Music streaming applications were created with the hope to minimize music piracy. However, in this digital era where one can illegally download music from a plethora of places, are music streaming apps and websites really reducing piracy? Well, according to the European Commission’s Joint Research Centre, Haute 100 lister Daniel Ek and his music streaming service Spotify are reducing illegal downloads.
In a study conducted by the commission, it was discovered for every 47 streamed plays an artist receives the number of unpaid downloads drops by one. The commission compared streaming data and illegal downloads for 8,000 different artists from 2013-2015, to reach its conclusion.
“This piracy displacement is consistent with [Spotify CEO Daniel Ek]’s claim that Spotify’s bundled offering harvests revenue from consumers who—or at least from consumption instances—were previously not generating revenue,” the researchers wrote.
The study also observed whether or not Spotify is helping or hurting record sales. The study reads, “Finally, while there is no corresponding study of Spotify, founder Daniel Ek has publicly argued that it is a ‘myth’ that ‘Spotify hurts sales, both download and physical. This is classic correlation without causation.’ Spotify chief economist Will Page presents evidence from case studies that artists who withhold their music from Spotify do not sell more copies. This suggests that Spotify does not cannibalize sales at the artist level.”
The commission also noted the growth of Spotify. The music streaming service has grown very quickly. Between 2012 and 2015 the number of users quadrupled, even paid users rose by factor of five. In 2014 Spotify gained 15 million paid users. By early 2015 Spotify had 60 million users overall.
The report also examined paid subscriptions versus free memberships stating it’s the free access that is preventing some music aficionados from simply illegally downloading songs and/or albums.
Researchers concluded the study by writing, “Revenue generation from recorded music is shifting rapidly from the sales of individual tracks (and albums) to bundled sales of streams. As this transition continues, understanding the relationship between streaming and sales will be crucial to both our understanding, as well as the operation, of the recorded music industry.”
To read the entire study click here.
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