Streaming Payouts (Yup, ANOTHER streaming post!)

music, music business, music industry

There’s a lot of talk about music streaming at the moment, partly thanks to TIDAL’s launch and subsequent flop, Apple’s pending entry into the game and labels, artists and songwriters shouting from the rooftops about how unfair the pay outs are.

Let’s be real, the payouts are shit but it’s not the streaming services’ fault (more on that in a second) and according to some mind boggling work posted here, streaming services actually pay more per play than radio does if we were to break it down by actual listener count.

**Before we continue, we know we talk about Spotify a lot but really they’re the only player right now until Apple step in so they’re the best example to use.**

When we say the payouts aren’t the streaming services’ fault what we mean is that they can only pay out from what they are making. If Spotify has 15 million paid subscribers that means they have $150million of revenue per month or $1.8bn annually. They pay out 70% of that which leaves $1.2bn in the pot to split between all the parties, if you want to know how they calculate what to pay check out their explanation here, it’s actually a very interesting read.

The problem with the music industry right now is the streaming services are lacking volume, we’ve said it before and we’ll say it again…more people equals more money. Those bitching about the money made from streaming services probably don’t subscribe to one which is rather ironic. Get on board the streaming train, music sales are dead! Tell your friends to get on it, tell your family, the more paid subscribers we can get on whatever platform they choose means a bigger pot.

Look a little closer at the Spotify article and you’ll see that by law in the US, statutes dictate that publishers be paid 21% the amount that master recording owners receive. This is actually equal to, if not more than the general 9.1 cents paid out to publishers when a song is purchased digitallty or physically (it’s hard to judge as the percentage that 9.1 cents equates to will vary depending on how much a song is sold for). So just like with radio, if you’re comparing apples to apples, streaming services actually pay out pretty nicely, they just don’t have much to pay out with. Like we mentioned above, Spotify only has 15 millions subscribers world wide, that’s nothing! Wait until there are 150 million, 500 million and hopefully one day billions of people subscribing to streaming services. That’s where the industry is headed and it sucks right now, but we’re all in it together (which is why TIDAL leaves such a bad taste in a lot of our mouths- successful, rich artists complaining they don’t make enough money. It created a bit of a ‘them vs us’.).

Buying an artist’s album isn’t supporting them as much as you’d like to think, they don’t make that much off of album sales- bands and artists never did. Check out the 30 Seconds To Mars movie ‘Artifact’ if you want to know more about that (or even if you don’t, it’s a really good movie). Go and watch them on tour, that’s supporting them, (unless they signed a dreaded 360 deal). Buying their album vs streaming it won’t make you a better fan nor will it likely make them that much more money.

What’s also worth noting is you don’t hear anyone complaining about DJs getting paid 6-7 figures for one night playing other people’s music (sidenote: there is NOTHING wrong with them being paid that but if the mentality that streaming services aren’t allowed to make money off of others’ music exists, why are you OK with DJs doing it? They’re not paying out 70% of their fees to the rights holders like the streaming services are). Sure, writers and publishers get performance royalties from our songs playing in clubs and bars but nothing like 6-7 figures (and the venue/DJ has to report the songs played so you’re relying on that too). There just seems to be a lack of understanding as to what people are actually complaining about when it comes to streaming pay outs. More money coming in means more money coming out. It’s that simple.

Rant over.

Until the next one.

-HS

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Original Content

music, music business, music industry

It’s surprising that music hasn’t caught up with TV yet when it comes to original content. Netflix, Hulu, HBO, Showtime and other TV/movie subscription services all create their own content as part of their USP (check us out with the marketing jargon). Why haven’t music services done the same? Spotify, iTunes et al have yet (as far as we’re aware) to create their own original content, sure they’ve signed exclusivity agreements, which is smart- we’re now seeing Tidal do it too- but it’s not the same as original content and here’s why..

Streaming services (should) have vast amounts of data about their users’ preferences when it comes to the type of music they enjoy, the time of year they play certain songs, the instruments that were used, the tempos etc so why not utilize that like Netflix did when they created House of Cards? They looked at the type of movies and TV shows people were watching- did they like suspenseful drama? was there humor in the one popular thriller, if so how much? How important were sex scenes or nudity? What was the lighting like in those movies? So many variables were analyzed and used to create the script and direction of the show. Look how popular the show is, it’s no accident!! It was created for mass consumption and people have eaten it up.  

Using data in a similar fashion could help write and produce the perfect song for certain genres. Imagine figuring out which key of song, chord progressions etc listeners gravitate to the most and crafting a track around that? Sure you might say it takes the creativity out of making music but the opposite could be argued. Less parameters mean you have to be more creative to make your song stand out. 

Now, we’re not arguing to make all music sound the same but if you want people to hear your music (why else do you do it?) then why not make it appeal to as many people as possible? If people haven’t latched on to your song in say, Germany, it could be for the simple reason that the German market don’t like 1 minute instrumental bridges like yours or that it’s the wrong time of year for that style of song there. If you knew to make those changes or wait for the best time to release the song you could save yourself money on marketing because you’ll know when to release and also be more confident it will gain traction. If a streaming service produce a song or an album that appeals to Germany, all of a sudden they’ll have more subscribers in that market. 

That’s just one of many examples of how creating original content using their data can really set a service apart from its rivals and lure in fans. Things like this could already be in the works but for now we’ll leave y’all with the idea, who knows, we may see it sooner than we think. 

-HS