If 2016 was the year that streaming music became a necessity, 2017 is the year streaming music showed its clout. This couldn’t have been showcased any more clearly than at the Grammys, where Chance the Rapper won best new artist, best rap album, and best rap performance — an honor only made possible because nomination rules changed, allowing for streaming-only albums to be eligible for nomination. In his acceptance speech, Chance gave a shout out to SoundCloud.
Streaming music consumption continues to ramp up, not slow down. Mid-way through the year, the RIAA (the Recording Industry Association of America) released statistics on the US music industry, and during the first half of 2017, revenues from streaming services accounted for 62 percent of the total market. Digital download sales were down, but revenues from streaming services were also up 48 percent, and across all categories of streaming, the revenue levels were at record highs.
Part of this pop probably has to do with how streaming music has broken beyond the boundaries of our smartphones and laptops, and is now available and integrated with Google Home, Sonos, Amazon Echo, and other home assistants and smart speakers. This is the year Google Home promised to integrate Deezer and SoundCloud, and began supporting free Spotify accounts. Just as recently as a few weeks ago, Sonos announced that customers can now play music from Spotify on all Sonos speakers using Amazon’s Alexa assistant. It’s easier than ever to use your favored music streaming platform not just on the go, but in your home.
Exclusives have also all but disappeared, compared to 2016 when they were everywhere. There are exceptions — Beyoncé's 2015 release Lemonade is still only available on Tidal, and Taylor Swift continued her contentious relationship with streaming by withholding her Reputation album from major services for weeks after release. Swift didn’t comment on why she waited to make Reputation available for streaming, but the move came just after Universal Music Group negotiated a contract with Spotify that allowed artists to keep new albums exclusive to the premium tier for two weeks after initial release.
In the midst of all this, the labels have been making some forward-thinking decisions that impact access to gray area material (unlicensed remixes, bootlegs, full DJ mixes, etc.). Sony made a deal with startup Remix Hits to allow musicians to purchase “stems” — isolated parts of songs — to freely use in their own productions. Sony also, along with Merlin, came to an agreement with Dubset, a rights clearance startup that works to legally allow unauthorized remixes on platforms like Spotify and Apple Music. Remixes aren’t going away anytime soon, and it’s about time labels and streaming platforms start to figure out how to distribute that content, not punish those who create it.
Apple Music has been part of this push, and was the service that partnered with Dubset to host the very first sample-heavy DJ set with full rights clearance. In general, the platform’s growth was robust this year, nearly keeping pace with Spotify, but there have been some hints that 2018 could hold some changes. Jimmy Iovine told Billboard “Just because we’re adding millions of subscribers and the old catalog numbers are going up, that’s not the trick. That’s just not going to hold.” The focus will instead be on building closer relationships between artist and fan. A move that could play into this is Apple’s recent acquisition of music identifying app Shazam. And, while there aren’t specifics about its integration with Apple, a spokesperson did say, "Apple Music and Shazam are a natural fit, sharing a passion for music discovery and delivering great music experiences to our users.”
It hasn’t been great for everyone. SoundCloud had a particularly tough year that saw it lay off nearly 40 percent of its employees, battle rumors about its survival, and eventually hand the reins over to new CEO Kerry Trainor. Trainor made a promise to refocus efforts on creators, which have thus far been nominal, including a revamped home page experience with personalized playlists and slight adjustments to the stats available on the back end for artists (like, strangely, the introduction of being able to publicly share your stats for a song).
A tough year for SoundCloud, Tidal, and Pandora
Pandora’s also had a rough go of it. The first half of the year was rocky, with CEO Tim Westergren stepping down, and a new Premium subscription service that stalled for months after its debut, adding only about 150,000 paying users over the first three month period. A new decision to let free users listen to on-demand music might put some wind back into the company’s sales though, and convert more to paying tiers. Tidal is facing some woes, too. A new report from Norway’s Dagens Næringsliv claims that the company’s user growth has stalled and it only has about six months of working capital left. Finally, Spotify had some stumbles getting everything in place for an IPO, delaying their timeline and pushing the move to go public until early 2018.
Sure, there have been some growing pains this year, but the key word here is “grow.” According to a Goldman Sachs report from back in August, streaming will help push the recorded music industry to a $41 billion business by 2030. The last time the music industry saw this kind of consistent trajectory was back in the ‘90s. Things are looking up, and it’s all due to the explosion of streaming.
Final grade: B
The Verge 2017 report card: Streaming music
- Streaming services becoming more fully integrated with home devices
- Music industry finding ways to legalize bootlegs and DJ mixes
- Fewer exclusives
- Platforms are still struggling with profitability
- Competitors need to differentiate their services
- Artists are still not happy with streaming payouts