Credit: Ben Houdijk / Shutterstock.com
Despite Australians spending more money on music than ever, a new report warns that streaming recommendation algorithms are actively causing a revenue decline for local artists. Australia has become the “global poster child for what ‘market failure’ looks like in recorded music,” according to the study by music economist Will Page and Morgan Harrington of The Australia Institute.
The report highlights a shocking paradox. Australia’s recorded music revenues grew by nearly 28% between 2021 and 2024, rising from $417.5 million to $534 million. Yet, revenue generated by local Australian acts fell during the same period, dropping from $50.9 million to $44.8 million.
The Algorithmic Dilemma
This revenue divergence meant Australian music’s market share declined sharply, dropping from 12% to just 8%. The report estimates that if local revenues had simply kept pace with overall growth, a further $40 million would have flowed back to the domestic industry in just three years.
The problem is fundamentally algorithmic. Streaming recommendation systems prioritize content based on language, which has caused a boom in countries with non-English languages like Denmark.
However, in English-speaking countries outside the US, the algorithms overwhelmingly surface content from the massive American catalog. Former Australian Prime Minister Malcolm Turnbull described this effect as a “digital ‘one-way valve'” that sends Australian listening (and revenue) offshore.
Global Warning and Solutions
The UK and Canada are facing a similar, though less severe, issue. The report notes the UK has witnessed an “embarrassing drought” since 2017, while Canadian artists are seeing a “steady decline of domestic presence” compounded by a talent drain to the US. Canada mitigates the issue through cultural protection programs, such as the Starmaker Fund, which subsidizes touring artists.
The report urges the Australian government to intervene by following Canada’s example. It also advocates for working with services like Spotify to develop local, human content curators. These regional curators—such as local concert venues or artists—could differentiate music in ways that algorithms cannot.
Spotify, however, offered pushback. Survey results released by the company show that 85% of Australians are satisfied with their ability to discover new music, and 81% find it easy to locate Australian artists on the platform. Spotify’s Head of Music Development asserted that the data shows local music is “visible, accessible, and easy to explore.”
About the Author
