Streaming is Good, the Economics are bad – Get It?
There’s a media pile on claiming that Taylor Swift is going to lose her war on streaming… really? Is there a war on streaming? No. There is no war on streaming. The battle is over economic injustice, not technology. We’ve written about this before…
Streaming Is the Future, Spotify Is Not. Let’s talk Solutions.
Why Spotify is not Netflix (But Maybe It Should Be)
The record business would do well to look at the solutions and marketplace that the film industry has developed with varied and robust consumer options in the streaming landscape. These include different access and payment models, not one business for all.
So let’s get this straight, and go right to the heart of the issue. It’s just math, and it’s simple math at that. We’ll ask again if anyone can show us how streaming scales to sustainability for artists and rights holders. Let’s see it, because this is how it looks to us…
SPOTIFY MATH FOR THOSE OF YOU AT HOME WITH CALCULATORS:
Spotify has ONLY 3m paid in the US at $10 each.
$10 x 12 mos = $120 per year. Pay out 70% that’s a gross of $84 per year per subscriber. Simple Math.
That $84 per sub is in revenue to all artists in rights holders. Times that by 3m and you get a whopping $252m a year in a $7b business.
Multiple that by 10, to get 30m subs @ $10a month and that’s only $2.5b a year… and that’s a big IF Spotify ever gets to 30m paid in the USA… and IF they do, that’s ONLY 2.5b in revenue against the $7b now…
So you effectively cut the revenue to everyone by 1/2 to 2/3rds… how does this math work without raising the price of subscriptions? It doesn’t.
It’s just math.
So please get your arguments right. No one is arguing against streaming as a technology or distribution mechanism. They are arguing over the fact that these piss poor business models can not exist or operate without artists subsidizing VC funded or publicly held companies.
If these business models are so bad that they can not afford to pay for the cost of goods to maintain a sustainable ecosystem it’s time to go back to the drawing board and start over. That has nothing to do with streaming, technology or distribution and everything to do with exploitative economic injustice.
It’s just math silly.