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.
Until the next one.