014, as J. Cole, Nicki Minaj and Rick Ross were the only artists with any previous chart success to drop albums in 2014, and it’s easy to see why 2014 was such a down year for the genre.
While every musical genre experienced a decrease in sales, with the exception of pop –due almost entirely to the success of the aforementioned 1989, which was classified as a pop record rather than a country album – the extent and the frequency of the decline of hip-hop sales is alarming.
This fall from consumer grace contrasts starkly with streaming numbers for the year, as streaming services such as Spotify, Rhapsody and Pandora experienced unprecedented success in 2014. Online music streaming increased by 54 percent, with 164 billion streams in 2014.
This surge in use of the services lead to significant additions to music sales tracking services, as the Recording Industry Association of America (RIAA) integrated streaming numbers to its Gold & Platinum Program, which records when an album has sold 500,000-plus units. The Billboard 200 also amended their standards, as 1,500 streams from an album are now considered one album sale, the most substantial change to Billboard’s format since 1991, when it first began using SoundScan, Nielsen’s data service, to record album sales.
In fact, the numbers may suggest that streams prevented the entire industry from reaching an even more historically damning low. The new Billboard streams-to-album sale standard (“Stream Equivalent Albums”), in combination with “Track Equivalent Albums”, Nielsen’s measure that counts 10 track purchases as one LP purchase, calculates that 476 million “albums” were sold in 2014 via streams and digital track purchases, which was only a 2.0 percent drop from the 2013 numbers.
The appeal of streaming services is obvious: they are accessible from your phone, which most people have on their person at all times, and holds an advantage over the bulkiness of CDs. They have an extensive collection of music to select; streaming services have been described as “universal jukeboxes.”
“You don’t have to go online looking for a link and trying to download songs and albums. Like, it’s right there. Like, all you have to do is type in your favorite artist and all their new music is right there for you,” said Nelson, adding that he only purchases albums by his two favorite artists, Jay Z and Kanye West.
There is an added social element, and the availability of all of the music in your library without the time constraints of downloading is incredibly convenient. And on top of all of these benefits, many of the services offer a free option, with services like Spotify and Pandora trying to incentivize paid subscriptions with ads and shuffle-only options for the free service.
With all of these elements giving streaming services advantages that other platforms simply can’t offer, it’s no wonder that many consumers consider the streaming services they now house their libraries under to be musical heaven on earth. As a result, over 80 percent of music consumers reported using a streaming service at some point during a six month period in November 2014.
However, some would argue that traditional streaming services are just as damaging to already declining hip-hop sales as others think it is helpful. They would argue that the free option allows for guilt-free (and technically legal) continuation of robbing artists of the monetary benefits of their work that was created by the heyday of illegal downloading and file-sharing. They would argue the same complaint that caused Taylor Swift to remove her entire discography from Spotify: most users of these streaming services aren’t paying, and the revenue that is formed from the few who do and advertising isn’t being fairly distributed to the artists.
One part of this argument is not up for debate: most streaming service users are not paying customers. Spotify, for example, is available to more than one billion users, and yet only 12.5 million users are paying subscribers, just more than 1 percent of their potential customers. Pandora isn’t fairing much better, with only 3.3 million subscribers of its claimed 250 million users (1.3 percent).
So which is it? Are streaming services causing the two percent drop in “album” sales, or keeping those numbers from plummeting even further? Are they crippling the hip-hop industry or carrying it? Are they the solution, or just a different problem?
Confounding the issue is the arrival of a new player in the streaming services competition for subscribers: TIDAL, a new, exclusive service that adds a new layer to the narrative, especially in relation to hip-hop.
TIDAL is a streaming service that offers several layers that are unique to its competition. For one, it promises “High Fidelity sound quality, High Definition music videos and Curated Editorial” for its users, claiming that the musical experience for its users will be superior to its competition. TIDAL also promises exclusives for its users that will not be available on other services; for instance, hip-hop giant and face-of-TIDAL Jay Z removed his debut album from Spotify, but it is available on TIDAL.
The most notable difference between TIDAL and its competitors though? TIDAL is not a free service in any capacity outside of a 30-day trial, after which the standard cost is $19.99 per month, which is twice as expensive as Spotify’s standard rate.
TIDAL hopes to use the clout of its artists to distance itself from its competition, as some of the biggest artists in the industry, including Beyoncé, Rihanna, Kanye West and the aforementioned J. Cole are just a few of the artists who co-own the company and have begun releasing material specifically under TIDAL. “I did realize that Jay Z took his first album off of Spotify,” Nelson says with a smile. “So if they keep doing that I might have to check out TIDAL.”
