In an article released today by Gizmodo UK band Uniform Motion talks about self-releasing their album only online. They go through the details of how much money they make from streaming plays on Spotify, Amazon MP3 and more as well as covering their profits from purchases of the album. Remember, this album is not being released through a record so the band gets 100% of the return. When a label releases an album they cut into the band’s profit significantly.
Excerpt:
“With Spotify, we’ll get $0.0041/play.
If you listen to the album all the way through, we’ll get $0.04. If you listen to the album 10 times on Spotify, we’ll get $0.40. If you listen to it a hundred times, we’ll get $4.05. If you listen to the album 1,000 times (once a day for 3 years!) we’ll get $40.50! If you use the free version of Spotify, it won’t cost you anything. Spotify will make money from ads. If you use any of the paid versions, we have no idea how they carve up the money. They only disclose this information to the Major record labels…” Gizmodo’s article HERE Original post HERE
Streaming audio web and mobile apps like Rdio, Rhapsody, and Spotify (the European service just released in the US this week) are filling speakers and ear buds by charging affordable monthly rates (avg. $10/month) on multiple platforms. Streaming music is relatively cheap, easy to use, and is backed by huge libraries of available music.
But do these services make money for the artist?
Sam Leigh at The Guardian reports that musicians may be getting very little money even though a lot of people are streaming their tracks. Leigh points out one claim that, “in a five-month period shortly after the service launched, Spotify users enjoyed more than 1m plays of Lady Gaga’s song Poker Face – which earned Her Gaganess the sum of $167.” Granted there are some spotty research methods here; we don’t know how much money Spotify paid Gaga’s record company for the track or how much the record company took before passing on the rest to Lady Gaga.
However, later in the article Leigh reports, “A spokesman for the body that collects songwriters’ royalties has boasted that it sets a minimum rate of 0.085p per stream (or, to put it another way, £0.00085). So, unless I mistake the arithmetic, a song played 1m times would net its author £850.” In US dollars that’s about $1400 per 1 million plays.
THE NUMBERS:
If we look at a hit song like Poker Face and assume that it reached 1 million streams (via Spotify, Rdio, or Rhapsody) than Lady Gaga and her label would earn $1400. Gaga can now go and buy herself a new MacBook or 116 copies of The Fame Monster on Amazon.com. Actually, after the record label takes their cut Gaga will end up with much less. However, if 1 million people buy the single Poker Face on iTunes at $1.00/song she and her label will receive $300,000. iTunes pays out 30% of their song revenue for the label and artist to split between them.
It would take about 214 million plays of Poker Face on a streaming service for Rhapsody/Spotify/Rdio (assuming they all pay out the same) to write a $300,000 check to Gaga and her label.
THE QUESTIONS:
These simple equations make me wonder if getting this $1400 check (and for most artists much much less) is worth it for the musicians at all. Also, who is now reaping the rewards of the artists talent/hard work? Certainly the streaming music service and partially the record company.
Is this system acceptable if we examine it like a song played on the radio? On the radio a song can be played millions of times, the customer “pays” to listen to it by hearing ads, but the artist gets no money. Isn’t getting paid a small amount from a streaming service a better deal? The argument of “no” is that radio play drives album sales, but streaming allows entire albums to be made available and no record purchase is needed. The argument “yes” is that while the artist’s album sales may be lower their exposure may be higher. Therefore in the future they can release an album digitally and hardcopy a month or two before it’s made available streaming or before the entire album is available streaming thus driving initial album sales.
What if record labels charge large sums of money to Spotify for the rights to popular artists new songs (e.g. Capitol records charges streaming companies $1,000,000 to the new Coldplay album plus the small streaming royalties)? Would the streaming companies pay the big bucks to have the big artists? Especially now that there are multiple streaming options for consumers? Would this kind of action from the record label create competition between the streaming services? i.e. Would Spotify pay more in royalties/up-front than Rdio or Rhapsody to get the new Coldplay ahead of the others or instead of the others?
The amount artists make through the traditional music industry has come very far in a very short period of time. In 2000, when Napster was barely in it’s infancy, a $2 or $3 single on CD that moved millions of copies (e.g. 2000’s biggest hit “Breathe” by Faith Hill) and netting the label and artist millions of dollars. Only 11 years later a million people can instantly play Lady Gaga or Justin Bieber and the artist barely gets enough money from it to pay rent.
Between cloud-based music services, music sharing/hype apps, and streaming apps, the distribution of music is again changing and doing so very quickly. It is uncertain how musicians already popular and those just trying to break in will capitalize financially on these new opportunities. Hopefully we will see a movement amongst the public to willingly pay for music in a way that artists get the reward for their creative work.
More Questions:
Will artists ever be able to make the same kind of money from their own content as was the tradition for the last half century?
Is this better than the free reign piracy of the last ten years?
How does this affect small local or independent bands? Is the exposure on a streaming service enough for them?
