Swift and a handful of other musicians are trying to turn back the clock to a time when albums were both major cultural symbols and big business. They’re keeping their music off popular streaming services such as Spotify and using their massive reach with fans to sell old-fashioned CDs with copious liner notes and extra tracks.
The future of how consumers listen to music is at a critical juncture. On one side, the big music labels envision a future in which people rely mostly on music subscriptions for their tunes, exploring and grazing, rather than purchasing tracks and owning them outright.
On the other are musicians like the 24-year-old Swift, who wrote an op-ed in the Wall Street Journal in July declaring that the album was not dead.
“There are many (many) people who predict the downfall of music sales and the irrelevancy of the album as an economic entity,” she wrote. “I am not one of them.”
For an industry that was nearly destroyed by piracy and then saved by Apple’s iTunes, the economics of music are changing once again.
The recording labels aren’t making as much money as they used to. As streaming replaces digital downloads and the sale of CDs, total revenue for the music industry has plummeted by 50 percent in the past decade, from $15 billion in 2003 to $7 billion in 2013.
Sales of albums have dropped off so severely that until Swift came along, this year was on track to be the first in decades in which no artist’s album would be certified as platinum.
But as labels embrace streaming as the future, artists from Swift on down to obscure independent musicians argue that they are getting squeezed harder than ever. Services such as Spotify, endorsed by the country’s biggest music labels, pay artists seven-tenths of a penny each time a song is played.
Swift’s strategy for releasing her new album has turned into a testament of her faith in music sales and the album format. She recently removed all of her music from Spotify. And she struck an exclusive partnership with Target for CDs of “1989” that include extra songs and photos tucked into the box jacket.
Of course, there are only a few artists in the world who have Swift’s reach. Beyoncé and Radiohead’s lead singer Thom Yorke have kept their music off Spotify, too. Beyoncé is also releasing two new songs and videos in a box set of CDs and DVDs to be released for the holidays.
But those musicians are popular enough that analysts say that by keeping their music off Spotify, fans may think twice about subscribing.
Spotify, which declined to comment, says it has 40 million subscribers, 10 million of whom pay $10 per month for ad-free streaming. The service was started in Sweden and launched in the United States three years ago. It’s backed by major record labels, including Sony and Warner Music Group.
The company responded on its blog this week to Swift’s decision to remove her music from its service.
“We hope she’ll change her mind and join us in building a new music economy that works for everyone,” it read. “We believe fans should be able to listen to music wherever and whenever they want, and that artists have an absolute right to be paid for their work and protected from piracy. That’s why we pay nearly 70 percent of our revenue back to the music community.”
The company says it has paid back $1 billion in royalties. But analysts say much of that has been paid to music labels and managers.
The industry’s defenders warn that if popular artists keep their music from services such as Spotify, it will make things tougher for all musicians if the streaming model doesn’t survive.
But musicians argue that only the big record companies are benefiting from the current setup.
“You have some saying you don’t have to kill the goose laying the golden egg, and then people like Taylor Swift are saying, where is the gold?” said Ted Kalo, executive director of MusicFirst, a coalition that lobbies on behalf of music labels, artists and unions.
The Recording Industry Association of America, which represents hundreds of music labels, declined to comment specifically on Swift’s decision to remove her work from Spotify.
But an industry source familiar with discussions between Spotify and Swift’s record label, Big Machine, said the artist’s decision was more about delaying access to her work in the United States so it could be promoted more widely abroad. The person, who spoke on the condition of anonymity because the negotiations were private, said Big Machine feared that the availability of “1989”?in the United States on Spotify would hurt album sales.
Swift was also able to walk away from Spotify because Big Machine, an independent label, doesn’t have investments in Spotify. Before removing her music, Spotify said 16 million of its 40 million users had listened to a Taylor Swift album in the past 30 days.
But Swift’s marathon promotion of “1989” before its release illustrates just how much work is involved in selling an album these days.
Swift has cultivated a huge following on social media, where she offers constant musings, glimpses of new music and details of her planned world tour to 46.2 million Twitter followers, 13 million Instagram followers and 70 million Facebook fans.
On Wednesday, she posted a video on Instagram celebrating the success of “1989” and nudging back at naysayers: “Industry experts predicted 1989 would sell 650k first week. You went and bought 1.287 million albums.”
But even with her ubiquity on social media, her sales strategy is decidedly old-fashioned. And she is going against the habits of even her biggest fans. Consumers – particularly young listeners – are buying fewer iTunes downloads and CDs and turning to streaming, prompting Apple, Google’s YouTube and Amazon to introduce their own online services to match Spotify and Pandora.
Several artists have complained that they can’t pull their music off Pandora, a service that curates music but doesn’t offer on-demand listening for specific songs. Its model is protected by a compulsory license and its payment rate for royalties is low, similar to Spotify.
David Lowery, co-founder of the band Cracker, wrote in a blog that his song “Low” was listened to 1 million times on Pandora. His total in royalties? $17.
“That’s less than a concert T-shirt,” he said in an interview.
Jimmy Buffett has also criticized Spotify’s meager payments to artists and asked an executive last year for a raise. He and other artists have grown impatient with Spotify’s promise to share the wealth in the future.
“Why is it up to the artist to subsidize their growth?” said Lowery, who is also a professor of music economics at the University of Georgia. “I’m not an investor in your company, so why do I have to subsidize your service?”
Artists like Swift also argue it’s still worth offering albums loaded with special features that fans will want to hold in their hands. Her label Big Machine said that for the first week of sales, Swift sold 647,000 physical copies of “1989,” compared to 640,000 digital versions.
“There has to be an incentive to go to a store, buy a CD,” Swift said in an interview last week with NPR. “So it’s very much an experience that’s different than downloading the music itself. It’s almost like this kind of collector’s edition, the physical copy.”