UN prepares to airlift badly needed calculators and math textbooks to Sony digital executives. Above a A Norwegian UN peacekeeping soldier reacts to leaked details of Sony digital executives confusing per capita revenue with ARPU (annual revenue per user.) Photo by Русский: Фото: Михаил Евстафьев English: Photo: Mikhail Evstafiev (Mikhail Evstafiev).
Are we really doing this again? Seriously, is there a single digital music executive at a record label that can do basic math? Reliable reports on the leaked Sony emails seem to suggest otherwise.
Did every single one of these folks fail the 6th grade word problems?
Let me explain this one more time. ARPU≠Per Capita Revenue
For instance in the year 2000 US recorded music purchases per capita were $71. Now remember that per capita figure includes a lot of people who probably don’t buy music. For instance infants, little old ladies and even (sorry but it helps illustrate the point) the hearing impaired. Per capita means everyone in the country. It means…well per capita!!
So when sony digital music executives start talking about ARPU (Annual Revenue Per User) on certain services they are talking about a much much smaller subset of the population. You can not honestly talk about $120 Spotify APRU and $71 dollar per capita annual revenue in the same sentence. Yet it looks like they do. I don’t know if this is sheer stupidity or if it’s part of some sort of digital snake oil scam.
To illustrate, look what would happen if you did it the other way and equated streaming services ARPU with per capita recorded revenue consumption. If all streaming services combined somehow miraculously manage to get to 40 million paying subscribers (about level of adoption of streaming video) on the high side you get to $15 per capita. (40 million x $120 a year/ 320 million us population).
You’re all fired.