Updated! Streaming Price Bible w/ 2016 Rates : Spotify, Apple Music, YouTube, Tidal, Amazon, Pandora, Etc.

The last time we did this was back in 2014, so we thought it was time for an update. Not a lot of surprises but as we predicted when streaming numbers grow, the per stream rate will drop. This data set is isolated to the calendar year 2016 and represents an indie label with an approximately 150 album catalog generating over 115m streams. That’s a pretty good sample size. All rates are gross before distribution fees.

Spotify was paying .00521 back in 2014, two years later the aggregate net average per play has dropped to .00437 a reduction of 16%.

YouTube now has their licensed, subscription service (formerly YouTube Red?) represented in these numbers as opposed to the Artist Channel and Content ID numbers we used last time. Just looking at the new YouTube subscription service numbers isolated here, they generate over 21% of all licensed audio streams, but less than 4% of revenue! By comparison Apple Music generates 7% of all streams and 13% of revenue.

Speaking of Apple, they sit in the sweet spot generating the second largest amount of streaming revenue with a per stream rate .00735, nearly double what Spotify is paying. But, Spotify has a near monopoly on streaming market share dominating 63% of all streams and 69% of all streaming revenue. The top 10 streamers account for 99% of all streaming revenue.

streamrevenuemkrtshr2016

To put this list in the context of our 2014 numbers we’re adding the chart below with the data sorted by the quantity of streaming plays required to match the revenue of a single song or album download. This is important as we work towards defining and setting a fair per stream rate and also setting an accurate economic equivalent of streams to songs and albums for the purposes of charting.

Billboard currently calculates 1,500 streams to one album for the purposes of charting, which at current streaming rates actually matches an economic equivalent. However, that is most likely a highly excessive numbers of plays to achieve that economic equivalent. But, more on that later…

Keep in mind every streaming service has a key piece of data that would allow artists and labels to set a fair per stream rate. Every on demand streaming service, Apple, Spotify, Tidal, Google Play all know how many times a song is played (per person) on average over time. This is the data that is key to setting fair streaming rates. Who will share this information? Apple, Jimmy Iovine, we’re looking at you.

streamspersong2016

  • HOW WE CALCULATED THE STREAMS PER SONG / ALBUM RATE:
  • As streaming services only pay master royalties (to labels) and not publishing, the publishing has to be deducted from the master share to arrive at the comparable cost per song/album.
  • $.99 Song is $.70 wholesale after 30% fee. Deduct 1 full stat mechanical at $.091 = $.609 per song.
  • Multiply the above by 10x’s and you get the album equivalent of $6.09 per album
[EDITORS NOTE: All of the data above is aggregated. In all cases the total amount of revenue is divided by the total number of the streams per service  (ex: $5,210 / 1,000,000 = .00521 per stream). In cases where there are multiple tiers and pricing structures (like Spotify), these are all summed together and divided to create an averaged, single rate per play.]

[royalties][streaming royalties][music royalties][royalty rates]

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Gently Down The Stream (Songwriters Streaming Royalties Explained) | SONA [VIDEO]

Thank You Songwriters Of North America (SONA)

Consumer Spending On Digital Music Actually Fell In 2014 (Yes You Read That Right) | Music Industry Blog

The Problem With Streaming, Is The Problem With Streaming… Mark Mulligan Reports.

down

“Though the drop was small – 1% – it was still nonetheless a drop at a period when digital spending should be booming.  In some key markets the consumer spending decline was significantly larger, such as a 3% fall in the UK.”

It’s just math. Better late than never… and here’s another newsflash from the way back machine that folks might want to start looking at again, Music Streaming Math, Can It All Add Up? That was 2013…

“The end goal has changed: Just under a third of free streamers go onto buy the music of artists they discover on these service while 37% simply stream newly discovered artists more. Both use cases will coexist for some time, but with with music purchasing fading phenomenon, the latter will dominate.”

The problem is at the top of the waterfall. This means the downstream economics are not going to get better than what’s going on at the top. This is the truth, no matter what nonsense they come up with over at CALinnovates, it’s the musicians are are right to demand better economics and transparency from the streaming companies.

