Global streaming of music pays off for consumers, artists

MILLIONS of consumers across the globe have been given the opportunity to access music from home, office or car at the click of a button thanks to online music streaming.

Gillian Ezra, head of African operations at Deezer, said apart from the convenience offered to customers who through the music platform are able to access over a million tracks, save them, create playlists and even listen offline – music streaming offers huge growth and support to the music industry too. Artists are paid royalties for each time their song is streamed, with Apple Music recently pledging to pay artists for the songs consumed even during its free three-month period after a public dressingdown from pop superstar Taylor Swift.

But how do the companies themselves make money?

Spotify, one of the biggest online music streaming sites in the world with over 40 million subscribers, said they made their revenue through ads and consumers’ monthly premiums.

Spotify offers customers a choice between two different packages, one free and the other a paid package called Premium.

On the free package, customers get their choice of music but it comes with ads.

Premium provides adfree, unlimited music that is also available offline.

Last year the Guardian quoted Spotify CEO Daniel Ek saying: “We believe we will generate substantial revenues as our reach expands that, at scale, our margins will improve.”

According to Bloomberg writer Leonid Bershidsky, Deezer makes 96% of its revenue from its user base.

“The rest comes from advertising played to nonpaying users,” the article reads.

“In the six months ended June 30, it made million (R1.3-billion) in revenue and paid back 76.4% of that to rights owners – a bit more than the 70% Spotify says it returns or the 71.5% claimed by Apple.

“For the six months ended June 30, Deezer reported a million (R173million) loss, practically unchanged from the same period last year, though revenue increased 1%,” the article continues.