Social Media and the Musical Revolution: Does the Money add up?

By the time that The Buggles had released their hit song in 1978, music television had been around in some form or another, for around four years. As the steady influence of the music video grew, so did the nervousness of radio executives. After all, could music television wipe out the popularity of music on the radio?

This fear of course, had been around since the advent of television, but as it began to play more music, executives feared that less people would bother to listen to what they were playing over the waves. But as we now know, this wasn’t to be the case.

The real enemy of radio is social media. And the victor is not the former.

Bob Lefsetz, a major music industry analyst and critic, said in June that:

“If you don’t think new services will kill terrestrial radio, you must like inane commercials, you must like me-too music, you must think airplay on one of these outlets will sell millions of albums, but that almost never happens anymore.”

But far from ‘kill’ the radio star, social media has done exactly the opposite, it has made people stars, while at the very same time, stripping them from the radio. No longer do people become household names through airwaves like The Beatles and Elvis – they do it through WiFi and Ethernet.

In June of this year, it was announced that YouTube (by far the most important social media outlet to the music industry) streams 4 billion online videos every single day, representing a 25 per cent increase in the last eight months alone. The focus, the talent and more importantly, the money, is now online and in social media.

After all, YouTube is where all the big stars hang out. Only last year, the western world was introduced to Psy, the South Korean performer who found himself $8 million richer for his video, ‘Gangnam Style’. And that is great, because it shows that relatively new artists do stand a chance against big name brands (not artists) like Madonna and U2.

So besides making artists rich, how is social media changing the music industry? Some claim that ‘social music’ is a new industry all by itself, and others (including Thom Yorke) claim that it is not making artists rich at all.

To put it simply, there has to be a middle ground, and thankfully, there is – advertising and sponsorship.

In July alone, Jay Z managed to sell 1 million albums before his album, Magna Carta Holy Grail, was even released after partnering up with Samsung. Doing so gained the album instant platinum certification, even though the sale did not count towards the Billboard charts (it debuted at number one anyway).

In addition to this, marketing professional, Claire BeDell, says that:

“Social platforms have also made it exceptionally easy for musicians to connect with their fan bases directly.

“Artists can offer sneak peeks, photos, exclusive opportunities and sweepstakes to their social media fans. Electro-house music producer Deadmau5 even incorporated vocals a fan sent him over Twitter into his song “The Veldt.” Rolling Stone later named it one of the best tracks of 2012.”

On a whole, social media is notorious for being untraceable when it comes to ROI and metrics, but the music industry forms one of the only places where this can be successfully accomplished.

Music analytics company, Next Big Sound, last year conducted research into how social media influences album sales, and the results proved promising, with strong correlations found through social media platforms and music sales (it also showed that keeping a fresh Wikipedia page is also integral for success).

With platforms such as Spotify and Last.fm acting as potential shields against the laziness of piracy, would it be too fool-hearty to propose that social media could help save the music industry?

Actually, possibly not.

Music streaming services are no longer relying on their own marketing to promote their brands; they’re using social media, and most commonly – Facebook. Spotify is already heavily integrated with Facebook, and through it, the music service last year partnered with Coke to give away thousands of free subscriptions.

As already mentioned however, the biggest battle that social music currently faces is not with fans, or even labels, but with musicians themselves. Currently, artists receive 0.4 cents per stream on Spotify; meaning that if an artist received 200,000 streams, they would receive roughly $800 (distributer cuts taken out).

This makes it hard for new and young artists to make a living through online streaming.

But it isn’t the same everywhere, as Rhapsody gives artists 0.69 cents per stream and Microsoft’s Xbox Music Service offers a staggering 3.5 cents.

So there is room for expansion on Spotify’s behalf, and crucially, as one the biggest and best known social music services on the internet, if it changed but a cent in how it rewards artists, the result could be game changing – for Spotify, music and social media.