When Napster came out, it was predicted that the music industry would suffer. This turned out to be true: file sharing has decimated the incomes of record companies and artists.
New, legal streaming services like Grooveshark, Last.FM, Rdio and Pandora have been created to compete with music pirating. The convenience of on-demand music is attracting more listeners than FM radio; it remains to be seen, though, whether streaming actually benefits the artists or if it has become a way for record companies to exploit them.
The most popular of these services is Spotify, which streams millions of songs in ad-supported and paid-subscription formats. Some artists like Spotify; newer acts like the band Imagine Dragons are happy to share their music in exchange for the free publicity.
Others, however, have been disgusted by how little they are being paid. A song by the band Galaxy 500 was played on Spotify nearly six thousand times, for which they were paid one dollar and five cents. An artist would have to have over a million plays a month in order to earn a wage equal to the American poverty level. Thom Yorke of Radiohead and Robert Fripp of King Crimson, among many others, have withdrawn from Spotify all of their music that they legally control.
I worry about a chilling effect on the production of music. Digital streaming makes sense for a record company trying to squeeze a few more pennies from its back catalog. But producing new work can cost a lot of money, and at these rates, they wouldn’t stand to recoup their investment in a new act if streaming was their entire income.