READ THE FULL BLOG AT MUSIC INDUSTRY BLOG:
https://musicindustryblog.wordpress.com/2015/12/04/consumer-spending-on-digital-music-actually-fell-in-2014-yes-you-read-that-right/

The problem is the music-streaming companies | The Hill – Paul Williams

Songwriters have a number of allies in the ongoing fight to update our nation’s horribly outdated music licensing laws. But after reading the recent post by CALInnovate’s Mike Montgomery (“Songwriters are fighting the wrong fight,” 10/5/15), it’s clear that he is not one of them. On what grounds can Montgomery, who represents technology industry interests, claim that he speaks on behalf of songwriters?

As a songwriter elected to represent the interests of ASCAP’s more than 550,000 music creator members, I find Montgomery’s arguments absurd and grossly misleading.

READ THE FULL STORY AT THE HILL:
http://thehill.com/blogs/congress-blog/technology/256247-the-problem-is-the-music-streaming-companies

Transparency Starts Upstream for Streaming Royalties | HuffPo – Chris Castle

We’ve often noted that if the economics at the top of the waterfall are near zero dollars (in microcents) then what trickles down will not get any better…

We’ve seen stories recently about various successes for artists in negotiations with major labels about “transparency” in the payment of the artist’s share of streaming royalties received by record companies. This is great news of course, but the new buzz word “transparency” should be understood in context. There is nothing the digital services would like more than to deflect the ire of artists and songwriters who are enraged about minuscule royalties away from the services and onto record companies or music publishers.

Creators need to be alert that they are not being duped into a false deflection because even in the best case, record companies can only pay on the royalties they receive from services.

READ THE FULL STORY AT THE HUFFINGTON POST:
http://www.huffingtonpost.com/chris-castle/transparency-starts-upstr_b_8238934.html

DMN Says It’s Unlikely Spotify Pays More to Rights Holders Than Apple Does

In the dust up surrounding the Apple Music Launch and the leaked agreement that lead to speculation that Apple was paying indies less than the often heard 70% to rights holders an interesting thing happened.

Industry executives and commenters at Digital Music News reported that Spotify was also paying indies less than 70% and closer to the 58%, or less than Apple.

Update to June 15th, and Apple is not only stating that they are paying 70%, but a more aggressive 71.5% to 73% of revenues depending on territory.

But what makes this that much more interesting is that Spotify has now been outed as NOT paying the commonly accepted 70% of revenues and also has NOT responded to the claims being made at Digital Music News…

So how much is Spotify actually paying? So much for openness and transparency…

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Spotify Desperately Doubles Down on Dumb Bad Math… Free Doesn’t Pay, It’s Just Math.

Bring out your shills… It’s no surprise that Spotify has once again enlisted it’s shills and PR machinery to defend it’s exploitation of artists, bad business model, and horrible royalties. The latest offensive comes as the major labels have announced that the unlimited free tier is not working for them (go figure, free doesn’t pay?).

Last year we wondered out loud, Who will be the First Fired Label Execs over Spotify Fiasco & Cannibalization? In February of this year we found out when Rob Wells exited his post at UMG. Around the same time public comments were made by Lucian Grainge for the need to get more paid subscription revenue. He also noted that the free tiers are not creating the type of performance required for a sustainable ecosystem of recorded music sales. Sony music chief Doug Morris has also come to the party stating, “In general, free is death.

Generally speaking we’re not often fans of major labels (remember they have 18% equity in Spotify) but we’re glad they’ve gotten out the calculators. Right now, the three major labels are currently reviewing their licenses with Spotify which are up for renewal this year. This is the time for the major labels to renegotiate those licenses to be more fair for artists.

We’ve detailed the math here, Music Streaming Math Can It All Add Up? In that post we look at the numbers based only upon paying subscribers. The bottom line is that even at the current rate of $9.99 (per month, per subscriber) it’s going to take a lot more paying subscribers to even get close to the type of revenue earned from transactional sales. Free, ad supported revenue, not even close.

Here’s a couple more things to keep in mind that we’ve detailed:

* Spotify Per Stream Rates Drop as Service Adds More Users…

– and –

* USA Spotify Streaming Rates Reveal 58% of Streams Are Free, Pays Only 16% Of Revenue

But perhaps the worst part of Spotify was outlined by Sharky Laguna’s editorial, “The Real Reason Why The Spotify Model Is Broken.” The well written piece details how the artist you play, may not be the artist who get’s paid due to the fixed revenue pool and market share distribution of revenues.

