According to data released by Recorded Music NZ, Kiwi musicians made more money from digital album sales than physical records for the first time in 2013, and, if numbers are anything to go by, this trend is set to continue over the next few years.
Damian Vaughn, the chief executive of Recorded Music NZ, alluded to this data at a recent speakers' event was held at the Spark Lab as part of the New Zealand Music Month schedule.
"Down the bottom [of the infographic] is the last seven years of recorded revenue, that is the revenue derived from the sale of recorded music and includes download, streaming and the physical product," said Vaughn.
Between 2012 and 2013 the proportion of revenue contributed by streaming tripled from three to nine percent, and Vaughn says this upward trajectory isn’t slowing.
"I looked at the figures this morning, and we’re probably tracking around 20 to 25 percent this year, which just shows the astronomical growth of streaming services in this country and how important it is for our industry," he says.
Vaughn presented the event alongside Spotify's head of business development of the APAC region Michael Richardson, and the pair exchanged thoughts on the impact that online streaming was having on the Kiwi music industry, and whether it was good for musicians.
A common criticism levelled at online streaming services is that the remuneration offered to musicians isn't sufficient—a problem that caused Thom Yorke and, more recently Taylor Swift to pull their music from the service (although Radiohead's material is still available).
In the aftermath of Swift's well-publicised departure from Spotify, Nielsen released a study on user habits when it comes to streaming services. The research found:
"... those who spend the most money on digital music are, unsurprisingly, the most likely to purchase music unavailable to stream. Similarly, those who pay for streaming services are also more likely to buy the album (14%) than free-streamers (6%), who are far more likely to find a way to get the music for free elsewhere. On the whole, fans willing to purchase music missing from online services are more likely to buy just one or two songs from the album rather than the entire track list.
In general, listeners expect newly released music to appear on a streaming site within two weeks or less. Teens have the lowest tolerance for long waits, with 60% expecting newly released music to be available within a week. They are the least likely to buy music that they can’t stream, preferring to either find something else to listen to, wait it out, or turn to free alternatives. Adults aged 18-34 will buy a song or two, but are less likely to buy the full album than the average music listener. Adults aged 35-44, on the other hand, are the most likely to buy music they can’t stream, with 19% saying they would buy the complete album."
While disappointed at the departure of Yorke and other similar artists, Richardson defended Spotify's remuneration record.
“Each artist has their own position, and Thom took his stuff off — all that I can say is that he’s welcome to come back, and I hope that he does," said Richardson.
"That’s their right to do with their repertoire. There are artists that can do that. Obviously, we’d like to have everyone on our service, because we believe we provide a great platform for artists and they get remunerated for it. We’ve delivered back to the industry over a billion dollars in the last year, and I think we’re the number two revenue generator in Europe behind iTunes—and we’re catching up to those guys rapidly."
He also explained the the new generation looks at music differently to how those that came before did.
"There’s a generation of people that have never paid for music and don’t think they should pay for music; they believe that music is free."
And given that this has manifested itself in large-scale piracy, Vaughn is of the opinion that legal streaming services that remunerate artists is step in the right direction.
“Every artist’s deal that they have with a record label is structured differently," he says. "We pay the record label and we don’t pay the artist. And what they get paid—however big or small it is—is always going to be better what they get from a peer-to-peer site, which always gives them nothing.”