• Streaming Music Services - There's Money To Be Made



    Without fail, every time I talk about the money to be made from streaming music services I receive feedback from people suggesting I'm an ignoramus to people such as Portishead's Geoff Barrow telling me to "wake the fuk up!" and "bore off you knob. (Link )" I stand by my opinion that there's plenty of money to be made by the music industry from streaming services and that artist's vitriol toward these services is misplaced and misleading. For example, Kendrick Lamar's newest album To Pimp a Butterfly was streamed 9.6 million times in its first 24 hours of release on Spotify. Based on numbers provided by Spotify (Link ), this earned a payout of between $921,600 and $1,290,240. Then how is it that Portishead made just $2,500 off 34 million streams when the math works out to more like $204k to $285k? As David Byrne said, "Same as it ever was." The rights holders, namely the record labels, are making the money. When artists complain that they're making little to no money from streaming music, it's more often than not explicit or implicit that services such as Spotify are to blame. As expected the artist's fans eat it up, retweeting and echoing the same misleading pseudo-facts that are really a disservice to the artist, the fan, and everyone except the record label. I hate to say it, but those who aren't making as much money as they wish from streaming need to look inward rather than outward. If you signed your rights away to a record label, you're getting that to which you agreed. It doesn't matter if the contract was signed before the advent of streaming. The contract was still signed and based on the long notable history of record labels' "terrific" treatment of artists, it could have been foreseen that when in doubt the label will come out on top. In other words, expect to get screwed if something unforeseen pops up. Don't get me started on artists who are still trying to hold back the hands of time and kill the streaming services. I get it that you used to make more money from CD sales. However, the free market has spoken. People don't want what you're selling, if you're selling CDs or lossy downloads. Getting back on track, it's the rights holders who are making plenty of money from streaming services and who stand to earn much more as more people enter the streaming music fray.

    Enter the latest earnings report from Warner Music Group (Link ) and the Sony Music contract with Spotify (Link ). The former proves that record labels are making more money from streaming music than downloads. The latter proves that the rights holders are pocketing the money from streaming services.



    "Notably, in this quarter we saw continued growth in streaming revenue which surpassed download revenue for the first time in the history of our recorded music business. Our commitment to being at the forefront of industry change as well as our ongoing investment in artist development is the foundation of our continued success."

    - Stephen Cooper, Warner Music Group’s CEO



    "In the wake of Swift’s departure from Spotify, many musicians rallied to her cause, vilifying streaming services that paid a fraction of a penny per play. But this contract makes it clear — the pay per stream rates aren’t the only issue. According to its financial disclosures, the majority of Spotify’s revenue, around 80 percent, has been flowing out the door to the rights holders. "You can’t squeeze blood from a stone," said David Pakman, the former CEO of eMusic and partner at Venrock. "Your beef can’t be with Spotify anymore.""

    - The Verge


    Again, I am all about purchasing music and paying those involved with creating the music I so love. But, I can't do much about the contracts signed by artists that put the majority of my payments into the pockets of someone else. I'm also not anti-record label. Labels are in business because they provide a service artists want or need. Streaming is here to stay. I hope the conversation about streaming service payouts can be funneled in the right direction. I'm also open to other opinions and appreciate comments whether they agree with me or not.







    Comments 37 Comments
    1. tranz's Avatar
      tranz -
      Thanks for the article.

      Not sure where you got your figures from, but 9.6M streams x 0.006 per stream is ~$57K. From that the label or aggregator takes a percentage. Still a very nice income but not close to what you have listed.

      These days with social media and aggregators like TuneCore and CDBaby, it has been much better for the individual artist to get a piece of the pie.
    1. The Computer Audiophile's Avatar
      The Computer Audiophile -
      Quote Originally Posted by tranz View Post
      Thanks for the article.

      Not sure where you got your figures from, but 9.6M streams x 0.006 per stream is ~$57K. Still a very nice income but not close to what you have listed.

      These days with social media and aggregators like TuneCore and CDBaby, it has been much better for the individual artist to get a piece of the pie.
      Hi tranz - good question. It's 9.6 full album streams. The album contains 16 tracks.

