With music streaming becoming
the preferred music consumption method, how can the music industry capitalize
on its potential growth. The reason
why it is only a potentially profitable business is because music streaming sights
have yet to break even or make a profit because of heavy license fees for the
music. Artists are outraged that although the license for the music is heavy,
the labels only get a cut of this revenue and artists are left with pennies in
royalties for thousands of plays. However, artists should actually encourage
music streaming and suffer the low royalty payout in exchange for the
demographic and behavioral data of music streamers. Although streaming series
have yet to divulge the secrets and data of their consumers, the partnership
between artists, labels and music streamers could jump start the industry and
provide a massive chunk of revenue to the industry on all levels.
In a series of trickled down
wealth, record labels and artists would pay music streaming companies for the
data so that they can target their fans better for concerts, which is “a
crucial tool to drive booking strategy” for concert locations (Billboard).
Through multiple revenue streams also increasing like merchandise because
target markets are more focalized will decrease marketing costs, decrease
opportunity costs, increase profit margins and spread the wealth around in the
music industry. The extra payment for
data can also provide a new revenue stream to increase potential profit margins
for music streaming sights as well.
Artists like Zoe Keating hope
that partnerships between labels and music streaming companies can happen so that
she can target more of her listeners: “How do I reach those casual listeners?
That's more valuable to me than some royalty” (Billboard). The “casual
consumers” are those that are not active ticket and merchandise buyers that
simply listen to the music. Zoe Keating hopes that this data will allow her to
adjust her content, show locations and marketing strategies to target these
casual listeners, where “user data from these sites can be a much bigger gold
mine to artists, labels, and promoters” (Billboard).
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