Essay
July 29, 2025
Spotify advertising campaign
When iTunes was launched, fans said goodbye to waiting in lines and hoping that an album would still be available when it was their turn. Gone were the days of having to spend money on 13 songs to listen to just one hit. Now, for 99 cents per song, a fan’s music catalog could travel everywhere with them, and they could change what they were listening to with the click of a button.
This was especially appealing to college students, who were short on money but rich in time, and spread the technique like gospel, making music feel essentially “free.” They didn’t invent piracy, but they normalized it to the point that when Shawn Fanning launched Napster in 1999, a service built to make peer-to-peer sharing of illegally downloaded music effortless, millions joined without hesitation.
By the time Napster was shut down in 2001, the damage was done: music piracy had become an everyday habit, cutting industry revenues by nearly $5 billion in the early 2000s alone. The problem deepened after 2008, when fans found new ways to pirate music by ripping YouTube videos and converting them to MP3s, sinking industry revenue, which had been about $22 billion in 1999, to under $15 billion by the mid-2010s. The losses didn’t just hurt major labels, they also made it harder for new artists to get a foot in the door as with profits shrinking, labels grew cautious and signed fewer unproven acts, narrowing the range of voices and sounds that could reach the mainstream.
Just as piracy reshaped how people consumed music, a new idea began to reshape how they might pay for it. When Daniel Ek founded Spotify, he wasn’t trying to reinvent how people paid for music as he knew they already weren’t paying at all. Instead, he sold convenience. Why spend hours hunting for dodgy downloads when, for a small fee, you could have every song you wanted, instantly and legally? Fines for piracy (about $750 per song in the U.S.) weren't scaring anyone, and tracking down people who pirated was nearly impossible. So when Spotify promised to turn freeloaders into paying listeners, labels and artists jumped on board hoping to change the industry.
An easy to use website, a wallet friendly price, and faster access than hunting down pirated files convinced plenty to switch to legal streaming. In its first three years, before even making it into the US market, Spotify already had 1.6 million paid subscribers and more than 10 million registered users.
.png)
The evidence wasn’t just in the users though, platforms like Spotify did provide a clear way to reduce piracy which is evidenced by the gradual and constant increase in music industry revenue, that by 2021 had returned to 2001 levels. What’s more, is that as TV and film have struggled with pirating after the streaming age, due to a fragmentation of where to find content, the centralization of music streaming, (since all record labels offer their artists on most streaming platforms), has prevented piracy from splintering the industry again.
In line with this, artist perception of Spotify was positive, it was a clear solution to a problem that was directly costing them their livelihoods. Additionally, democratization of music creation and distribution made it so that artists who would have had a hard time getting discovered, could now share their music with ease. But as the novelty wore off, problems started to arise. For one, streaming services like Spotify pay artists by pooling around 70% of ad and subscription funds and distributing them depending on deals each label has with large streamers. Payments per stream usually end up being a fraction of a cent, and go to the rights holders (often labels), meaning that artist revenue depends on the deal that artists have with their labels (usually around 20%). Pay for artists is so low that less than 0.6% of musicians in the UK reported making more than £10,000 from streaming per year. In the same year, £20 billion was made from streaming in the global recorded music industry, highlighting the unfair distribution of revenue between streaming, labels and artists.
On one hand, the lack of remuneration can be attributed to the increasing amounts of artists that put their music on streaming services, however, it can also be argued that labels are to blame for the uneven distribution. Before digitalization, labels justified high cuts of artist contracts due to high overhead costs that came with storing and distributing music, but since digitalization, these costs have decreased drastically and yet labels keep taking similar cuts. Not only this, but the three biggest players in the industry (Universal Music Group, Sony Music Entertainment and Warner Music Group, and their respective publishers), have a combined 18% of Spotify’s shares, which not only pushes them to speak highly of the platform, but also gives them a share of Spotify’s large annual revenue.
So, it can be said that streaming was a solution to piracy for the industry as a whole but for artists it's more complicated. Through bundling music, streaming created revenue from listeners that were downloading music illegally, as well revenue from more casual listeners who maybe would have not invested in an album, but it also deterred physical sales that would have provided greater profits for artists individually, ultimately leaving the industry better off, but musicians at a loss.
Despite the grim outlook, musicians will continue to create. In the past, large artists like Taylor Swift and Prince have been critical of streaming, going as far as pulling their music from services as an act of protest. But smaller artists, who are looking to be discovered are unable to do this, which leaves artists as a whole in a similar position as when piracy was rampant.
Certain voices in the debate argue that piracy, and for these purposes streaming, is ultimately beneficial for artists because it lets them garner a superfan base, and ultimately exploit side revenues like merch or touring. For large artists, who can regularly release expensive merchandise and hike up the prices of concert tickets, this might work, as the more people are fans, the more will purchase the other assets. Meaning that in this case, the music becomes a marketing tactic that supports a merchandising business behind it.
The same argument can be made for emerging musicians: when listeners don’t have to pay for music, they’re more likely to explore new artists and become fans who might later spend on merchandise and tickets. But in reality, building an audience takes time, so meaningful income can only come years later and the constant push to sell merchandise and keep touring can have harmful environmental impacts, put financial pressure on artists, and contribute to their mental and physical exhaustion.
.png)
Streaming services claim that they are backed against a wall as if they raise their prices too much, they lose customers. Elena Segal, the global senior director of music publishing at Apple, explains this saying that they are "competing with free,” and that if they raise subscription prices, consumers will go back to pirating. As the UK’s Digital, Culture, Media, and Sport committee argued in 2021, the only way to guarantee the longevity of the industry and the welfare of the people that create it, is through adequate government legislation that challenges the behavioral norm that music should be “free.” Unfortunately, aside from making sure that copyright laws are as up-to-date as possible, it's hard to enforce and police anti-piracy measures as the number of perpetrators is infinite, making them impossible to find.
In many ways, the history of piracy and streaming reflects a broader shift in how society values music, not as a product to be owned, but as a service to be accessed. Streaming put a bandaid on what became a strong cultural shift in a generation of fans who saw free access not as theft but as their right, creating an expectation that music from their favorite artists should come with no strings attached. While platforms like Spotify succeeded in curbing piracy and rebuilding industry revenue, they created a model that often sidelines the very people who create the music. Unless meaningful legal frameworks and fairer compensation structures are put in place by labels, the music industry risks repeating its past mistakes: choosing profit and convenience over the very artists it claims to serve.
If you enjoyed this article, sign up to our newsletter and follow us on Instagram and LinkedIn to stay up to date with Gen Admission 🎶