      9,600,000 x 16 x 0.006 = $921,600

      to

      9,600,000 x 16 x 0.0084 = $1,290,240
    1. wgscott's Avatar
      wgscott -
      I receive feedback from people suggesting ...
      Twitter is very appropriately named.
    1. The Computer Audiophile's Avatar
      The Computer Audiophile -
      Quote Originally Posted by wgscott View Post
      Twitter is very appropriately named.
      Indeed.
    1. bobbmd's Avatar
      bobbmd -
      Quote Originally Posted by wgscott View Post
      Twitter is very appropriately named.
      are you back? can i return those tables and reconnect those cables
    1. firedog's Avatar
      firedog -
      Chris, your article is correct but incomplete.

      In the days of physical media there were set royalty rates that performers and songwriters received from record sales,airplay, and publishing. Even when the rates were low, successful product produced quite a good income for artists.

      With the advent of streaming, the rules about physical media no longer apply. Essentially the artist has no power. The labels negotiate rates with the streaming company and the artist is basically left out in the cold. The record labels are now taking a much higher percentage of the income stream than they once did. Why? Because they can. Corporate greed...you pick the reason that appeals to you.

      It is just this situation that was part of the Jay-Z pitch when he took over Tidal. Most perfoming artists receive a very small amount, and songwriters receive literally almost nothing. Songwriting was once a pretty good way to make a living if you succeeded. In the streaming world, even if the song you've written succeeds, you will still need a day job. Forget about living off the royalties. I think your commentary doesn't take this into account.

      Those of us who value music also should want a world where the artists who create it can make a good living from it.
    1. The Computer Audiophile's Avatar
      The Computer Audiophile -
      Quote Originally Posted by firedog View Post
      Chris, your article is correct but incomplete.

      In the days of physical media there were set royalty rates that performers and songwriters received from record sales,airplay, and publishing. Even when the rates were low, successful product produced quite a good income for artists.

      With the advent of streaming, the rules about physical media no longer apply. Essentially the artist has no power. The labels negotiate rates with the streaming company and the artist is basically left out in the cold. The record labels are now taking a much higher percentage of the income stream than they once did. Why? Because they can. Corporate greed...you pick the reason that appeals to you.

      It is just this situation that was part of the Jay-Z pitch when he took over Tidal. Most perfoming artists receive a very small amount, and songwriters receive literally almost nothing. Songwriting was once a pretty good way to make a living if you succeeded. In the streaming world, even if the song you've written succeeds, you will still need a day job. Forget about living off the royalties. I think your commentary doesn't take this into account.

      Those of us who value music also should want a world where the artists who create it can make a good living from it.
      Hi Firedog - Thanks for the comments. For the most part I agree with you, but I disagree that the artist has no power. The more money an artist brings in the more power the artist has with the label. Not all artist receive the same percentage from the label for streaming income.

      I hear you that artists and song writers used to make a good living and it would be nice if they still made a good living. However, the public has spoken and they don't want what was being sold to them (CDs and downloads). Now it's up to artists to negotiate with the labels for a larger percentage of the streaming pie. It's nonsense to complain about the streaming services when the real culprit is the artist / song writer and the label / rights holder. People need to look inward rather than blame external sources. If they want a big label record deal they will have to live with the consequences.
    1. realhifi's Avatar
      realhifi -
      I keep hearing that the public has spoken but what is not being said is that streaming services came about by business's looking for new business and when the consumer started getting things for free they of course said, MORE PLEASE!

      If a food chain started giving away something on their menu in order to get new customers then you better believe they'd get new customers, even if they were losing money in the process.

      Of course the public wants steaming now.
    1. Radio Jimbo's Avatar
      Radio Jimbo -
      In one of Kurt Vonnegut's novels St. Peter tries to convince poor people hoping to get into heaven that they could have been rich if they'd only tried harder: if only they'd known there was oil in the backyard! That Uncle Ed had $500,000 in Coca Cola stock in the garage! "Sorry you missed it!" says St. Pete. "Not our fault!" I paraphrase, but you get the gist.