The primary difference between TIDAL and Spotify, however, has nothing to do with exclusives: TIDAL is unapologetically geared toward the benefit of the artist as opposed to the satisfaction of the consumer. Jay Z has, in several interviews, emphasized the benefits TIDAL-represented artists will receive. “This is a platform that’s owned by artists,” Jay Z said. “We are treating these people that really care about the music with the utmost respect.” (Source: The New York Times)
The message is clear; the customer does stand to benefit from the aforementioned exclusives and “lossless sound quality”, but the basis of the service is founded on serving the employees as much, or in the opinion of some, more so than serving the consumers.
The prototype has some interesting implications for the compensation of artists. Hypothetically speaking, if the pay of TIDAL artists compensates them to the extent that say, Taylor Swift thinks they deserve, then CD sales could eventually become an obsolete measure of the success of a project as more artists flock to the streaming service as their primary source of income and exposure.
The possibilities for underground and under-the-radar artists under TIDAL is equally intriguing. The underground subgenre of hip-hop has long housed artists who build loyal fans under a “diamond in the rough” aesthetic that appeals to fans looking for the “next big thing.”
However, the road to the top is paved with struggles, with financial strains chief among them for many underground artists. The offer being proposed by TIDAL could likely become very appealing to hip-hop artists like Bas and Mick Jenkins as they envision exclusory access to their work and a promise of proper compensation.
But in order to incite this change, the new company must stay afloat long enough to make a notable impact. Because of this discrepancy there have been real questions regarding the staying power of TIDAL as a competitor in its market.
“Consumers actually don’t want too many choices when it comes to music listening. The easier the better. They’re not going to subscribe to multiple services,” said Barbe. “Spotify is Walmart. TIDAL is K-Mart. Neither are great but we choose one over the other if we’re going to go to either.”
Critics are skeptical of the odds of the typical consumer, who can’t be convinced to use the subscription service for Spotify or Pandora, to be willing to shell out twice as much money.
“If it is difficult enough getting consumers to pay 10 bucks a month, why are they going to spend 20? To most consumers, I think that the differences in sound quality of one stream to another are either is or unnoticeable or immaterial,” said Tom Lewis, associate director of the UGA Music Business Program.
Some potential customers are just as cynical. ”I hate to go against something Jay Z made because Jay Z isn’t wrong often,” Maddox said, laughing. ““I just wanted to see what the lossless sound was like. At the end of this month, I’m just gonna go back to Spotify. They [TIDAL] aren’t making the consumers happy.”
Some, however, are more wary of counting out the service. “I think TIDAL is fixing to dominate the streaming industry and that competitors should be worried about its power in the industry,” said Ashton Adams, a Grady student at the University of Georgia.
TIDAL has had an undeniable impact in one area, however: the company has re-ignited discussion on whether or not artists are being fairly compensated for their work, both on streaming services and in general. The bottom line is at the end of the day music is a business, and the rejuvenation of the music industry due to streaming services is a hollow victory if those who contribute most aren’t being paid. Public opinion seems divided on the issue.
“It’s hard to say it’s unfair, because more people are using streaming services than buying copies, so in essence there is a possibility with certain artists are making more money off of these services than physical copies,” said Maddox. “Now is that gonna be for someone like Kanye? Not likely. But for underground artists like Cozz, maybe like Bas, it’s relevant.”
Nelson agrees that the compensation is legal and fair, but argues that they also benefit big-name artists. “As far as getting the music out, you know, the bigger artists are breaking records over and over again,” he said. “You know Drake, just broke the stream record with his mixtape, and then a month later Kendrick [Lamar] broke the stream record with his album.”
However, this opinion is not unanimous. Others are far less approving of the compensation, or lack thereof. “I don’t think these streaming services are fair to artists,” says JuliaKate Culpepper, a fourth-year student at the University of Georgia, “because artists and writers notoriously don’t get paid what they deserve for services that stream their songs.”
Experts seem more wary of making an immediate judgement. “It is easy to say that in the short term, they are not, but in the long term, I think it is too soon to tell,” said Lewis. “When there are a lot more paid streaming subscribers, we will have a better handle on whether or not the streaming services are paying enough out.”
It remains to be seen whether or not these questions – whether or not streaming services help or hurt the industry, if TIDAL will be a significant player, if the compensation, or lack thereof, of the artists – will be answered sooner or later.
One thing is not up for debate: streaming services, in some form, are not going anywhere, at least not for the foreseeable future. Whether it is Spotify, with their user-friendly format, or hip-hop centric, consumer friendly TIDAL heading the discussion, the staying power of the format itself seems to be the one constant in a topic with so many conflicting opinions.
Well, there does seem to be one other school of thought that is held almost unanimously by those with any knowledge of the subject. “We are a culture of convenience over just about anything else,” said Lewis. “CD’s aren’t coming back.”