What made the iTunes model so successful was that it allowed music lovers to buy songs that they want, as opposed to being forced to buy an entire album just for one song. This ala carte system obviously worked, but even if a song was $0.99, there were some users who felt that it was still too dear.
Enter music streaming where for about $10 a month, users get to listen to as many songs as they want, whenever they want. This “all you can listen” model seems to be much better at combating piracy, according to research conducted by the European Commission’s Joint Research Centre.
According to their findings, they have found that music streaming services such as Spotify has actually helped reduce the levels of piracy in the countries where the platform is available. Their data shows that for every 47 Spotify streams, it has helped to prevent one illegal download. However this comes at the price of digital purchases.
The research also found that for every 137 Spotify streams, it reduces the sale of a digital track from platforms like iTunes by one. However the report claims that ultimately the gains made from streaming revenue outweigh the loss from the digital sale. “Given the current industry’s revenue from track sales ($0.82 per sale) and the average payment received per stream ($0.007 per stream), our sales displacement estimates show that the losses from displaced sales are roughly outweighed by the gains in streaming revenue.”
So what does this mean? It seems to suggest that dedicating resources towards trying to shut down every illegal website out there would be like playing an endless game of “whack a mole”, and that maybe coming up with better legal alternatives, such as streaming, would be a better idea.
Filed in . Read more about Legal, Music, Piracy and Spotify.