The digital era has created enormous opportunities and challenges for the music industry. However, although the music industry once called streaming platforms the savior of the industry—this is rapidly changing.
Now, artists and labels have realized that streaming has never been reliable revenue.
In addition, with the growth of TikTok, the power dynamics within between social media and streaming are rapidly changing. This has left artists angry and has threatened financial compensation.
In this article, we’ll look at the shift away from streaming platforms and why this may cause music businesses a few issues:
The History of Streaming Platforms
You can trace music streaming back to the 2000s, with services like Pandora and Last.fm offering radio stations based on user preferences. Nevertheless, the launch of Spotify in 2008 transformed the music industry.
The success allowed other streaming giants to enter the fray—including Apple Music, Amazon Music, and Google Play Music. Each platform offered unique features and benefits, but they all shared a common goal: to provide listeners access to music anytime, anywhere.
As streaming gained more traction, the music industry grappled with a new reality: although streaming could reach massive audiences and unprecedented engagement, it also posed significant challenges for monetization.
However, social media is now doing the job of streaming platforms thanks to algorithmic discovery, particularly on TikTok, Facebook, and Instagram.
So what’s the problem with social media taking over streaming?
1. The Dilution of Revenue Streams
As social media platforms like TikTok grow, the reliance on streaming platforms for revenue generation will further decrease. Now, artists are torn between allocating resources to social media content creation and focusing on standard music production.
With artist revenues already dwindling due to the expansive artist pool and passive streaming habits, the social media shift as a primary platform worsens financial strains.
2. Impact on Artistic Development
The demand for short-form content has perhaps ruined the expansion of songs and artists. That’s because artists produce bite-sized content that caters to the platform's algorithmic preferences; in turn, sacrificing their artistic expression.
Furthermore, this emphasis on quantity over quality may impede the creation of a loyal fan base and creative growth.
3. Uncertain Financial Models
Social media platforms are wrestling with creating sustainable revenue models that compensate artists while balancing the needs of advertisers and users.
Some platforms have experimented with subscription-based models; however, switching from free content to paid subscriptions poses significant challenges.
The discrepancy between the profitability of short-form versus long-form content further complicates revenue generation efforts because it casts doubt on the viability of social media as a primary revenue stream.
4. Disruption on Multiple Fronts
The disruption caused by social media platforms extends beyond the music industry. Social media platforms are experiencing internal upheavals as they guide evolving user preferences and revenue pressures.
This creates numerous challenges and uncertainties for artists and social media platforms alike, requiring careful negotiation and adaptation.
5. Copyright Infringement
User-generated content on social media platforms raises concerns about copyright infringement. With users freely remixing and sharing music content, artists and rights holders may struggle to protect their intellectual property rights.
As a result, this challenges the traditional copyright enforcement mechanisms and requires measures to safeguard artists' rights.
6. Algorithmic Bias
The algorithms governing content discovery on social media platforms, primarily TikTok, can shape user preferences and influence which artists gain visibility.
However, these algorithms are not immune to bias and manipulation, potentially favoring certain artists or genres over others.
The Fallout Between TikTok and Universal Music Group
This week, TikTok removed music associated with Universal's extensive publishing catalog as per the requirements of the multinational music company. This includes all songs authored by Universal Music Publishing Group's songwriters.
The ramifications extend to artists linked to the label—such as Harry Styles and SZA—even if they are not directly signed under UMG.
TikTok issued a statement confirming its compliance with Universal Music Group's directive, expressing commitment to pursuing an equitable resolution with the music giant. However, the platform emphasized that these actions impact the represented songwriters, artists, and others not affiliated with Universal.
In response, Universal issued an open statement to its songwriters, rebuking TikTok for its failure to acknowledge the equitable value of their songs.
Universal highlighted TikTok's reluctance to address concerns regarding fair compensation for songwriters, particularly about artificial intelligence (AI) technology.
Final Thoughts
Social media platforms may become the new streaming services, but that doesn’t mean they are perfect: they’re quite the opposite. Possible downsides include fewer revenue streams, copywriting infringement due to AI, and less artistic development.
To avoid these pitfalls, music companies must protect their musicians and prepare for the changes.
At Reprtoir, we offer the perfect tools to grow and nurture your music business. Chat with us today to find out how service can grow your business during uncertain times.
