Running Head: TEN DOLLARS A MONTH AND ITS IMPACT

Ten Dollars a Month and its Impact

Kevin Zhou
Florida State University

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Introduction
From records to cassettes, from CD's to ninety-nine cents per song, the method in which
music is being capitalized is rapidly improving and innovating. That same innovation has led to a
new medium in which songs or music can be listened to and technically purchased through
subscription; music streaming services. A music streaming service is a service that allows a
consumer within that market to listen to nearly any song that the service have to offer. This
concept can be considered an alternative to direct music downloading. With this new service, the
music community has seen a vast number of changes that is altering the culture in which people
listen to music as well as huge changes in the way the music industry interacts with their
consumers. However, with these changes come with arguments; it is now being speculated
whether or not these changes are beneficial to the community and industry as a whole,
financially and culturally. However, with thorough qualitative and quantitative research it is seen
that although the new service does come with faults, when looking at the benefits, the music
community and industry far is better off with Music Streaming Services. This is so because, with
the new service, the music industry is seeing economic improvement. Additionally, with music
streaming services, the music community went through important and essential cultural changes
that benefit both consumers and artists. Lastly, with the introduction of music streaming services
comes the conclusion of arguably one of the biggest issues the music community and industry
faces; music piracy.
Music Industry Financial Analysis
First, when examining how the music industry benefits from this new service, it is easy to
realize that the first thing to consider, being that it is an industry, is knowing how much profit are

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they reaping financially from music streaming services. But before looking at the numbers,
Lauren Keating, a writer for Tech Times writes a (2015) article reporting how record labels and
music streaming services make their deals. Keating explains that each music streaming service
has their own method of pricing and rates. Essentially, because most of the deals happen on the
negotiating table, deals, pricing, and contracts remain confidential between the two parties.
However, Keating goes on to report that on a contracted leaked from one of Apple Musics deals,
it is revealed that the company makes 71.5 percent of its revenue in the U.S. However, it's
important to note that the approximately 70 percent will go to whoever owns the publisher rights
to the recordings In this case, it would be the music label and the contracted publishers
(Keating, 2015). Knowing this, it is easy to see that the music industry is reaping the benefits
from this new medium of listening to music. But when looking at the numbers and statistics, Nils
Wlmert of Vienna University and Dominik Papies of the University of Tuebingen gather
quantitative data that proves the music industry is making financial gains from the new service.
In their research, they compare revenues made from free streaming services and, in this case,
paid subscription streaming services. They find that even with market cannibalization or the
initial negative impact of a new product or service on sales, total revenues ended up being
positive. In their conclusion, they even note that the music industry should consider the
subscription music streaming service over the free one if they want to see economic
improvement (Wlmert & Papies, 2015, p. 321-324). When looking at Keatings article and
comparing to Wlmerts and Papies research, a conclusion can easily be made that the music
industry, more specifically, music labels and publishers are gaining a great deal of profit from the
new method of listening to music. In fact, a very familiar company that associates itself with the
realm of music listening through the medium of downloading, Apple, recently made an addition

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to their music monopoly, and their actions are all due to the new concept of music streaming
services (Sisario & Chen, 2015). Ben Sisario and Brian Chen of the New York Times reported
this on their (2015) article when they emphasize that Apple, the technological mogul, is
following the footsteps of one of the first subscription-based music streaming company Spotify,
by creating their own music streaming service platform. Knowing that Apple, an already
successful company, is rivaling a novice company truly shows the magnitude of profit that the
platform of a music streaming service can have.
Music Community Improvements
When moving on to the effects music streaming services have had on the music
community, it is seen that the music community experienced the most change out of the
introduction of the new service. This is first seen through the concept of interface. Interface can
be interpreted or even defined as the relationship or point of contact between a system and a
person. Jeremy Morris of the University of Wisconsin-Madison and Devon Powers of Drexel
University write a journal article in (2015) that gives an overview of the musical experience in
music streaming services that emphasizes this concept. Morris and Powers summarizes that with
these new music streaming platforms come new interfaces, each with a different experience for
consumers. They continue by adding that the goal of these interfaces is to make the consumer
feel good. For example, they listed that Spotify had this goal in mind by making their interface
experience more personalized. They go on and conclude that the main effect that these new
service companies have had on the music community is The shift toward a branded music
experience and how the new focus is driven towards stimulating the listeners relationship to
music in the presentation and curation of that music (Morris & Powers, 2015, p.111-117).

