The post-tax split of streaming revenue from a report by Ernst & Young, funded by the French recorded music trade organization SNEP, whose members include Universal Music, Sony Music and Warner Music.
Which leads us back to Adele. If Spotify’s agreements with the labels set the pace for licensing payments for streaming music, then Adele sets the tone for the artists. She’s in an elite class of pop star; one of the three women with the biggest albums of the last three years that decided to forgo offering their records to the streaming services upon release. Surprise-released at the end 2013, Beyoncé was first an iTunes exclusive. Physical releases came later, but it was out for a solid year before Queen Bey released it to the streaming services. Taylor Swift took it one step further, pulling her entire catalog from the streaming services leading up to the release of 1989, which is still download- and purchase-only. But Adele is a singular commercial force. Unlike Taylor Swift’s Big Machine, she rarely tours, yet she moved almost as many copies of 21 as Beyoncé and Swift have sold in their entire careers. So all eyes were on her leading up to the release of 25: would she stream, or would she not stream? In the days ahead of 25’s release, the verdict came down: She would not.
For their part, Adele’s team wasn’t totally unwilling to play ball; it’s been reported that their main beef was with Spotify’s free tier, which generates considerably less revenue per stream through advertising than the subscription tier. For better or worse, Spotify refused to fragment its library, so Adele took her ball and went home. And with the sales numbers through the first three weeks, it’s hard to argue against her: 25 represented 41 percent of all albums purchased during November 20-26, the week of its release.
So Adele, Taylor Swift, and Beyoncé don’t need streaming to make mountains of cash — for now, anyway. That’s great for them and their families, labels, and hangers-on. But what about everyone else? No matter what the labels do to Spotify, the public has gotten used to this new way of listening to music. It’s not going away. Independent artists increasingly rely upon their music being available on-demand, for free, in order to grow their audience as fast as possible, making profits on merchandise and tour dates. And of course, the overall revenue pie from streaming is currently smaller than the inflated numbers of record sales in the early ’00s, but some artists with favorable record deals can still make millions streaming a hit song. As the streaming market gets increasingly fragmented, there’s almost too many moving parts to see how it’s all going to shake out. The major labels continue to license their catalogs to more and more services, further devaluing the exclusivity of its product, but as the overall number of paid subscribers on Spotify, Apple Music, and the like continues to grow, so does the overall revenue generated by streaming.
As long as Adele is selling millions of records while keeping her music off streaming services, other big pop stars will likely follow suit. Despite the digital direction in which the market is leaning, selling a CD, vinyl, or even a digital download of an album is still more profitable than a stream. Record companies will do everything in their power to maximize this most lucrative of revenue streams as long as it remains even remotely viable. Streaming has already surpassed sales revenue from an industry perspective; eventually, we’ll see an artist make more money from streams than from sales (our money is on Drake). But not this year.
This piece is part of Flavorwire’s series of essays on 2015 in culture. Click here to follow our end-of-year coverage.