I Knew You Were Trouble When You Walked In: The Impact of Spotify and Music Streaming on the Musician Labor Market

Abstract

By the turn of the 21st century, the increasing digitization of music along with the rise of online file-sharing services such as Napster created a storm that looked poised to wipe out the music industry as it currently stood. The growth of iTunes and revenues from digital music sales were not sufficient to deter the year-on-year losses the music industry was facing due to the collapse of CDs and other physical formats of music. It wasn’t until the growth of music streaming, led predominantly by Spotify among other platforms, that the U.S. music industry saw its first increase in total revenues in 2016 after more than a decade of negative growth. This paper seeks to investigate whether the growth in music streaming services, spearheaded by Spotify, has made the music market more favorable for musicians in the U.S. This analysis utilizes occupation and income data from ACS survey data to estimate the impacts of the rapid emergence of Spotify within the U.S. market. We find that Spotify’s swift growth in 2014 has caused a significant, albeit minor, negative influence on musician and songwriter occupation levels. Furthermore, we conduct analysis into changing music tastes evident in annual top streaming charts to provide a stronger understanding of the evolving music scene. This paper concludes with a discussion of the future of the music industry from an artist’s perspective as well as describes potential policy implications given our study’s findings.