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The next positive effect that is seen on the music community with the introduction of
music streaming services is a new effort in branching music to social networking. Mark Glantz
writes a Journal Article in (2016) highlighting the human touch of internet radio and streaming
services by reviewing twelve different companies specializing in music streaming. Out of those
twelve, he reviews how the company, Grooveshark, followed this innovative trend by creating
and incorporating a community option into their interface. With this option, users can connect
their accounts to social networks to let their friends know what about they are listening too, or
what playlists they have made (Glantz, 2016, p.42-43).
When considering the next positive impact that music streaming services have had on the
music community, it is important to note that one of the most sought-out goals in the music
community is to earn a Grammy. A Grammy is an achievement or award that is handed out by
the Recording Academy annually to recognize an artists achievement in the music industry.
Typically, to be nominated, an artist would have to sell music physically through the medium of
a CD, tape, etc. This essentially meant the artist would have to be signed to a music label for that
to happen, thus, leaving independent artists who do not have access to that resource at a huge
disadvantage. However, with the introduction of subscription-based music streaming services,
independent artists with clout are now able to stream their music on these services. Knowing
this, the Grammys Awards made a major amendment in their nomination process. John Lynch of
Business Insider, reports on (2016), that the Grammys Awards are opening the nomination
requirements to streaming-only" music that exists only on services with "paid subscription, full
catalogue, [and] on-demand/limited download platforms." This amendment to the guidelines of
nomination thereby fixes the issue of independent artists feeling like they are forced to sign with
a music label to achieve a Grammy (Lynch, 2016).

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Overall, with the new service of music streaming, the music community sees several
positive impacts that benefits artists and consumers in the long run. These benefits being an
improvement in marketing-based interfaces to give consumers a better music listening
experience, an improvement on social media connectivity, and a major change in how artists who
are not signed to music label can receive the prestigious honor of a Grammy Award.
Music Piracy
One of the biggest issue that the music community and the especially the music industry
faces is Music Piracy. Music Piracy is an activity that disproportionally harms music artists and
proportionally harms the music industry by sharing, copying, and downloading music through
illegal means. However, with the introduction of subscription-based music streaming services,
comes an apparent conclusion to the act of music piracy. Dr. Jonathan Drr, Dr. Thomas Hess,
and Thomas Wagner of the Munich School of Management, as well as Dr. Alexander Benlian of
the Darmstadt University of Technology write a journal article in (2013) claiming that music
pirates began using MaaS or subscription-based music streaming services and subsequently
given up illegal downloading (Drr, Wagner, Benlian, & Hess, 2013, p. 384). Following this,
Gary Sinclair of The University of Stirling and Todd Green of Brock University write a Journal
Article in (2016) that provides an explanation for why music pirates are slowly giving up illegal
downloading for music streaming. In the article, Sinclair and Green conduct multiple interviews
on Ex-Downloaders or ex-music pirates and why they chose to migrate to the music streaming.
They found that all the interviewees referred to Spotify when answering the question, and
explained how Spotifys option between free music and advertisement or ten dollars a month for
unlimited music with no advertisements was the reason why they migrated over to music
streaming. Essentially, music pirates find more utility from the new business model found in

