The Value of Music Streaming Services

Rob Holthause

August 26, 2019

Earlier this year, Spotify broke 100 million paid subscribers. Apple Music isn’t far behind, with 60 million. We are in the midst of a massive paradigm shift in the way that the average listener gets their music. What’s pushing people from an ownership model to an access model? Let’s take a look at the rise of streaming services.

Music is a consumable good, but it has a key difference from virtually all other consumables: unlike a cup of coffee or a bottle of vitamins, an album can be consumed indefinitely and at the listener’s leisure. In this regard, music is similar to another art – literature. But while libraries have existed for millennia, recorded music is a relatively new medium, and albums and singles have historically only been available for purchase at record stores.

With the advent of the digital age, information increasingly became available online. Apple released iTunes in 2001, allowing listeners to digitize their music. Suddenly, a whole rack of CDs could be stored on a user’s computer and, eventually, on an iPod. The concept of the music library was born. And with the concept of a library comes the concept of access – a “library card” if you will.

Fast forward a few years, and we see an explosion in the popularity of streaming services. This shift to streaming over traditional ownership can be boiled down to one factor – cost. A Spotify Premium or Apple Music membership costs $10 per month, and provides the consumer with a mind-bogglingly massive library of music to choose from. Compare that with the average cost of an album on iTunes – $10 – and it’s plain to see the value in streaming. One could spend many years and countless amounts of money, and still not amass a collection that’s anywhere close to the libraries that Spotify or Apple boast. In that sense, it’s also way more convenient as well.

Another thing to consider is that as music has become less physical and more digital, there’s less of an incentive to spend money owning an album. There’s enjoyment that comes from owning the physical album, with its liner notes and photos, that is lost when a listener purchases an album online. If what you’re after is the art itself, that’s the songs. The product previously offered in liner notes is now available separately online, every time you Google the artist.

Physical albums aren’t going away – you’ll have to pry my vinyl collection from my cold, dead hands – but the value of streaming services is overwhelming. It’s clear that they’re not just a fad (RIP, 8-track cassettes) but that they’re here to stay.



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