Now keep in mind we’re not anti-streaming. We completely believe that streaming is the future of music distribution and delivery. None of our arguments here are anti-streaming or anti-technology.

Our arguments are anti-exploitation and anti-bad business models. Technology and economics are different issues. We detailed our thoughts for moving forward with potential solutions in our post Streaming Is The Future, Spotify Is Not, Let’s Talk Solutions. We look at five practices that can make streaming music economics viable for all stakeholders and generate the revenue required for a sustainable ecosystem.

When a Spotify rep says, “We think the model works” keep this in mind as we review the Spotify Time Machine…

* 2010 A Brief History Of Spotify, “How Much Do Artists Make?” @SXSW #SXSW

Back in 2010 during Daniel Ek’s Keynote Speech an audience member who identified themselves as an independent musician asked how much activity it would take on Spotify to earn just one US Dollar. The 27 year old wunderkind and CEO of the company was stumped for an answer… Five years later we have a pretty good idea why.

– and –

* 2012 A Brief History Of Spotify, “It Increases Itunes Sales”… @SXSW #SXSW

Ek strenuously denied that his streaming service cannibalises sales of music through services such as Apple’s iTunes.

“There’s not a shred of data to suggest that. In fact, all the information available points to streaming services helping to drive sales,” he said.

Of course, that was until this past year when Itunes sales are reported to have declined by 13-14% and that is pretty much directly attributed to the cannibalization done by Spotify. Hello…

It is said that one of the definitions of insanity is to keep doing the same thing while expecting different results. Our suggestion to the those in positions of power is simply this, if  you want something different, you have to be willing to do something different.

Sure, Spotify was a grand experiment but after half a decade we now have the data to know if that experiment is working out (or not). In the end, it’s just math and free doesn’t pay…

 


 

Streaming Is the Future, Spotify Is Not. Let’s talk Solutions.

 

Spotify Per Stream Rates Drop as Service Adds More Users…

 

USA Spotify Streaming Rates Reveal 58% of Streams Are Free, Pays Only 16% Of Revenue

Spotify Top 10 Territories : Global Revenue Marketshare & Streaming Percentages

The Top 10 territories account for 87.10% of all streams and 91.48% of all revenue. So all revenue outside of the Top 10 is less than 9% of global revenues. So if you’re streaming your music outside of the Top 10 territories, you are more or less giving your music away.

SpotifyGLOBALMarketshareRevStreams

Here’s the summed, net averaged per play rate for the top ten territories.

SpotifyT10CountriesStreamingRates

Below the top ten territories are isolated (and the market share recalculated).

The data would seem to suggest that savvy artists and labels avoid the territories where the number of streams far exceeds the percentage of revenue (the red boxes).

SpotifyNOFLYTerritories

Data set provided by US based indie label with 800 songs. Data is summed from sales and reports dated Sept 2011 – Aug 2014. This is what Spotify really looks like to most artists and indie labels.

Absolute Must Read : How To Make Streaming Royalties Fair(er) | Medium

The record industry has completely disconnected the relationship between artists and their fans whereby the artists catalog is now an aggregated asset to leverage (the label’s) equity in a tech start up that is subsidized by musicians. Not cool.

This is an excellent piece by Sharky Laguna that looks at how all models utilizing divisible revenue pools are fundamentally unfair to the relationship between the artist and the fan. In short, the plays by each consumer should be compensating ONLY the artists that, that person plays (makes sense, right?). Further more 100% of the consumers subscription fee should only pay the artists that individual listens too – no matter how few or how many plays the consumer gives each artist.

Under this proposed revised accounting method, each consumer is once again reconnected directly to the artists they chose to support. This is exactly the kind of thinking that should be happening at the labels and music tech companies.

In a nutshell: Royalties should be paid based on subscriber share, not overall play share.

If I pay $10 and during that month I listen exclusively to Butchers Of The Final Frontier, then that band should get 100% of the royalties. I didn’t listen to anyone else, so no one else should get a share of the $7 that will be paid out as royalties from my subscription fee.

Please read the full post at MEDIUM:
https://medium.com/@sharkyl/how-to-make-streaming-royalties-fair-er-8b38cd862f66

Jay Frank’s Magical Mystery Streaming Math… Or, Brotha Can Ya Spare A Calculator?

