Causes of Music Industry Revenue Decline

Every time the music industry hits a growth slowdown it reaches for the same lever. Raise prices. Sell more to the people already paying. Wait for the numbers to recover. It happened with CDs. It happened with downloads. It happened with vinyl. Now it's happening with streaming. Spotify has raised prices three times in three years. Amazon raised Music Unlimited twice in twelve months. The incoming Spotify co-CEO told the Financial Times last year that price increases are "part of our strategy" and will continue. Streaming is underpriced. That argument is correct. But the conclusion the industry draws from it, charge more, addresses the symptom while leaving the actual problem completely untouched. Subscription growth is slowing because a monthly fee for passive access to finished songs is hitting the ceiling of what that model can generate. Making it more expensive doesn't expand the ceiling. It extracts more from the people still paying while the ceiling stays exactly where it is. The superfan strategy is the same thinking dressed up in community language. Every major label is now talking about superfans. Warner built a platform for it. Universal is investing in superfan experiences. Spotify is planning a deluxe tier. Exclusive content drops, premium meet and greets, early access to tickets. Things for the most devoted fans to receive from artists at a higher price point. The devoted fan pays more. The model stays the same. What nobody wants to say is that the model itself is the constraint. The music industry spent a century building infrastructure for a fan who receives. All of it optimized for delivering finished content to a passive audience. And that audience has been signaling for years that it wants a fundamentally different relationship with music. The teenagers I watched at a Musical.ly event in 2016 were already there. Making karaoke on their phones, remixing, building something together that the entire century of music industry infrastructure had no category for. The gaming industry built spaces for fans to create inside them. Fortnite. Roblox. League of Legends. The monetization followed participation, and participation has no ceiling. Music has the same raw material. The fans are already creating. They have been for years. Raising the price of a subscription is the right answer to the wrong question.

20 years ago, when I entered the Indian music industry, I was told something blunt: Music is the little step-brother of films. Some even called it the tail of the film industry. Why? Because films were the big business. Music labels survived largely by distributing film music. So, when 2026 opened with the news of two major music labels acquiring equity in major film production houses, my first reaction was pride. The tail is no longer wagging. It’s sitting at the table - with equity. But if you look past the celebratory narrative around these deals, the warning sign becomes clearer. This isn’t a story of strength. This is what industries do when their core business model stops working. These are not expansion moves from a position of power. They are defensive pivots. Whether it’s Universal Music Group investing in Excel Entertainment, or Saregama India Ltd. taking a stake in Bhansali Productions, these moves mark a fundamental truth: “Pure-play recorded music, at scale, is no longer a reliable growth engine and as a standalone, platform-dependent business, is broken.” Streaming did three things simultaneously: - Compressed margins to near-irrelevance - Shifted power to platforms, not rights holders - Detached value from culture, replacing it with volume metrics The big labels backed this model aggressively, chased MAUs and playlisting, and sacrificed long-term ecosystem health for short-term money & scale optics. The very players who normalized unsustainable pricing are now diversifying away and hedging their future elsewhere - films, IP, catalogues, adjacent businesses. Mid-level distributors are scrambling too - buying catalogues to lock in predictable cash flows: this is not innovation, its survival. This isn’t the music industry winning. It’s the music industry admitting it broke itself. The most uncomfortable truth in this? When incumbents pivot, the cost is borne by those without power - independent artistes and smaller labels - who are left navigating an ecosystem that no longer works, through no fault of their own. The ones who did not design the streaming economics, did not benefit meaningfully from scale, did not have leverage in platform negotiations, are now expected to survive on fractions of pennies, self-market endlessly and compete in an attention economy rigged for capital, not creativity. The future of music is not about: - More streams - Bigger catalogues - Better algorithms It is about rebuilding the artist–fan relationship. A future where: - Artistes own their audience - Fans participate, not just consume - Monetization is layered, not singular - Culture is curated, not cluttered The next chapter in culture-tech will be written by those who don’t ask “How do we get more streams?”. But instead ask “How do we build something artistes can actually live on - and fans can truly belong to?” And that’s what we are building at #Artisteverse.