      Your feckless argument that artists should "look within" strikes me the same way. You seem to blame the artists for record label executives inability to realize they were in a burning building. Really: It would be "nice" if artists could make a living? Artists and songwriters are "culprits"? Wow. Some of these artists make less in a year than the cost of some of the gear you review. People who can appeal to mass taste will usually make money. Those who don't, but still make valid music, won't. What happens to them?

      Consumers have spoken, you say. Of course they have. They want all the music in the history of recording available to them for $10 a month. Who wouldn't? But an artistic community needs to be sustained, or it will wither and die. What are you going to listen to on your megabuck system then? Further, as artists and labels fail, what happens to sonics and fidelity, the whole point of this website? As record companies fade, so do budgets and time in REAL studios? Artists will always make music, whether or not they get paid, but do you want everyone to wind up recording in "Garageband" ? How's that gonna sound on your $5000 DAC?

      Record labels and Streaming companies have colluded to manipulate outdated intellectual property laws to their advantage. They've done this willfully. They continue to lobby congress to avoid paying terrestrial radio royalty rates. Why? Because they "expose new artists"! The cynicism on display here would be hilarious if it weren't heartbreaking.

      Abbie Hoffman used to say Nancy Reagan's telling drug users to "Just say no" was like telling a schizophrenic to "just cheer up". Do you really believe that all of this trouble would just blow over if artists went back to their plantation owners and asked "Please sir, may I have some more?"

      Doubtful. The streaming financial battle has likely already been lost for artists. The companies have won. But that doesn't make it right.
    1. esldude's Avatar
      esldude -
      2014 Year End: Top Billboard 200 Albums Chart | Billboard

      So how many of the top 200 albums of 2014 according to Billboard were from artists who did not have a record label deal?

      I don't like what record labels do in regard to artists. It seems a terrible deal at best. Nevertheless, just looking at results do record labels make for bigger selling albums? Now the other thing one could look at is do artists working via streaming and other means without record labels make more money. Success and name recognition beget success. So getting a 'breakthrough' even once is very valuable for future income of artists.

      So let us just say labels only pass on 10% of what an artist could earn without the label. Do labels generally increase total career sales of artist by more than 1000%. If they do, as bad as it seems, they are beneficial to an artist. If they don't, there is room for another path to make for financial success of artist beyond what labels take part in. Maybe you are only in the top 500 of albums, but make more money than a record deal putting you in the top 50.

      I really hope streaming and direct sales by artists or a new kind of record company that only minimally inserts itself in the process for a small slice of the pie happens. It would make for more independent artists making a living wage. More variety and creativity in music. And not needing a giant hit album to quit your day job. I haven't seen it happen yet though.

      Spotify giving 70% to rights holders looks pretty good. Perhaps the amount paid per stream is too low. But is is hard to demonize Spotify when that 70% number exists.

      I would have thought around a decade ago that labels would be on their way to oblivion by now or they would have drastically changed how they do business. You could argue both are partially true, but it hasn't changed as much as I would have expected. Labels may do more than is being given credit for here.
    1. The Computer Audiophile's Avatar
      The Computer Audiophile -
      Quote Originally Posted by Radio Jimbo View Post
      In one of Kurt Vonnegut's novels St. Peter tries to convince poor people hoping to get into heaven that they could have been rich if they'd only tried harder: if only they'd known there was oil in the backyard! That Uncle Ed had $500,000 in Coca Cola stock in the garage! "Sorry you missed it!" says St. Pete. "Not our fault!" I paraphrase, but you get the gist.

      Your feckless argument that artists should "look within" strikes me the same way. You seem to blame the artists for record label executives inability to realize they were in a burning building. Really: It would be "nice" if artists could make a living? Artists and songwriters are "culprits"? Wow. Some of these artists make less in a year than the cost of some of the gear you review. People who can appeal to mass taste will usually make money. Those who don't, but still make valid music, won't. What happens to them?

