Spotify and the future of the musical industry

It is yesterday’s news but we all knew it was bound to happen. Spotify made it in the NYSE and is now a 25+Billion USD company. The NY Times said it loud and clear, streaming is king and there is no turning back. Nielsen’s number’s on annual sales of music will tell you that streaming rules the market and physical media, with the exception of vinyl’s resurgence, are declining. I am what they call an “analog guy” but I know that vinyl as a trend won’t last forever, in the not so distant future streaming will be completely dominating the market.

Could this be a reason why Oppo Digital announced a full stop of the production? Truth be told, less and less people rent or buy DVDs and Blue Rays, streaming is quickly monopolizing our TV screens. I don’t have the numbers but something tells me that Blue Ray player’s sales are declining fast, while Netflix, Apple TV and the like are selling like hot cakes.

There is one big loser in my eyes, the studios. Until a few years back and for decades if you wanted to be someone in the music industry you had to sign an important contract with a major distribution name. The production, while important, was overestimated in the collective minds of audiophiles and music lovers. It became cheaper and cheaper as technology advanced, especially since with a few plug-ins the expensive hardware of the past (compressors, limiters and special effects) was readily available on a laptop, and for peanuts money. Speaking of money, rock stars and pop icons never actually made all that money from the records. The records, the physical format either that be cassettes, CDs or LPs where more of a vector, to get the voice out, to make the band famous. You needed a major label to get you distributed around the globe. Back at the day there was no MTV and no internet, definitely no streaming services. You could produce in your basement, you needed the label to get you all the way from the States to Australia. You weren’t making and real money from the record sales, even the biggest contracts of the last couple of decades, Aerosmith might be a good example, were not that much after all, not when you compare that kind of earnings with what the bands made from live concerts. This is where the money came from.

So studios were more like distribution chains, and guess what is practically useless nowadays? Exactly. Soon there won’t be physical media distribution. Music gets streamed and that cuts off the need for major distribution labels. I guess they know it already but I don’t see them doing much, except bargaining with Spotify and the other streaming providers about their cut, the one last, though important, thing they still own is the catalog but that will change soon as more and more artists won’t be needing a major label that pays them nickles to get distributed, they will get those nickles straight from the streaming service and still make a living out of concerts. You never know sometime in the future Spotify and YouTube might start buying the catalog form the labels.

Bottom line, streaming is here to stay. Did you buy any Spotify stocks?