Spotify streaming reduces the number of permanent song downloads, according to a new working paper by Luis Aguiar at the Institute for Prospective Technological Studies in Spain and Joel Waldfogel of the University of Minnesota. Looking at data on music sales, song streaming on Spotify and piracy, they estimate that an additional 137 streams on Spotify displaces one track sale. However, Spotify streaming also reduces piracy — an additional 47 streams reduces by one the number of tracks stolen — which roughly offsets the loss of revenue from reduced track sales. The evidence implies that Spotify streaming is revenue-neutral for the recorded music industry, the authors say.

(Source: Joint Research Centre, European Commission)

Published in Dawn, Business & Finance weekly, December 14th, 2015