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music streaming services such as Spotify, than having to download music illegally all the time
(Sinclair & Green, 2016, p. 9-11). Wagner, Benlian, and Hess, in another journal article written
in (2014) explains the relationship between the business model and the consumers. They explain
that through the two options of having advertisements or not, music streaming service companies
can easily persuade consumers to pay for the premium plan by offering limited trials. This gives
music pirates a taste of unlimited music, which thereby encourages them to treat music as if it
were a utility to be paid for (Wagner, Benlian, Hess, 2014, p. 267) So, because music at its
digitally primitive state was so easy access and share before, peers in the music community
found no worth in buying the music because it was just more convenient to download the tracks
illegally. However, the introduction of streaming services added much more to the table; this
essentially became the fine line between worth buying and music pirating.
Issues with the New Service
With every new thing and it benefits comes with conflicting issues. So far it has been
examined that music streaming services has provided direct and indirect benefits for both the
music industry as well as the music community. However, Kate Swanson of the MEIEA Journal
writes an article in (2013) reviewing public disapprovals for new service. She reports that music
artists such as Taylor Swift and The Black Keys spoke out on how music streaming services
undermine them as artists due to the unfair royalties and cannibalization of their album sales.
(Swanson, 2013, p. 208-209). To concede, it is true that as the concept of music streaming
services continually becomes the norm, artists who solely rely on album sales are losing money
as the music industry is making more money ever than before. However, even with this issue it is
undeniable that this new service is a new function of the music industry. Swanson in her article
even states Whether we like it or not, Spotify and related music streaming services represent a

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window into the future of the music industry. Additionally, it is impossible to forget the new
service provides benefits that outweigh the issue, such as the end of music piracy. When
comparing music streaming services and music piracy and their effects of album sales, it is easy
to suggest that artists are better off with the services as they still get paid even if their album
sales are being cannibalized.
Conclusion
From the Record, all the way to the creation of the MP3, entrepreneurship always found
ways to innovated the capitalization of music. Today, music is being capitalized through the
means of a streaming service. Through in-depth review, it is seen that although music streaming
services can potentially harm artists in the music industry through unfair royalties, these services
provide a variety of benefits that impacts the music community and industry positively and thus
paves the way for a new future in which consumers listen to music differently. These benefits
being an increase in music industry revenues, an improvement in music listening experience
through interface, a new path for independent artists to be nominated for a Grammy Award, and a
long-awaited conclusion to music piracy. With all these benefits, an underpayment from the new
services seems miniscule so when wondering if the music industry and community is better off
with subscription-based music streaming services, the answer is an easy yes.

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References
Drr, J., Wagner, T., Benlian, A., & Hess, T. (2013). Music as a service as an alternative to music
piracy? Business & Information Systems Engineering, 5(6), 384.
Glantz, M. (2016). Internet radio adopts a human touch: A study of 12 streaming music
services. Journal of Radio & Audio Media, 23(1), 36; 36-49; 49.
Keating, L. (2015). The business of music-streaming services: How deals with record labels and
publishers are made. Retrieved October 31, 2016, from
http://www.techtimes.com/articles/81895/20150910/business-music-streaming-servicesdeals-record-labels.htm
Lynch, J. (2016). The Grammys made one big change to their rules and now this rapper has a
chance at winning. Retrieved October 31, 2016, from
http://www.businessinsider.com/grammys-make-streaming-only-music-eligible-for-awards2016-6
Morris, J. W., & Powers, D. (2015). Control, curation and musical experience in streaming music
services. Creative Industries Journal, 8(2), 111-112.
Nils, W., Dominik, P. (2016). On-demand streaming services and music industry revenues
insights from Spotify's market entry.33(2), 316-325.
Sinclair, G., & Green, T. (2016). Download or stream? steal or buy? developing a typology of
today's music consumer. Journal of Consumer Behaviour, 15(1), 9-11.

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Sisario, B., & Chen, B. X. (2015, March 25). Apple and Beats Developing Streaming Music
Service to Rival Spotify. Retrieved October 31, 2016, from
http://www.nytimes.com/2015/03/26/technology/apple-and-beats-developing-streamingmusic-service-to-rival-spotify.html?_r=0
Swanson, K. (2013). A case study on Spotify: Exploring perceptions of the music
streaming. MEIEA Journal, 13(1), 208-209.
Wagner, T. M., Benlian, A., & Hess, T. (2014). Converting freemium customers from free to
premium--the role of the perceived premium fit in the case of music as a service. Electronic
Markets, 24(4), 259-268.