For a number of years musicians and artists have been vocal about the fact streaming services aren't working for them. As it turns out, the model isn't working for streaming giants either.
New research from Goldman Sachs has lifted the lid on the industry expected to be worth more than $130 billion by 2030—one which although growing, is seeing revenue per stream shrinking.
Analysts who put together the 'Music in the Air' report for 2023 say they believe that the music industry "is on the cusp of another major structural change" thanks to under-monetization of content, outdated streaming payout structures and the emergence of A.I.
The ten authors of the Goldman paper outline that between 2017 and 2022 the number of audio streams has increased by 2.5—up to 3359 billion from 950 billion. Yet in the same five-year period revenue per stream tanked, down from $0.0065 to approximately $0.0052.
The pay question isn't just bad for business, it's also impacting artists. In May, Snoop Dogg called out streaming giants during an interview with Apple Music's former creative director.
During his Milken Institute Global Conference appearance, the Gin and Juice rapper said: “I don’t know who’s running the streaming industry—if you are here or not—but you need to give us some information on how to track this money down, cause one plus one ain’t adding up to two.
“Some of these artists are streaming millions and millions of streams and they don’t have millions of dollars in their pocket.”
He's not alone.
Artists like Sting and Beatles frontman Paul McCartney have previously written to the British government asking for action, and the U.S. advocacy group Union of Musicians and Allied Workers is pushing for fairer deals from streaming giants.
Expect prices to increase
Unfortunately for consumers, it seems the purse strings already tightened by inflation are going to be stretched even more.
The Goldman report suggests that music streaming platforms should take inspiration from other content providers like Netflix, pointing out that the platform has upped its prices by 55% in the U.S. since 2016—approximately 10% every two years.
Likewise, its premium plan has rocketed by 67% over the same period—and cracked down on password-sharing households to force more individuals to pay for the service.
On the other hand Apple and Spotify upped their prices in late 2022 and early 2023, but not by more than 13%.
That's all set to change the researchers believe, noting: "We believe that such price increases are not just a one-off and we would expect the industry to work towards implementing price increases on a recurring basis, especially in an environment of higher inflation, and similar to the price increases adopted in other industries."
Apple Music and Spotify did not respond to Fortune's request for comment asking if they had any plans to increase prices.
The value of a superfan
The sector was also advised to look for ways to capitalize on an already engaged audience: superfans.
Die-hard supporters of acts like Taylor Swift have already shown they're happy to spend approximately $1,300 on tickets to see her on tour, merchandise, travel and food—and it's an enthusiasm streamers can take to the bank, Goldman said.
The author's analysis suggests that the superfan sector—which streams double that of an average customer—could be worth up to $4.2 billion over time, with around 20% of current audiences falling into that category.
Where platforms have tried to tie plans to household structures before—Apple Music's family plan, Spotify Duo for two people that live together, student plans and so on—the lender suggests that streamers should add a premium option too.
It's a tactic Apple Music is already looking into, having introduced its Classical streaming app which comes with higher audio quality.
Meanwhile, Spotify plans to launch a new premium tier offering a Hi-Fi (higher quality sound reproduction) service later this year, according to Bloomberg.