Music industry exec and blogger Jay Frank commented on our post BUT SPOTIFY IS PAYING 70% OF GROSS TO ARTISTS, ISN’T THAT FAIR? NO, AND HERE’S WHY…. Jay’s comment is typical of the thinking that has landed the record industry where it is today (losing money and in trouble).

It’s hard to tell from the comment whether Jay actually believes what he’s saying in the same way someone who bought a million dollar house with no money down, on a zero percent, 5 year ARM convinced themselves there was no housing bubble…

If they [Spotify] go from 10m to 100m free users, they’ll be able to charge much larger premium rates, and may even strike deals with some acts. That could easily result in $1b in artist royalties, given some other media models. This now puts Spotify at $3.5b in artist royalties per year. Pretty good.

To your point, though, that’s still half of the $7b number you put out there.

Right, no kidding “that’s still half of the $7b number”. To be fair to Jay, you should read his whole comment in context at the link above.

However, by his own admission he is still coming up short by $3.5b. If you factor that in with the analysis of the projected revenue losses from YouTube’s Music Key that’s another estimated $2.3b in the hole. But the simple truth is much easier to see, revenue keeps dropping as it has for the past 13 years while piracy apologists and digital music snake oil salesmen have yet to show any increase in actual overall net revenue from recorded music sales.

YouTube’s MusicKey Will Cause $2.3 Billion In Music Industry Losses… | Digital Music News
http://www.digitalmusicnews.com/permalink/2014/11/03/youtubes-musickey-will-cause-2-3-billion-music-industry-losses

By Jay’s logic, digital albums would sell for one dollar not ten while digital song downloads would be priced at ten cents and not one dollar. That’s not the case for good reason and illustrates quickly and effectively why Spotify paying 70% of gross is moot. We don’t think labels would agree to getting paid 70% on one dollar album albums and ten cent songs. Of course the labels don’t have 18% equity in Itunes either…

The larger truth and common sense is that Spotify economics don’t work in the same way $1 album downloads and $.10 song downloads don’t work – there’s not enough scale to make the economics sustainable. If Jay truly thinks you can more than double the revenue from transactional downloads by reducing the price by 90% we’ve got a bridge in Brooklyn we’d like to sell him very cheap.

In terms of “highly selective math” Jay continues his comment from above:

To your point, though, that’s still half of the $7b number you put out there. True, but that presumes that Spotify is the only player in town. While they may be a major force, there will also be other internet radio, satellite radio, video streaming, other streaming competitors and probably still physical and digital retail sales. Add to that greater ubiquity in tracking usage with increasing penetration of smart mobile devices combined with declining mobile data cost…and I feel like we’re starting to approach $10b a year.

And that’s just the U.S.

Ok, so let’s see that $10b a year in revenue streams plotted out and lets take a closer look at it. Here’s what subscription based services look like right now. Netflix only has 36m subscribers in the US, no free tier, and massive limitations on available titles of both catalog and new releases. Sirius XM, 26.3m in the US as a non-interactive curated service installed in homes, cars and accessible online. Premium Cable has 56m subscribers in the US paying much more than $10 a month and also with many limitations. Spotify… 3m paid subscribers in the US after four years.

Tell us again about this strategy of “waiting for scale.” Spotify is Three Million PaidThree… Oh, and that’s just the U.S.

* 3m Spotify Subs Screen Shot
* 26.3m Sirius XM Subs Screen Shot
* 36m Netflix Subs Screen Shot
* 56m Premium Cable Subs Screen Shot
* $7b Music Business Screen Shot

Hey, it’s just math… but in the meantime Jay, you may want to look at this:

Streaming Isn’t Saving the Music Industry After All, Data Shows… | Digital Music News
http://www.digitalmusicnews.com/permalink/2014/06/26/streaming-isnt-saving-music-industry-new-data-shows

A Detailed Explanation on Why Streaming Has Failed… | Digital Music News
http://www.digitalmusicnews.com/permalink/2014/10/02/detailed-explanation-streaming-failed

You can email Paul Resnikoff at paul@digitalmusicnews.com

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RELATED:

Streaming Is the Future, Spotify Is Not. Let’s talk Solutions.

Music Streaming Math, Can It All Add Up?

Who will be the First Fired Label Execs over Spotify Fiasco & Cannibalization?