We’ve got data. Lots of data. We have two different consumption surveys of college students and one of the broader population. We’ve also got the details of 2014 digital revenues from a moderately sized independent catalogue.
While everyone else wildly speculates we’re gonna show you our data. All this week.
Is our data definitive? No, but it’s also not pie in the sky projections involving “connected” refrigerators from the VPs of digital “strategy.” This is what is really happening out there in the real world.
And why did we trust these “digital” record label executives anyway? Aren’t these the guys with the HUGE salaries and tiny revenue streams? Let’s see how that worked out this last week.
Drake: >500,000 in sales = >$4.5 million to rights holders
Drake 27 million streams on Spotify = $135,000
“Yeah but steams will continue week after week it’s incremental income”
Really? Let’s do the math on that and check. It’s just math. What are you so afraid of?
So let’s suppose that Drake sold ZERO albums after this week. In order for streaming income to catch up to sales this would require Drake to get 27 million streams for the next 34 weeks. But that is only if Drake doesn’t sell anymore albums. Taylor Swift has sold nearly 8 million albums. The first week she sold 1.3 million albums. Drake is gonna sell A LOT more albums. Let’s be completely pessimistic and assume he only sells an additional 500,000 this year. This would require Drake to be the TOP streamed artist on Spotify for 68 weeks. Or 1 year and 3 months. Unlikely.
“But wait there will be residual streams over the next few years, decades even”
Yes and there will be residual sales over the next few years and decades. At current rates streaming revenue will never catch up…
But I digress. Let’s look at todays little nugget of real data:
The percentage of college students in our survey that DO NOT buy digital music has risen from 26.5% in 2014 to 36.7% in 2015. This corresponds to reports of drops in sales of digital music elsewhere. Is this the result of the widespread adoption of streaming? We don’t know for sure…but 200 years of economics suggest that consumers don’t buy things they already get for free. It strains credulity to insist that streaming does not cannibalize sales. For this would require these 18-24 year olds to suddenly behave differently than all other consumers we have ever known.