Ever since the rise of the digital age, the music industry has been compelled to change and adapt a number of its business model in order to allow for its technical advances. Digital downloads are the norm nowadays, with physical sales steadily declining, and new ways of consuming music rapidly emerging. One of these ways is on-demand streaming, which allows consumer to access a large catalogue of music online, at the price of a low subscription fee, or even entirely free of charge. By analysing the current state of the digital music market, introducing the idea of Anderson’s Long Tail model, and linking both to the concept of on-demand streaming, a basis of understanding of the subject matter has been developed. A detailed case study of market leader Spotify then offered an in-depth understanding of the business-model of a streaming service and its development within a changing market. By examining points of criticisms the company faces, but also its beneficial sides to both artists and the music industry as a whole, a well-rounded picture of this business model has been developed. A survey conducted amongst a cross-section of music consumers has been able to confirm the relevance of streaming services to its target group, and illuminate further what they value most about these services, or what might make them customers in the future.
The status of on-demand streaming as “the future” of the music industry can be validated at least insofar in that it is the way music is and will be consumed by a steadily rising number of consumers. However, the record labels and streaming services will need to find a way to make this new business model more profitable for all involved – including the artists.