Humbot vs Rephrasy

Streaming has changed the economic landscape for independent music through the reduction of barriers to entry and compression of per unit revenue. Previous distribution methods included printing, packaging, and shipping costs along with developing relationships with retail outlets. Services such as DistroKid and Bandcamp provide independent musicians access to global markets for a nominal annual subscription cost while retaining ownership of their master recordings. As a result, there has been a significant increase in the amount of released material; in excess of 100,000 new songs are uploaded each day.

However, with this wealth of options, there is an issue related to discovery. Each stream generates very small revenues (often less than one penny), therefore generating significant revenue requires large volumes. The vast majority of streaming services utilize a pro-rata model for distribution of royalties. This model combines all royalties collected from all users and then distributes those royalties based upon each user's share of streams. This method provides benefits to top-tier performers and those with large advertising budgets. Therefore, although some independent performers may have dedicated fan bases who are very active listeners, those performers will likely generate little or no revenue. Some supporters of "user-centric" models believe that if each user paid into a separate account and that account was used exclusively to pay for the music that user streamed, then independent performers would receive greater financial returns.

Streaming has become a way to promote the music business, whereas previously it was primarily about selling music. As a result, many independent artists are now able to support themselves through live performance, merchandise sales, vinyl releases, sync licenses, and direct-to-fan platforms like Patreon and Bandcamp. At the same time, independent artists have access to streaming data that provides insight into their audience base, including location, which helps them schedule tour dates and target their marketing efforts. Previously, this type of data was only accessible to major record labels.

Playlists are now the gatekeepers. Placement on an editor's top playlist is potentially life-changing for an artist. However, getting your music onto these playlists is usually dependent upon whether you are using a tool that allows you to pitch your music to them, have money for advertising/marketing, or if the algorithm likes you. As a result, artists are releasing shorter songs with faster hook-lines and more frequently so they can continue to engage their audience.

Lastly, a fourth layer of service providers have developed: distributors, label service providers and advances-based funders that provide funds for an artist to utilize in return for a portion of future royalty payments. While these types of services may assist artists with scaling their business, they may also increase the complexity of operating the business and possibly the cost.

The process of streaming has made it possible for anyone to distribute their content, however it has also made it much more difficult for individuals to gain exposure. Therefore, while being an independent creator is now easier than ever to begin, maintaining that independence will be a significantly greater challenge.

Streaming has impacted all aspects of the music industry. Distribution once required a manufacturer to print physical copies of music, and retailers were needed to market and sell them. Today, any independent artist with a laptop, an internet connection, and a credit card can upload their songs to any major streaming service and sell to the public.

Yet abundance is a boon to music lovers and a boon threatens to become a nightmare to smaller artists, many of whom only have enough money or fame to release a single song. Most platforms use an individual percentage method that slices the music industry’s monthly revenue pie and distributes it by calculating each artist’s share as a portion of the total listens for that month. This favors artists with the largest fan bases that account for the biggest share of listens during the month.

The business model of some of these streaming services is unfair to the artist. Artists rely on live performances and other merchandise revenue to sustain their business. On the other hand, it's a good thing that people use these sources to listen to music. Streaming data allows artists to gather more information about who their listeners are, giving a more transparent way of engaging with the consumer on the user end.

Playlists have also emerged as the curation tool of the streaming era, and Spotify in particular drives and supports the tastes of both consumers and labels. Access often begets algorithmic favor. A placement on the weekly pop chart, for example, can rapidly push a song into the mainstream; playlists representing specific locations, also created by Spotify, help artists break in particular territories.

Finally, a change in licensing practices, which favor direct engagement with fanbases, and a new emphasis on indirect income streams, offer substantial opportunities for the self-promoting independent artist. But they add complexity. Funders and grantmakers need to adjust accordingly.

Overall, streaming revenue is one of the income sources that artists have some control over. Yet independence can make it difficult to understand all that is involved in earning a substantial living.