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…
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
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