Why is $5 Dollar a Month Streaming Good For Artists? Because 1/2 the Record Company Executives Will Lose Their Jobs! Yeah!

Label executives and many distributors including most indies have been out there trying to sell artists and small labels on $5 a month streaming!  Because at $5 a month many more people will subscribe to these streaming services!

1) No they won’t.  Why would they pay for what they already get for free?  It’s totally irrational you morons.

But Let’s ignore several hundred years of economic theory and proceed to #2.

2)Let’s say streaming gets as many subscribers as cable. Even round it up a bit to 100 million subscribers. Let’s do the math.  Everyone get out your calculators and follow along. YOU WILL BE TESTED!

$5 x 12 months is $60 x 100 million subscribers.  Spotify keeps 30%.  that’s a $4.2 billion dollar music industry.  About half what the industry is now.   And it’s highly doubtful they will reach 100 million subscribers. What does Netflix have now? 40 million? and Netflix isn’t stupid enough to compete with itself with an identical free version of it’s service. 

Either way at least half the money.  And with half the money you can only employee half as many executives.

Let’s hope that the first batch out on the street are the ones that sold everyone on these deals. If it were up to me I’d start with the head of digital and anyone who has ever uttered the phrase “data is the future.”

You DO know there’s not room for all of you executives to work at YouTube and Spotify right?

And here’s some career advice for all you future former record executives: sell t-shrits.



6 thoughts on “Why is $5 Dollar a Month Streaming Good For Artists? Because 1/2 the Record Company Executives Will Lose Their Jobs! Yeah!

  1. Why is the music industry myopically focussed on a race to the bottom? At least the authors are united in not accepting a bad deal from Amazon. Why can’t musicians do the same?

  2. I agree that $5 dollar a month streaming is not good for artists or the rest of the music industry because it is unlikely this will unleash a lot of pent up demand for these services from people who otherwise would balk at paying $9.95 a month. It is just helping the race to the bottom.

    The real problem is services (especially YouTube) giving too much music away for free on ad-based platforms so consumers do not have much incentive to purchase a basic subscription – or better yet, buy an upgraded one (more on that below).

    Streaming fits best with where we are at with the advance of technology at the moment. It is mobile and spontaneous. For many reasons, we are never going back to the days when downloads, CDs or even vinyl records were the norm. Whether we like it or not we are stuck with streaming as the only viable method of monetizing music – otherwise we are headed back to the days of piracy on peer-to-peer networks.

    Consumers gravitate on mass to free offerings – obviously – but just as clearly, the ad-based platforms are killing the industry because the revenue from them is not commensurate with how much blood, sweat and tears (and money or opportunity costs) go into making music.

    In my opinion, there is no use just criticizing streaming, because there is no viable alternative. We need to unlock the potential that streaming presents. Rather than lowering the price (which as you correctly point out is foolish) we ought to be knocking heads together as an industry to build a smarter paid approach. This would be done by moving the streaming industry toward a much more tiered approach to monetizing the music. This is Freemium 101.

    For example, having a not-so-good user experience at the free level where not all artists are available and new releases are windowed, then a basic user experience around say $9.95 a month, then a really great experience at say $29.95 a month, and at say $99 a month for example the consumer gets private artist access or a live feed that comes directly from the artist’s studio (I am just throwing out ideas – i.e. increasing the personal access to the artist – which is one of the main underlying value propositions in music, the feeling of being connected to something). That extra value is worth a lot and is largely going untapped right now because artists are conditioned to give everything away in the hopes that someone will notice them. They should give a little bit away, then charge a heck of a lot for the rest. This is an old strategy that has worked well in many other industries, including street-corner types.

    In my opinion, we should get past bashing streaming and figure out how to disincentivize businesses from giving away music (in a Darwinian way, to make it hard for them to exist by increasing the percentage of revenue they have to share from say 70% to say 90%), and at the same time figure out how we can best monetize paid streaming. There are lots of bright people out there and I hope we can get focus on this issue. We need to take this adversity and turn it into opportunity.

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