The Impact of streaming on music industry earnings in South Africa

Historical evolution of the music industry

From the revered gramophone, which was the first instrument capable of reproducing music and storing it on a flat disk, invented by Emile Berliner in 1887, to the cassette that made its appearance in 1944, the compact disk (CD) which was regarded as revolutionary in 1982, and streaming which today, dominates the music industry, the world of music is a very different place.

The gramophone enabled people to listen to music conveniently at a time and place of choice instead of going to a live concert. Over time the product improved in quality and consistency from the zinc and glass discs on which the music was stored to sturdy vinyl.

Cassettes offered a variation to the convenience of listening to music. Due to its portability the cassette complemented the gramophone as they continued to exist alongside one another.

The CD was quite revolutionary in that it was compact and less prone to wear and tear, and CDs marked the beginning of the end of the gramophone. The life cycle of the gramophone lasted about 100 years. The lifecycle of CDs would last about 25.

While the timing of the transition to digital storage on hard drives, including audio tracks, is more difficult to pinpoint, but the iPod marketed by Apple in 2001 is probably a reference point in time. The conversion to digital, compression technologies like MP3, miniaturisation of hard drives, and clever branding, catapulted Apple to become the most valuable company in the US which currently has a market capitalisation, of about US$3.5trillion.

Storage and access

The phenomenal growth in storage capacity and the fast transmission of data resulted in the creation of data centres where huge volumes of data are stored. With cloud technologies and hard disks enabling the storage of large amounts of data, streaming data in real-time without interruptions became possible.

Software architecture, vast memory banks, lightning-fast search and retrieval speeds and the compactness of compressed audio data laid the groundwork for a new way of consuming music.

Music streaming and its benefits

Streaming is an activity where you can listen to a catalogue of music anytime and anywhere via the internet without having to download.

The technology on which streaming is based has made it possible to offer vast tracks of music at affordable rates, exposing more people to different repertoires and volumes of music and movies. Established companies like Spotify, Universal and Apple Music are now offering 1,000 tracks for a small monthly fee to listen on demand and as many times as consumers wish.

This technological advancement has opened the market for more services, different genres and styles for different preferences, and push technology facilitates suggestions based on previous selections.

The growing ubiquity of the internet, together with higher speeds and bandwidth as well as lower costs, has made access and use of the service affordable to more and more people.

No wonder that even a market like South Africa, with relatively low disposable income in a slowly growing economy, is showing signs of solid growth. According to the WOW report on the music industry in South Africa, the industry is the fastest-growing music market in sub-Saharan Africa, with a 20% revenue increase in 2023 following a 32% rise in 2022, and it is set to continue on a high growth path for the near future.

The complexity of the music industry.

Streaming has removed national borders enabling market access and acceptance across cultures. A good example is the international success of Amapiano, a music genre originated in South Africa which has gained international recognition. According to the WOW report, producer Yumbs has signed a record deal with Warner Music Africa. This could not have been possible with the traditional methods of promoting music.

On the other hand, some artists are fighting for fairer, more transparent and adequate remuneration. They feel that streaming generates lower income than live performances and tours that offer immediate, higher payouts. Marketing merchandise like branded clothing, posters, and accessories generate immediate income for artists and helps strengthen fan loyalty. Balancing between short term higher payouts and long-term, consistent royalty revenues from wider audiences could be a matter of delayed gratification.

Social media, especially TikTok, have also changed how music is consumed and how awareness is being created, bypassing traditional more onerous channels of marketing. Recognition of artists by the market will increase their leverage to negotiate better royalty sharing with record labels. Young South African talent is encouraged to pursue their dream.