Beginning with Napster, a popular file sharing and illegal music download platform, online music sharing and digital music have changed the business model of the industry. The Chairman of the Universal Music Lucian Grainge believes that the new form of music distribution caused a “14-year, 50% decline in U.S. record sales.”  Then when iTunes was first introduced, customers could purchase just one song instead of an entire album.a 4.9% decrease in music sales, year-over-year. After years of combatting music piracy, the music industry has gradually adopted new revenue-generating streaming services.
These new models include free-without-advertisement, free-with-advertisement, trial, and paid music streaming services. Regardless of the type of model, artists are paid per stream. How much are they making? According to Rolling Stone, on Spotify an artist is paid $0.006 to $0.008 per stream, while thetrichordist.com says it could be as low as $0.005. According to thetrichordist.com, Nokia pays the highest, at %0.074 per stream. Due to the low rat, artists, including Taylor Swift and Thom Yoke of Radiohead, have pulled their music from the service. Forbes writer Tim Worstall that in terms of per-stream royalty rate, Spotify could be paying 16x the radio rate, compared to UK radio per listener rates,
Moreover, Spotify explains that as more listeners opt for the paid-version of their service and revenues increase, royalties for the artists increase as well. Spotify pays out 70% of their revenues to rights holders. According to Spotify’s website, this 70% is “split amongst the rights holders in accordance with the popularity of their music on the service.” The right holder is usually the artist’s label, which in turn divides royalties to their artist depending on their contract. This model has led to a $500 million Annual Royalty payout in 2013, which is almost double the payout in 2012. At the same period of time, Spotify had about 25 million users in 2013 and about 15 million in 2012. Those are pretty good numbers, from an artist’s standing. And, as of November 2014, Spotify claims to have over 50 million users, 35 million of which pay for premium service, and expects both of these numbers to grow.
Meanwhile, Aloe Blacc of Aviccii’s hit Wake Me Up, claimed that the song, which played over 150 million times on Pandora, yielded as low as $0.000736 per-play royalty rate on that service, which, by the time it got to him, was diluted to $0.000238 per-play. However, the NYT qualified this complaint exhibiting that Blacc only included song-writing royalties on the hit, and not (the much higher) royalties for being the vocalist.
So what does this mean? Well, as streaming comprising a growing portion of digital sales in music, streaming services, in combination with downloads, are not just the future of music, but arguably the present. Despite restricting her newest album 1989 release from streaming services, Swift has still sold more than 1.28 million copies in its first week. Over 50% of the sales have been physical copies. For most artists, such a feat is impossible. This record is not an indication that album sales will increase – it’s an anomaly of the current system, and only possible by such a popular artist. 1989 is not a foreshadowing to the return of the album, no matter how hard Swift or other popular artists try. Moreover, for an artist like Swift, who has such an intense following, superfans would probably still have bought her album had she also allowed it to be streamed, while less devoted fans who have not purchased the album would have streamed the album on Spotify or other services, which may have potentially led to even more revenue for her. Her decision to restrict the album is not just a way of optimizing revenue, but also an idealistic statement against these services in general. But, as more brick-and-mortar album stores close and fewer listeners grow up with physical CDs, more and more fans turn to Spotify or Pandora or some other service, and streaming has become the best way for artists to reach their fans. Even if artist should fight for higher royalty rates, just as authors should work with the changing dynamics caused by the growth of digital reading habits and e-readers instead of fighting against it, artists will have to accept that music streaming is not going away.
 The Wall Street Journal: http://www.wsj.com/articles/era-of-free-digital-music-wanes-1415839234
 Swift has kept most of her music on other streaming services like Beats Music, Rhapsody, Rdio and Tidal.