# Let The Heads Roll…More Genius From The Record Industry Braintrust or Mark Mulligan Gets a Calculator…

Happy Halloween and welcome to the scary stupid post of the day…

We’ve been saying this for a long time, music streaming math just doesn’t add up. Would someone please buy some calculators for the record industry braintrust that keeps making these stupid deals? Seriously, it’s just math and it’s not that hard… even Mark Mulligan is getting it… no kidding…

\$2.3 Billion In Net Loss To Artists and Labels Per Year

The report extrapolates that YouTube Music Key will generate \$400 million in revenues in its first year. But over the long run it will also be responsible for more than \$2.6 billion in lost subscription revenue yearly. That’s a negative net impact of \$2.3 billion in lost music revenue every year, according to the study.

Ok, that’s YouTube. Let’s revisit how the Spotify math works…

If you own a calculator, let’s just do the math one more time, real slow and simple like…

1) Spotify and former uTorrent CEO Daniel Ek says Spotify only needs 40m paid subscribers for streaming to be sustainable for artists. But that math just doesn’t work.

2) \$10 per month subscription = \$120 per year per subscriber

3) \$120 per year, per subscriber paying out 70% of gross to rights holders equals \$84 per subscriber, per year.

4) \$84 per subscriber, per year x’s 40 million subscribers equals \$3.4b per year in top line gross revenue to ALL rights holders. That’s \$3.4b for labels, artists, publishers and songwriters combined.

5) \$3.4b per year is HALF of the current revenue of \$7b per year where the domestic business has been flat lined.

6) Assuming you could DOUBLE the subscription base to 80m PAID in the USA within two years by dropping the price in HALF to \$5 per subscriber per month you still only gross (wait for it…) \$3.4b a year in revenue.

We know this is shocking to the math impaired, but doubling scale (imagined as it is) while cutting the subscription fees in half, actually nets you the same amount of money. Shocking the things one can learn with a calculator or a spreadsheet.

Maybe we’re all screwed, but we will not go quietly and we’re gonna call it how we see it on the race to the bottom. We will document the stupidity undoing the business. Maybe it’s time for Lucian Grange to get out that axe again and let people know what time it is? #stopthemadness

READ THE FULL POST AT HYPEBOT:

RELATED:

# Streaming Is the Future, Spotify Is Not. Let’s talk Solutions.

## 3 thoughts on “Let The Heads Roll…More Genius From The Record Industry Braintrust or Mark Mulligan Gets a Calculator…”

You folks have been proLIFIC! Excellent stuff, keep it coming 🙂

2. This is all well and dandy, but what you seem to be completely forgetting is that you cannot turn back time. Streaming was invented as a potential answer to everyone and their dog pirating music via peer to peer networks and simply not buying physical CDs anymore. That together with everyone and their dog making music and thus fragmenting the attention of all those music fans between them further makes for meagre business. And yes music execs heads will role, but not cause they endorsed the inevitable change, but cause they didn’t react quickly enough and most of all cause their industry has been riding on an inflated and now simply unsustainable high during the late eighties and nineties and a bit before Napster came along after the millennium when they were able to double dip and sell the same music on CD to the same people again that they had already bought the vinyl record and / or cassette. All you do if you raise the price for streaming subs is push more people back to piracy and btw the idea is not to sell twice as many subs by halving the price, but more like selling ten or more times as many.

1. You’re missing the point, addressed here:

Streaming Is the Future, Spotify Is Not. Let’s talk Solutions.
https://thetrichordist.com/2014/10/14/streaming-is-the-future-spotify-is-not-lets-talk-solutions/

Here:

Who will be the First Fired Label Execs over Spotify Fiasco & Cannibalization?
https://thetrichordist.com/2014/10/09/who-will-be-the-first-fired-label-execs-over-spotify-cannibalization/

And here:

Music Streaming Math, Can It All Add Up?