The recommendation algorithms used by streaming services are the main reason why Australia’s local artists are seeing a revenue decline, even though Australians themselves are spending more on music, a new report says.
The report warns that other English-speaking countries – aside from the United States – are facing a similar problem.
Australia’s recorded music revenues grew by nearly 28% between 2021 and 2024, from USD $417.5 million to $534 million – but revenues from local acts actually fell during this period, from $50.9 million to $44.8 million. Australian music’s market share fell from 12% to 8% in that time.
Had local revenues kept up with overall growth, “a further $40 million would have flowed back to the domestic industry in just three years,” the report noted.
“Australia is now the global poster child for what ‘market failure’ looks like in recorded music,” the report stated. “A vicious cycle risks taking root, with increasingly fewer domestic success stories resulting in less domestic investment, meaning even lower chances of future success. Intervention is required to stop the rot.”
The report, written for public policy think tank The Australia Institute by noted music economist Will Page and Australia Institute Research Director Morgan Harrington, says the problem is algorithmic.
Recommendation algorithms favor content in the user’s own language. That has worked out very well for many local music markets that have their own language, as Page noted in prior research, with local music experiencing a boom in popularity.
“Even countries as small as Denmark, which has just 5.5 million people speaking the same language, are seeing Danish-language artists dominate their charts,” the report noted.
“Sixteen of the top 20 albums (and 15 of the top 20 songs) in Denmark last year were by Danish artists, performing in Danish.”
But in English-language countries like Australia, the UK and Canada, recommendation algorithms overwhelmingly surface music from the US, which is far and away the largest source of English-language recorded music.
“Streaming platforms have turned discovery into a global contest in which Australian artists singing in English are competing with the vast American catalog,” former Australian Prime Minister Malcolm Turnbull wrote in the report’s foreword.
“This digital ‘one-way valve’ that sends our listening offshore reflects a broader challenge of sovereignty in the digital age.”
“Australia is now the global poster child for what ‘market failure’ looks like in recorded music.”
Will Page and Morgan Harrington
To a lesser extent, the UK and Canada are seeing a similar problem.
“The United Kingdom has witnessed an embarrassing drought since streaming took off, failing to produce a truly worldwide success since Dua Lipa in 2017,” the report stated.
“Indeed, in the five years since the start of this decade, the UK has seen only 30 new artists debut among their local top 1,000.”
Canadian artists are “encroached upon by the dominance of its southerly neighbor, with a steady decline of domestic presence compounded by a ‘talent drain’ where many of their own major breakthrough artists are signed and managed out of the United States.”
Yet if the problem in the UK and Canada isn’t as big as it is in Australia, it may be due to the fact the UK continues to have outsized cultural influence, and its legacy acts like Queen and Oasis continue to bring in revenue by the millions.
In Canada’s case, the problem is mitigated in part by various programs governments have set up to protect and prop up the country’s cultural industries, the report says. (And the success of Drake and The Weeknd doesn’t hurt either, we would add.)
The report urges Australia to take a page out of Canada’s book. It points to the Starmaker Fund, a program that provides money to Canadian artists touring internationally to add additional dates to their tours. The program is funded by fees from private broadcasters. (Canada recently updated its telecom laws to require streaming services to pay into the fund as well, something the services are challenging in court.)
“This digital ‘one-way valve’ that sends our listening offshore reflects a broader challenge of sovereignty in the digital age.”
Malcolm Turnbull, ex-Prime Minister of Australia
The report also urges the Australian government to work with streaming services like Spotify to develop local, human content curators for streaming audiences.
“Curators that can compile playlists relevant to a particular city or region (some of whom may also be local radio stations, local concert venues or local artists themselves) can organize and differentiate music in ways that algorithms either cannot or do not,” the report said.
It also notes that some broadcasters have integrated streaming services into their apps and websites, so that listeners can add tracks they like to their playlists. By contrast, popular radio stations run by the Australian Broadcasting Corporation only allow listeners to hear the music on the airwaves or on its “comparatively obscure” ABC Listen app, the report said.
“Why not make more of this great local content available to the world on other platforms, including Apple Music, Spotify and YouTube, where lots more people can discover it?”
While the issue of declining local music has been on the radar of Aussie politicians for several years at this point, the idea that streaming services are damaging local music is getting some pushback from Spotify, which recently released survey results showing that 85% of Australians “are satisfied with their ability to discover new music on streaming platforms.”
Spotify’s research also found that 81% of streaming users “say it’s easy to find Australian artists,” and 61% are “satisfied with the amount of Australian music available and accessible to them.”
“The data tells a positive story: that 81% of listeners feel Australian music is visible, accessible, and easy to explore on streaming platforms,” said Alicia Sbrugnera, Spotify’s Head of Music Development for Australia and New Zealand.
“We know that when we support the discoverability of new music, we’re supporting the entire Australian music ecosystem – for artists, venues, labels, and fans – and through this new research, fans have told us that it’s working.”Music Business Worldwide
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