      Consumers have spoken, you say. Of course they have. They want all the music in the history of recording available to them for $10 a month. Who wouldn't? But an artistic community needs to be sustained, or it will wither and die. What are you going to listen to on your megabuck system then? Further, as artists and labels fail, what happens to sonics and fidelity, the whole point of this website? As record companies fade, so do budgets and time in REAL studios? Artists will always make music, whether or not they get paid, but do you want everyone to wind up recording in "Garageband" ? How's that gonna sound on your $5000 DAC?

      Record labels and Streaming companies have colluded to manipulate outdated intellectual property laws to their advantage. They've done this willfully. They continue to lobby congress to avoid paying terrestrial radio royalty rates. Why? Because they "expose new artists"! The cynicism on display here would be hilarious if it weren't heartbreaking.

      Abbie Hoffman used to say Nancy Reagan's telling drug users to "Just say no" was like telling a schizophrenic to "just cheer up". Do you really believe that all of this trouble would just blow over if artists went back to their plantation owners and asked "Please sir, may I have some more?"

      Doubtful. The streaming financial battle has likely already been lost for artists. The companies have won. But that doesn't make it right.
      Hi Radio Jim - Thanks for the honest comments. Obviously I think you are way off, but that's OK with me :~)

      The main gist of my opinion is that streaming services aren't the problem and the party to be blamed for artists not making money. Nobody forced artists into contracts with businesses that are out to make money for themselves first and foremost. Artist's pointing the blame finger at streaming services is absolutely the wrong thing and isn't going to get them anywhere. Streaming services can't hand over 100% of their income. Artists need to look at the business model they have chosen to use. Do everything yourself and make all the money from streaming services. Work for someone else (a record label) and make money like an employee. Artists aren't special when it comes to the free market. The public doesn't want their CDs, it wants to stream their music. The same can be said for horse and buggy manufacturers. I'd like to see everyone make a living doing what they want to do, but life doesn't work that way.

      "Those who don't, but still make valid music, won't. What happens to them?" They are subject to the free market just like every other business in most of the world. Make a product that people like and you will succeed monetarily. Make something most people don't care about and you will be rewarded as such. Yes, some artists make less than the cost of gear reviewed here on CA. That's life. Some artists are arguably much less talented and make more money than this entire industry. That's life.


      I agree that the artist community needs to be sustained. Streaming doesn't change this. The record labels are making the money, not the streaming service. Same as it ever was. Artists should ask themselves if they can sustain themselves on a paycheck from a label or doing all the work required to run their own business.


      I don't believe "all of this trouble would just blow over if artists went back to their plantation owners and asked "Please sir, may I have some more?" I believe artist need to stop blaming streaming services first and foremost. In the long run streaming can and will make more money for artists than physical music sales ever did. I also believe artists can't play dumb and raise hell for signing a contract that screws themselves. History has repeated itself so many times with the age old artist - record label battle.
    1. The Computer Audiophile's Avatar
      The Computer Audiophile -
      Quote Originally Posted by esldude View Post
      2014 Year End: Top Billboard 200 Albums Chart | Billboard

      So how many of the top 200 albums of 2014 according to Billboard were from artists who did not have a record label deal?

      I don't like what record labels do in regard to artists. It seems a terrible deal at best. Nevertheless, just looking at results do record labels make for bigger selling albums? Now the other thing one could look at is do artists working via streaming and other means without record labels make more money. Success and name recognition beget success. So getting a 'breakthrough' even once is very valuable for future income of artists.

      So let us just say labels only pass on 10% of what an artist could earn without the label. Do labels generally increase total career sales of artist by more than 1000%. If they do, as bad as it seems, they are beneficial to an artist. If they don't, there is room for another path to make for financial success of artist beyond what labels take part in. Maybe you are only in the top 500 of albums, but make more money than a record deal putting you in the top 50.

      I really hope streaming and direct sales by artists or a new kind of record company that only minimally inserts itself in the process for a small slice of the pie happens. It would make for more independent artists making a living wage. More variety and creativity in music. And not needing a giant hit album to quit your day job. I haven't seen it happen yet though.

      Spotify giving 70% to rights holders looks pretty good. Perhaps the amount paid per stream is too low. But is is hard to demonize Spotify when that 70% number exists.

