Traditional wisdom goes something like this: streaming is killing the music industry because it does not return enough revenue to artists and labels to replace the money lost from falling sales. As is often the case in the digital age, traditional wisdom may be wrong.
Despite the protestations of some pundits such as Taylor Swift, who famously castigated Spotify for harming artists, economists might not necessarily share the same view.
In a new working paper, University of Minnesota economist Joel Waldfogel and Luis Aguiar of the Institute for Prospective Technological Studies in Seville, Spain, compared countries where Spotify grew rapidly and where it did not.
The data compiled in the study suggests that while Spotify did have a negative impact on revenue digital music sales, it was offset by the reduction in music piracy and payments from Spotify to rightsholders.
However, as the paper notes, “It is not clear that revenue neutrality is an indication of success.”