The music industry isn’t broken because of AI. It’s broken because the distribution system was never built to handle AI. We praised the rise of “democratized distribution.” Anyone could upload a song and go global, no label was needed. But today, over 100,000 tracks are uploaded daily. Thousands of them are AI-generated, bot-uploaded, or outright fake. (20% of songs uploaded are made by AI!) We’re at a stage where a track made in 10 seconds by an AI model can make more money than a song crafted over months by a human artist. These tracks are made to hack royalties and impersonate artists. And there were no checks, identity verification or accountability at the backend systems. This has resulted in royalty pools getting diluted. Today, what the industry needs now is discipline: -- Rights verification before upload -- Accountability from distributors -- Platform-level filtering that protects creators The mechanism that determines how music reaches the world needs to be redesigned. Despite the benefits of democratized access, growth without appropriate structure compromises the integrity and sustainability of the whole music value chain, calling for immediate change. #ai #music #artists #creativeindustry

The hidden costs of music in the streaming era: Why artists are struggling to survive A recent post from an independent musician has gone viral, shedding light on the financial reality of creating and promoting music in the streaming era. This artist broke down the economics of producing a single track, revealing just how difficult it is for musicians to break even, let alone thrive, in today's music industry. Creating one commercially viable track costs around $1,000 in cash—not including the artist's time or promotional expenses. On platforms like Bandcamp, where the artist can sell the track for $0.50, it would take 2,353 purchases to recoup costs. Bandcamp's no-fee days and voluntary contributions from fans help, but even then, success requires substantial support. The situation worsens with streaming platforms like Spotify. As a chart circulating online highlights, artists need hundreds of thousands of streams just to cover production costs. However, getting listeners on streaming platforms requires even more spending—paying promoters, hiring assistants, and investing significant time to make a track stand out. One musician shared their experience of promoting a Christmas song in 2024. After spending $2,000 on follow-up emails to DJs who showed initial interest, they didn’t receive a single spin on holiday stations. The artist candidly reflected on whether the failure was due to personal incompetence, insufficient resources, or simply a lack of market demand for their music. Yet, the post also raises a more systemic question: have tech companies deliberately devalued art? Streaming platforms like Spotify have made their founders billionaires, yet pay fractions of a cent per stream to the artists who fuel their platforms. This isn’t just about one musician. It's about a system where creativity is increasingly exploited for profit by tech giants, leaving artists struggling to survive. As the musician poignantly stated: "Maybe it’s too late for my profession. But we need to start asking tough questions. Why is this service free? Why doesn’t this company pay taxes? What can we do to address income inequality and save other professions before it’s too late?" The artist’s post is a powerful call to action—not just for musicians, but for everyone whose livelihood is being shaped by the unchecked power of big tech and the growing wealth gap.

🎵 Indian Music Industry at a Crossroads: Time to Retune Strategy 🎶 A timely article from The Economic Times sheds light on the structural shifts disrupting India’s music ecosystem. With the shutdown of platforms like Resso and Hungama, and the move of Gaana and others behind paywalls, the once-thriving ad-supported model is under serious strain. 📉 Large Music labels are witnessing stagnant or tapering revenues—a clear sign that the industry must evolve. Some of the key issues that is impacting adversely includes Shrinking revenue from ad-supported streaming, Over-reliance on platforms with unsustainable revenues, and lack of flexible monetization models for diverse user segments ! It is time for the industry to evaluate new ideas 💡  for a strategic way forward: * Revamp Monetization: Hybrid models combining freemium and micro-subscriptions could strike a better balance between user affordability and label revenue. * Artist-Led Engagement: Empower artists with more direct-to-fan platforms and monetization tools, fostering loyalty and recurring income. * Localized Innovation: Vernacular content and regional partnerships can tap into India’s diverse listening base, offering scale and stickiness. * Policy & Collaboration: Labels, platforms, and telecoms must align to ensure fair revenue share and sustainable business models. The Indian music industry is brimming with talent and potential. It’s time for all of the stakeholders to collaborate, innovate, and build resilient, inclusive ecosystems for the digital age. 🚀 The article may be seen here- https://lnkd.in/dQTRvdAW #MusicIndustry #Streaming #DigitalMedia #India #MusicBusiness #Innovation #ETInsights #LinkedInInsights