Recently, there has been some debate sparked in various social media about the impact that streaming services (Spotify, Apple Music, Google Music, YouTube Red, Pandora etc.) are having on artists ability to fund their projects and earn a living. In the Christian hip hop community, here’s what a couple of artists are saying:

Shai Linne Wrote…

Just a quick word as an artist that some of you support. I understand why people use streaming services. From a fan perspective, it totally makes financial sense. BUT from an artist’s perspective, especially an independent artist, streaming is DISASTROUS. {{{SIDE NOTE: What I”m about to say only applies to you if you actually desire to financially support the artists you listen to. I don’t assume that is the case, and I get the times that we’re in. People listen to music for all kinds of reasons and you’re all entitled to spend your hard earned money how you want. So what I’m about to say is not really for “casual fans”, but for “die-hards”.}}}

Derek Minor wrote…

Music has been devalued so much that buying an artist’s album is like giving them a tip. The hourly wages come from streaming.

There’s no question that streaming, at least in its beginning stages, has had a negative impact on revenue for artists and labels. Streaming typically pays artists/labels (or whoever is the owner of the master recording) anywhere from $0.001 to $0.005 per play. A play is defined as one user playing 30 seconds or more of that particular song. If you think through the math, that equates to $1000 to $5000 per ONE MILLION streams. At this point in time, a million streams is difficult to achieve, at least until millions more people sign up for the streaming services. Across all streaming services, as of the publish date of this article, there are probably several hundred million users across all platforms, some users pay for premium service, and the majority are getting free service paid for by advertising. But for many artists to start to reach the millions of streams target, there are going to have to be millions more using streaming platforms worldwide.

Given that a a great indie album costs about $20,000 to $30,000 to make (with proper producing, engineering, songwriting, mixing, mastering), it can take an artist 15-30 MILLION streams to break even. And then not only does an artist have to get 30 million streams, they have to do it in 2 years, which has been the typical product cycle for release of full-length albums. How many artists do you know who can hit 15-30 million streams right now? Not many.

Streaming services were made possible by legislation that became part of Copyright law in 1998, otherwise known as the “Digital Millenium Copyright Act” (the DMCA for short). The DMCA setup the ability for companies to stream music on the Internet in two main ways: as a “non-interactive” service, such as your local radio station’s broadcast stream, or “interactive” services, such as Spotify and Apple Music. Pandora was the first commercial streaming service, and it was a hybrid service that allowed the user to pick an artist then get a stream of songs based on that artist. The issue from 1998 onward was that record labels did not want their full albums with individual tracks available on the interactive services, since they knew it would cannibalize their sales of CDs and downloads. This has proven to be obviously true. However, when Spotify proposed to come to the U.S. market in 2013, they worked out a deal with the major labels to exchange stock in Spotify for access to major label catalogs. The major labels agreed, since they saw the potential of Spotify to recruit millions of paid users, thus driving up Spotify stock and enriching the major labels even further. The problem was that the artists themselves did not benefit from that deal. Some artists do benefit directly from streaming, such as older classic acts who would now see streaming revenue for years to come (think “Stairway to Heaven” being played by millions of people now and for decades to come). Indie artists really got the short end of the stick since they were not part of any existing catalog, and if they decided not to be on the interactive streaming services, they risked not being heard by anyone. But if they do publish their music on streaming services, they earn almost nothing. That dilemma exists to this day. When you mix Christian music into that equation, the picture becomes even more bleak.

So what is an artist to do? Here’s a suggestion of different strategies that you can use to deal with streaming. You have to take into account where you are in your career as an artist. If you’re new, then publishing all your music on streaming may be advantageous since streaming gives your fans the ability to be individual radio stations for you. If you’re a seasoned artist with a big fan base, then holding out and not doing streaming would maximize your revenue, and this is exactly what Taylor Swift and Adele did on their most recent releases. However, most artists are somewhere in between, so there are hybrid approaches you can take.

Here are the possible strategies for releasing your music on streaming platforms:

Go “All In”
Streaming is here to stay. The value to consumers is amazing, and the user experience on Spotify and other platforms has made enjoying music better than ever. Netflix has proved that people will watch more movies now that they have a huge library at their fingertips. With streaming, you no longer need to beg radio stations to play your music. Every one of your friends and fans can now become your radio station by creating and sharing playlists with your music on it. But just realize the bulk of your earnings potential now lies in your shows and your ability to sell merchandise.

Release a “Teaser” EP
If you have a full album of 10 or so songs, you can release an abbreviated edition of the album (an EP) on the streaming services, but create a separate full release that is available for download only.

Use the Netflix Model
This is the model that the major movie studios have been using with Netflix for some time. Save your biggest hits for download only and/or only allow streaming AFTER an album has been available for download after a certain amount of time. For example, you could release your album for download only, then after 30 days make it available for streaming. You can vary the “download only” period by up to 12 months if needed. Again, some songs/albums you could withhold from streaming permanently, if they are cash cows for you. And this leads us to the next option…

Go Download Only / Crowdsource
This is the “nuclear option”: You can withhold from streaming services completely, and motivate your fan base to buy the download. A good way to do this is via crowdsourcing. Crowdsourcing allows you to mix your music with other merchandise items to encourage people to really take part in your art, not just the music. If you are a new artist, this may not be the best option. This will work only if your have an established fanbase, with a recommended social media following of at least five to ten thousand people on at least one social network. You can also make certain albums available only at shows via physical media, like CD and Vinyl, making them collectors items.

What approach makes sense for your next album? Let us know in the comments below.