We can’t make this up. We’ve stated many times before, as the consumption of streams increase (and those services grow) the per stream rate will drop as revenues level off. This is simply because revenues can not keep up with consumption, and there is no fixed per stream rate.
In our latest look at streaming rates we found that Spotify streaming rates had dropped 16% from 2014 to 2016. Now, Hypebot is reporting that Spotify is asking for another 14% reduction in royalty payments.
Please someone break out a calculator… that would be a 30% reduction in per stream rates in two years! It’s just math. Wow.
Read the full story at Hypebot:
It’s often hailed as a model for the future of digital music, but the reality is that many smaller labels can’t survive on streaming
When Swedish independent artist/producer/songwriter and label owner David Elfström Lilja checked his admin page on Phonofile, his distributor, the other day to find out how much he had made from his latest single Worlds Collide in its first few weeks of release, his heart sank. For 18,035 streams he had received 8.70 SEK (£0.80). Meanwhile it had sold two copies on iTunes, for which he received 36.37 SEK (£3).
“No one can say that streams don’t cannibalise sales, cause I can’t imagine those streams wouldn’t have generated at least a few sales [if people couldn’t stream it unlimited times],” he reflects.
It’s worth noting that 2013’s 5% rise of music sales in Sweden represents a slowdown, as sales rose by 13.8% in 2012. You’d be hard pressed to find anyone in Sweden that doesn’t know about Spotify by now, so perhaps we’re getting closer to the point where the market is saturated, when all those willing to pay for it are already paying (the company recently dropping listening limits for free users is not exactly helping to push people towards paid subscriptions). And yet revenue levels are nowhere close to where they were in the early noughties.
READ THE FULL STORY AT THE GUARDIAN:
Bloomberg almost gets it right. While Megan McArdle correctly identifies the problem with Spotify in the context of current market economics she fails to recognize the source of the downward pressure on online music distribution, Ad Funded Piracy.
As we have said many times, we don’t object to streaming as a business model, we only object to the poor revenue and compensation economics that these services currently provide. In other words, the economics of music streaming are a direct symptom of the larger disease of Ad Funded Piracy – this is why we hope to see more artists speaking up about the actual source of the problem as pirate sites are a for profit business that do not compensate artists at all.
In other words, while the cost side has improved, the revenue side has gotten worse even faster. People simply aren’t willing to pay very much for recorded music anymore. If you’re an artist, and especially if you’re a record label, that’s very bad news. Naturally, some artists want to shoot the messenger, blaming Spotify for their paltry payments. But Spotify is not the problem. The market is the problem. Spotify is just the messenger telling them what the market is now willing to pay for their songs.
We have a suggestion for any streaming music company executives who should happen across this post – if you really want to help musicians, why not start educating the media and musicians about the cause and source of why streaming economics are really so bad, Ad Funded Piracy.
Let’s join forces and aggregate the power of the community to restore a fair, ethical and balanced marketplace to music so that artists, songwriters and performers can have sustainable careers, and you too.
READ THE FULL STORY AT BLOOMBERG: