Spotify’s decision earlier this week to improve its free, ad-supported tier wasn’t an unexpected move. In July, CEO Daniel Ek said he was “unhappy” with the company’s advertising business, and executives laid out their efforts to turn it around. Some changes would be technical, such as giving brands the ability to buy programmatic ads through platforms such as The Trade Desk. The move to allow free streamers to choose their songs rather than listen on shuffle mode was more straightforward.   

The problem with free, ad-supported music isn’t confined to Spotify, though. Around the world, streaming revenue from audio and video supported by advertising fell sharply in the first half of the year. In the U.S., free streaming — both audio and video — from on-demand and social platforms fell 2.9% to $875 million, worse than the 1.8% decline in all of 2024. In contrast, paid subscriptions rose 6.3% to $2.89 billion through June 30, better than the 5.3% gain in 2024.  

Numerous people who spoke to Billboard pointed to video, particularly short-form video, as the culprit behind the decline in ad-supported streaming. Although these executives lacked a smoking gun, there is some evidence that TikTok and other short-form video platforms are taking attention away from better monetized streams of music videos.  

A new report by MIDiA Research highlighted how popular short-form and social media apps can exist in a parallel world to music streaming platforms that provide the bulk of record labels’ revenues. Views on TikTok and YouTube Shorts don’t convert well to streams at better-paying platforms like Spotify. That conversion “funnel,” as MIDiA calls it, is especially weak for young consumers.  

TikTok is particularly adept at keeping consumers’ attention, according to MIDiA’s report. People frequently discover artists on TikTok, but they’re more likely to follow the artist on TikTok than they are to listen to more of the artist’s music elsewhere. Indeed, the report found that TikTok is worse than other social platforms at converting attention to streams outside its ecosystem. The result is a warning for record labels that pour resources into marketing: According to MIDiA, today’s 16-to-24-year-olds are less likely than 25-to-34-year-olds to have discovered an artist whom they love in the last year. 

The cause for the drop in free streams is not so clear-cut, however, and MIDiA’s findings don’t always jibe with a previous report. In February, a Luminate report commissioned by TikTok concluded that TikTok was “a key driver” of music discovery, monetization and chart success” in the U.S. TikTok users, according to the report, are more likely to be superfans who pay for music subscriptions — that doesn’t impact the question about free streaming — and have used TikTok’s “Add Music to App” feature to save more than one billion tracks to streaming services.  

Nonetheless, a report released last week by SNEP, France’s recorded music association, echoed the MIDiA study by indicating that a poor conversion rate from social media to long-form video platforms was having real consequences on revenues. The report explained a 6.8% decline in midyear ad-supported video streaming revenues by citing video’s “transformation” and the popularity of short-form videos, primarily at social media apps. Ad-supported audio streaming fared better, rising 2% from the prior-year period.  

Any decline in video streaming revenue creates questions about YouTube, the world’s most popular streaming platform. YouTube generated $36.1 billion in 2024 — $21.6 billion from advertising — and is accessed by an estimated 2.7 billion people each month. It is a ubiquitous presence not just in music but across the internet.  

Numerous music executives point to the rise of YouTube Shorts as a likely factor behind video streaming’s downward trajectory. YouTube Shorts, TikTok-style short-form videos that have been neatly integrated into the YouTube viewing experience, were watched 70 billion times a day in 2024, according to Business of Apps. When people view Shorts, the thinking goes, they are less likely to view full-length music videos that provide record labels with better royalties. Labels’ licensing deals with YouTube pay them a flat fee for short-form videos, rather than the per-stream revenue share they get for full-length music videos, according to sources.

“When algorithms and design decisions push fans toward short-form, the natural byproduct is declining engagement with long-form music videos,” says Johnny Cloherty, CEO of Songfluencer. 

For many artists, full-length videos aren’t seen as a good investment, adds Cloherty. He has found that today’s artists spend approximately 10 times more time and resources creating short-form content rather than longer content. “I hear it directly from clients who are weighing whether to release stripped-down, lo-fi [full-length] videos — or no [full-length] video at all,” he says. 

YouTube’s diminished role in recorded music royalties can also partially be explained by the platform’s years-long transformation into a major entertainment company. Years ago, when YouTube was awash in low-quality content, music videos played a more prominent role, and labels commanded premium royalty rates. But YouTube has since turned itself into a platform where successful independent creators mingle with content from every major TV network. Multiple music industry sources believe YouTube’s focus on being a TV platform has hurt music.

The TV is a major focus for YouTube, with two sources saying the rise of long-form videos by household names like MrBeast has come at the expense of a focus on music. There are now so many creators making high-quality videos that YouTube holds an annual “upfront,” an event typically held by TV networks, to woo advertisers. In August, YouTube was the top TV distributor in the U.S. for the sixth consecutive month with a 13.4% share of all TV usage, far ahead of No. 2 Disney’s 9.4%.  

The problem with ad-supported music isn’t confined to video. As Spotify’s advertising revenue has languished, its premium tier has helped fuel the company’s rapid growth. In 2022 and 2023, the company’s free user growth exceeded its premium user growth in seven of eight quarters. Over those two years, the number of free users grew 61% to 379 million while premium users grew at roughly half that rate, climbing 31% to 236 million.  

Since the first quarter of 2024, though, premium user growth bested free user growth four out of six times — including in the first two quarters of 2025. Over those six quarters, the number of premium users grew 17% to 276 million while free users increased just 14% to 433 million.  

“What you’re seeing is a maturing of the market in general,” says Sachin Saggar of RedBrick Advisors. “People converting to premium aren’t being replaced on the freemium side, which would lend itself to a decline in revenue [for ad-supported streaming].”  

The problem isn’t without solutions. Spotify’s changes to its free tier could help bring in new users, and giving free listeners the ability to select tracks could encourage free listeners to delve into the catalogs of artists they discover on social media. Additionally, short-form video platforms won’t always lag so far behind more mature platforms’ monetization. But those could be hard-fought gains for artists and labels.

Additional reporting by Dan Rys and Kristin Robinson.