The way we listen to music has progressed, from vinyl records to cassettes to CDs and now through digital sources. Over the past decade, digital music has evolved, but has not quite been balanced. The readily available quality of music through digital sources has increased the convenience of listening to, exploring, and discovering music, but unlike previous sources, Spotify and Pandora do not get a decent compensation for what they have contributed to the music industry. Spotify and Pandora both allow users to easily access music for free as long as you do not mind listening to ads.
Pandora launched in 2000 and is an online radio that plays a selection of music that is customized to the user’s taste. Users can search for an artist or song that is of interest and Pandora will recommend music of a similar style or genre. The user has the ability to like or dislike the song and Pandora will continue to suggest more music based on the user’s feedback. Users can also share songs or stations with friends through email, Facebook, or Twitter. Pandora has a purchase link that navigates users to Amazon’s MP3 store or iTunes. Users are given the option to purchase Pandora, which will remove all advertisements.
Spotify is essentially an iTunes, but free and with commercials. Users have access to an unlimited music catalog. One is able to create playlists and star their favorite songs. Spotify also has an online radio similar to Pandora. You may have noticed that your Spotify has updated to a new version, but do you know all the new perks? Spotify has a new social following feature, which suggests Facebook friends, artists, and influencers to follow while discovering music. It has automatically followed artists you have listened to the most and subscribed to playlists that may be of interest. Users can easily unfollow anyone that does not interest them. The Spotify Social profile has been redesigned, “showing [a verified artist’s] standard discography and their most popular songs according to the Spotify user base.”
Pandora and Spotify make a lot of money, but unfortunately a majority of the revenue goes to royalties. The music may be free to the users but Spotify and Pandora pay royalties to the record companies. Music is not cheap. Artists and record labels have lost money from the sales decreasing. Now, so are Spotify and Pandora. “Spotify’s chief executive, Daniel Ek, has said that the company had paid in its history about 70 percent of its income “back to the industry.” But a closer look at its recent financial statements shows that the ratio may be even higher. Last year, its “cost of sales,” which includes licensing fees and distribution expenses, was $229 million, or 97 percent of revenue.” The system has not yet been perfected, but hopefully the cost for licensing will decrease once Spotify improves and prospers. Looking at Spotify’s popularity, I do not think that will be a problem.
Work Cited
Sisario, Ben. “Pandora and Spotify Rake In the Money and Then Send It Off in Royalities.” NYTimes.com. Media Coder. 24 Aug. 2012. Web. 21 Mar. 2013.
Constine, Josh. “Ears-On With Spotify Social, The New “Follow” Feature Now Available to Everyone.” Techcrunch.com. Tech Crunch. 20 Mar. 2013. Web. 21 Mar. 2013.
I remember back when I actually used to listen to the radio, and it seems today that I don’t ever turn it on unless my iPod isn’t working. When I get in my car the first thing I do is turn on my iPod or Pandora. I don’t think that we will ever lose actual radio stations, because we have things like satellite radio that let you choose what you want to listen to in the car. Pandora and other online radios and apps are definitely taking over what was formally the radios audience.
ReplyDeleteTo me Pandora is going to eventually find a way to give users ad free listening for free. Right now like Tina mentioned in her blog, Pandora is losing money just as fast as the record companies are because all their money comes from ads and nothing else. Plus Pandora has to pay the record companies loyalties. “Pandora, which went public last summer, has never had a profitable year, and in its most recently reported quarter lost $20 million on $81 million in revenue,” (Sisario) will Pandora ever be able to make a profit? I think that Pandora has to come up with another way of making money, Pandora is one of the most popular Internet radios and yet it seems to be losing money.
I have never used Spotify but what I read about it it is also as successful as Pandora. On Spotify you can download songs straight from iTunes when you hear them on the radio.
Spotify seems to be having the same issue as Pandora where is can’t make any money off of their popular application. “For the moment…Spotify’s investors are shouldering its losses, and music is still expensive. The company’s annual report notes that the “future minimum royalties payable” for 2012 stood at $151 million.” (Sisario)
Today there are so many choices where you can find radio online, you have Spotify, Pandora, and iheartradio. Radio and record companies both realize that this is becoming their downfall and they feel they need to do something about it. “Both producers and audiences are daunted by the prospect of navigating the extraordinary amount of choices available online, and it is in this shared need that the potential for industry reinvention may reside. Artists and labels suddenly need to be represented everywhere and audiences face more music options than they can begin to digest.” (Baym)
I don’t know if we are consuming too many types of music choices, or too many apps. Regardless of what we are consuming in today’s generation it’s going to become more prevalent in the generations to come. Technology is going to continue to grow and most people are going to invent apps that even may be better than Pandora. Hopefully in the future Pandora and other online radios will figure out a way to make money while keeping their costumers happy. If Pandora were to start charging their customers then they would most likely lose most of them.
Baym, Nancy, “Rethinking the Music Industry,” Popular Communication 8.3 (2010): 177 – 180.
Sisario, Ben. “Pandora and Spotify Rake In the Money and Then Send It Off in Royalities.” NYTimes.com. Media Coder. 24 Aug. 2012. Web. 21 Mar. 2013.
My main source of music comes from my iPod or my iTunes on my laptop. I don’t even listen to the radio anymore. I can’t even remember when was the last time I bought a CD. I can admit I am not one to use Spotify or Pandora, but I do use iHeartRadio at the gym. Kristina brings up a great point when mentioning that there is no balance. I never really thought about if these companies get reimbursed for their vital role in the music industry. Without Pandora, Spotify, and iHeartRadio, what would listeners use? I truly believe that these three companies have enhanced the music industry. “Artists and labels suddenly need to be represented everywhere (e.g., a web site, MySpace, Facebook, Spotify, Last.fm, Twitter), and audiences face more music options than they can begin to digest” (Baym). These companies also act as a media convergence because users can share the song on Facebook, Twitter, and via email. Due to the fact that artists are ‘represented everywhere,’ this is a positive to increasing their sales. If it wasn’t for iHeartRadio I would have never started listening to country music. Now that I heard the songs on iHeartRadio, I proceeded to buy the songs on iTunes because I wanted to own them and listen to them at my convenience. I think this is the perfect example to prove how these companies are improving the music industry.
ReplyDeleteAnother example of a company that helped the music industry was MySpace, which was designed for music. It was a way for people to get their music out there or express the type of music they enjoy listening to. This was many years ago, but at that time sales were high.
The music industry should reconstruct the financial side of the business. If artists and record labels allowed Pandora, and Spotify to receive some sort of compensation maybe people would consider buying the song on iTunes. Not only do these companies not get back any money, but also they pay royalties. Instead of these companies writing musicians a big fat check, the system should be reversed. “SoundExchange, the organization that collects royalties from these services, said on Thursday that it paid $462 million to performers and record companies last year, up 58 percent from 2011. Not long ago, SoundExchange’s payments were considered minimal by most musicians, but they have been growing quickly. In June, the organization announced that it had paid $1 billion in royalties since its founding in 2000” (Sisario). The musicians and record companies are already making a ton of money, but it is possible that more people would buy their music if they heard it on Pandora.
Technology is constantly changing and the music industry will continue to change with it. The music industry is very large and there are millions of artists out there. Competition will always be there and people will do anything to get to the top of the charts. The music industry should work with the companies so that each can benefit through working together.
Works Cited
Baym, Nancy, “Rethinking the Music Industry,” Popular Communication 8.3 (2010): 177 – 180.
Sisario, Ben. "Digital Notes: Measuring Growth in Dollars and Page Views." New York Times. N.p., 26 Jan. 2013. Web. 21 Mar. 2013.
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