The question on Justin Roberts' lips summed up the angst of an ever-anxious music world: "Why would anyone want to purchase a record ever again if you can just listen to it for free?"
The Chicago-based, Grammy-nominated kids musician was discussing his decision to make only the title track of his new album, "Recess" — rather than all of its songs — available on the increasingly popular and controversial on-demand streaming service Spotify. Yes, he wants people to hear his music, but he also wants those who like it to own it, a notion that may soon be seen as quaint even though the money he receives from song streams is just a tiny fraction of what he nets from sales.
When screenwriter/author William Goldman wrote, "Nobody knows anything," he was referring to the movie business, but the phrase could apply to this moment in the recording industry, which may be on the brink of salvation or damnation depending on who's doing the talking. Dramatic transformations are taking place, with the upsurge of online services facilitating a transition from people playing music they own to streaming music on the Internet.
For connected consumers it's never been easier to check out new music, either on demand via services such as Spotify (which has licenses to stream the bulk of major labels' catalogs) or YouTube (a video website that nonetheless serves as a prime music-listening portal, no subscription required) or by listening to an Internet radio service such as Pandora or Apple's newly launched iTunes Radio. But some musicians are complaining about the scant royalties they're receiving from these companies, all while the industry has yet to signal that long-awaited rebound.
To the contrary, Nielsen SoundScan's tally of 4.68 million U.S. album copies sold over the last week of July represented the lowest weekly total since the service began tracking sales in 1991. Were those crummy numbers due to more people streaming music instead of buying it — as some record label officials contended — or merely the unsurprising result of a down summer in which anticipated albums by such superstars as Beyonce and Eminem failed to surface?
The Spotify folks certainly aren't accepting the blame. Launched in Sweden in 2008 and introduced in the U.S. in July 2011, Spotify is presenting itself not just as a convenient service for consumers but also a panacea for a recording industry that's been in decline since piracy and illegal file sharing took hold in the late 1990s.
The service allows you to listen to anything in its vast catalog (more than 20 million songs globally, it reports) either for free with ads or for $9.99 per month for unlimited, uninterrupted service that also works on mobile devices. If the Spotify model succeeds, the reasoning goes, listeners will be paying for music they'd previously been enjoying for free, and musicians finally will receive fair financial compensation for their creative efforts.
But for now some musicians are dubious, and the Spotify backlash gained a high-profile flag-bearer over the summer when Thom Yorke — whose band Radiohead in 2007 embraced the brave new digital world when it offered its album "In Rainbows" for a pay-what-you-want-to-pay price — pulled his side-project Atoms for Peace's recent album, "Amok," from the service. As he wrote on Twitter: "Make no mistake new artists you discover on #Spotify will no (sic) get paid. meanwhile, shareholders will shortly being rolling in it. Simples."
Atoms for Peace member/Radiohead producer Nigel Godrich argued in a series of tweets that Spotify is "bad for new music" and that "if people had been listening to spotify instead of buying records in 1973 I doubt very much if (Pink Floyd's 'Dark Side of the Moon') would have been made. It would just be too expensive."
The local independent label Drag City is keeping its catalog off Spotify and all other streaming services, even as most labels big and small play ball. The Chicago-based Bloodshot Records has its music on Spotify, though label co-owner Nan Warshaw remains wary.
"Sales are certainly being cannibalized by piracy. It's less clear how much they're being cannibalized by these other things," she said, though she added: "If the streaming services like Spotify become a predominant model, then very few if any labels can survive on that kind of money. It's certainly better than people stealing music, and we do see a small payment, and we are getting sizable checks from Spotify every month. However, it's not sizable when you look at the number of times a song was played."
Ken Parks, Spotify's chief content officer as well as Spotify North America's managing director, doesn't buy claims that his service has had a negative impact on sales. For one, with about 24 million registered users — 6 million of whom pay for the service — Spotify doesn't approach the market penetration of, say, YouTube, which Parks called "by far the largest music service in the world." YouTube reports that each month more than 1 billion unique users visit the site and more than 6 billion hours of video are viewed, with music being the most-viewed category.
Parks argues that Spotify isn't big enough to cannibalize that many sales, and when the company does achieve a larger scale in the U.S., as it has done in Sweden and other Nordic countries, he believes it will help the music industry's sales grow, not shrink, and musicians will reap the rewards.
"We are in the very early days of this service," Parks said. "We consider ourselves just scratching the surface."
Let's hit the pause button here to examine the distinct ways in which these online services operate.
• Pandora has been by far the biggest player in Internet radio, announcing that it had 72.1 million active users in August (a 28 percent increase over 2012) who streamed 1.35 billion hours of music, this after the company revealed in April that it had surpassed 200 million registered users. (iHeartRadio, Slacker and SomaFM are among those playing catch-up.) But the Sept. 18 launch of iTunes Radio promises to change the dynamic: Early last week Apple announced that it already had attracted more than 11 million unique listeners to its service, and Pandora's stock price dipped by 10 percent.
You can create a Pandora "station" based on an artist you like — anything from Lady Gaga to Muddy Waters to Gorky's Zygotic Mynci — and you'll hear music from that artist as well as supposedly similar works from other artists, as determined by the company's algorithms, plus the occasional ad if you sign up for the predominantly free service. But although creating a Lady Gaga station will enable you to hear Lady Gaga songs, you can't ask Pandora to play you "Poker Face" or any other specific tune.
• Spotify, like its less popular competitor Rdio, is primarily an on-demand streaming service, allowing you to preview only music that interests you, though it also offers a Pandora-like radio application. On Spotify you can call up "Poker Face" or Muddy Waters' "Mean Red Spider" or Gorky's Zygotic Mynci's entire "Barafundle" album, and that music will stream as often as you'd like to listen to it.
• As for YouTube, even though its global director of musical partnerships Chris Maxcy stressed that "YouTube is not a music service," the Google-owned site has become a go-to source for checking out music, whether on an official band video or audience-shot concert footage or audio-only album tracks that a fan has posted and the artist hasn't ordered to be taken down.
Russ Crupnick, senior vice president of industry analysis for the Long Island-based NPD Group, said there's much consumer overlap among these services, with about 80 percent of Spotify users also listening to Pandora.