The business of music
Unsplash | Sara Kurfeß
A series of publications on the business side of music were released in the past few weeks and they are well worth a look. For decades, the general wisdom has been that the new business model of (recorded) music, i.e. streaming, has been far less profitable than the previous, physical-led model. Could it be changing?
As always, the answer is — it depends…
The upside
A couple of recent figures are shedding light on the changing landscape of the music industry. Starting with the most general: according to the IFPI, which recently crowned APT. as the highest selling single of last year, 2025 marks the tenth straight year of recorded music revenue growth. Which is interesting because many observers have long claimed that the only way to generate revenue in music today is live: could that phenomenon gradually be changing?
Physical products, interestingly, are — kinda — back. Vinyl sales have been steadily growing, for the 19th straight year globally (IFPI). According to the RIAA, vinyl sales reached $1 billion in the US last year — for the first time since 1983. To be fair, inflation needs to be factored in, and other physical products are not exactly showing the same strength (remember cassette tapes?) but that is still a noteworthy piece of data.
Now, let’s focus on streaming. Last year, Spotify alone paid out $11 billion in royalties, its all-time highest number. That amounts to over 80 000 artists getting paid at least $10 000. And half of those royalties went to independent artists & labels. Perhaps more interestingly, more than 80% of artists generating $1M+ on Spotify in 2025 did not have a Top-50 hit. In other words, the back catalogue effect is strong, hence all these recent deals with major artists giving — or rather selling — away their rights.
Add to that another $8 billion from Youtube (from June 24 to June 25). And then there’s touring: last year, Live Nation alone generated $25 billion, a 9% year on year increase. Not too shabby, right?
The limits
The devil is in the details, as we all sadly know. A couple of key arguments do mitigate this otherwise rosy picture: first off, the underlying criticism made against Spotify, which is the way it calculates profit sharing. Beyond the whole label-takes-all question that doesn’t directly concern streamers, the logic Spotify applies is that of a big pool in which all the revenue generated is gathered to be shared based on streaming numbers. In other words, you might be an obsessive fan of early Madonna, your “money” will not go to her the way an album royalty share will, she will instead get a share of the overall revenue based on her numbers.
While that calculation has its flaws, namely the fact that it is somewhat unpredictable, it does have merit: after all, if numbers keep rising the way they have, then more artists should be able to afford lunch, right? Again, that depends. In 2024, Spotify introduced a new rule that takes tracks generating less than 1000 streams out of any royalty consideration. Although the number of said tracks is — interestingly — not public, that arguably leaves out a huge amount of tracks.
But the bigger hurdle artists need to jump to eat has less to do with Spotify’s evil dealings and more to do with… them. Or rather their numbers: technology didn’t only revolutionize the way we consume music, it also upended the way we make it. For years, any 13-year-old with a laptop and a dream could create a song from his bedroom. Now, AI makes it even simpler. The consequence is obvious — there have never been that many new tracks released on the face of the earth. And that leaves us with an interesting math problem: if overall revenue increases by 5% a year but the number of tracks triples, where does that leave the (small) artist?
It would be simplistic to criticize this new era of ours before we first appreciate everything it brings. As consumers, more music than ever before, including astounding work if you know where to look. As musicians, an infinitely simpler way to produce and distribute music. But a lot of uncertainty as to whether it will ever generate enough cash for a happy meal. Then again, I’m too old for a happy meal.