By Kevin Belanger
Tech & Innovation Writer
Streaming services like Pandora, SoundCloud, and Spotify have proven to be enormously popular with music listeners since their creation, due to their extremely low or non-existent prices. However, these low prices unfortunately come at a cost. According to Wired.com, websites such as SoundCloud are struggling to make enough money to continue streaming. SoundCloud reported that it lost 44.19 million dollars in 2014 while only bringing in 15.37 million dollars. According to Venturebeat, SoundCloud has stated that it will attempt to raise more capital to stay in business. Similarly, Pandora is rumored to want to sell itself. Wired reports that the collapse of music streaming websites is not unprecedented. SoundCloud could be particularly problematic because many independent musicians use the service to launch new projects in the hopes that it can allow them to reach a larger audience. Because much of the music uploaded to SoundCloud is only saved in user libraries, the loss of the website could lead to the loss of music which may be difficult to recover.
Venturebeat also reports that companies like SoundCloud, Pandora, and Spotify may face a disadvantage because they are competing with services like Apple Music, Amazon music, and Google music. These streaming services can afford to take losses, which makes it easier for them to compete on prices with their competition.
Recently, streaming apps have tried other ways to earn more revenue and differentiate themselves from their competitors. Some artists, such as Taylor Swift, have come out in opposition to streaming services and refused to allow their music to be accessed via them. However, some apps have made exclusive agreements with certain artists to release their albums. Recently, both Rihanna and Kanye West have decided to release their newest albums via the app Tidal.
Streaming services have also faced criticism from within the music and song writing community. According to the New Yorker, song writers may face significant challenges because of the payment structure for song writers in the United States. Currently, song writers earn most of their income through royalties based on album sales or number of times played via online streaming. However, the writer’s share of internet streams is a small fraction of the amount that a writer can earn for an actual album sale. Writers are also hampered by the fact that even when streaming services have the proper information to compensate song performers, they often have difficulty finding the information required to compensate the song writers and other persons involved with music production.
During the Grammy Awards, Neil Portnow, the President of the Recording Academy spoke out against music streaming services. Portnow pointed out that artists should be compensated more fairly than they are now by music streaming services. He particularly argued that fans must be willing to purchase albums from their favorite artists in order to make it worthwhile to pursue a career in music. In the past, Portnow has aligned himself with artists and called for streaming services to pay artists more fairly.
A version of this article appeared in the Tuesday, February 23rd print edition.
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