      I would have thought around a decade ago that labels would be on their way to oblivion by now or they would have drastically changed how they do business. You could argue both are partially true, but it hasn't changed as much as I would have expected. Labels may do more than is being given credit for here.
      Hi Esldude - Thanks for the comments. I agree with your logic.
    1. tranz's Avatar
      tranz -
      "The public doesn't want their CDs, it wants to stream their music"

      Certainly I am NOT one of those, and would be shattered if the only choice would be streaming. I am okay with having CD physical go to CD download as that saves me a ripping step and helps the environment. However, to be prisoner to a streaming service and have them determine which albums are available for me to listen to or whether they decide to have network issues...UGH!

      And on top of that, Tidal still sounds like internet radio, albeit good internet radio, and does not compare with my CD rips!

      I am all for streaming for both the consumer and artist as it is yet another income stream for the artist and another way for the consumer to find artists to enjoy. It has never been easier for artists to enjoy income streams from internet (including streaming services, download services, youtube, etc.) and you do not need to be at the mercy of a label, whereas before that was the only way.

      Cheers.
    1. Sonic77's Avatar
      Sonic77 -
      I'm glad you pointed out the fact that artists are getting screwed by the music companies, that makes me not want to buy their service, and hopefully others will join me.
    1. The Computer Audiophile's Avatar
      The Computer Audiophile -
      Quote Originally Posted by Sonic77 View Post
      I'm glad you pointed out the fact that artists are getting screwed by the new streaming companies, that makes me not want to buy their service, and hopefully others will join me.
      Surely you jest?
    1. Sonic77's Avatar
      Sonic77 -
      Quote Originally Posted by The Computer Audiophile View Post
      Surely you jest?
      Why would I jest? I meant the music companies.
    1. The Computer Audiophile's Avatar
      The Computer Audiophile -
      Quote Originally Posted by Sonic77 View Post
      Why would I jest? I meant the music companies.
      My article clearly states the streaming services aren't the companies screwing the artists and I read your comment as saying the streaming services are screwing the artists.
    1. Sonic77's Avatar
      Sonic77 -
      Quote Originally Posted by The Computer Audiophile View Post
      My article clearly states the streaming services aren't the companies screwing the artists and I read your comment as saying the streaming services are screwing the artists.
      Fixed it :~)
    1. firedog's Avatar
      firedog -
      Chris-
      The problem with your argument is that the markets aren't really free. We live in a semi-competitive system which gives us the illusion of a truly free competitive market. A truly free market is conditional on no actor having market influence. In almost every market you can think of, this condition doesn't exist. Most markets are dominated by corporate interests who through influence on both the legal system and the market have tilted the playing field in their direction. Certainly this is very true in the music business, on all levels.

      So under these conditions, for you to stick to the idealistic position that "nobody forced the artists into contracts" may be technically true, but it isn't true in the economic/social reality; and it is odd that you demand the artists work as if in an ideal world of free markets, but don't see an incongruity in the fact that the markets aren't really free, and that the other actors are reaping the benefits of this situation at the expense of the artists.

      The real solution isn't to make demands on the artists, but to try and level the playing field, so there can be something that more resembles a free market. There are someways that this could be done, I'm doubtful they will happen, as powerful interests don't want them to - they stand to loose the unfair benefits they've managed to accrue to themselves. Occasionally there is a corporate/business actor that sees the really big picture, and doesn't try to grab an unfair share, but this is rare.
    1. ednaz's Avatar
      ednaz -
      Quoting David Byrne - "Same as it ever was" is very appropriate. A lot of musicians from the 60s and 70s had contracts that were so rapacious that they didn't make enough money to keep up their instruments. A few stories have been pretty frequently re-told - how little Jefferson Airplane made for all the hits they had, John Fogarty's long silence, Billy Joel's stop-out to be a piano man while waiting for a contract to expire.

      If you're a marquee artist - meaning, you've been very successful, enough that you could re-negotiate your contract, you probably can make really good money on the streaming services. A couple young up and coming artists I know have had to keep their day jobs through their second successful album. Easy to blame the streaming services because their take is visible. But I think you're on the right track that for a large number of artists, the biggest cut is going to the agents and labels.