A Detailed Explanation on Why Streaming Has Failed…

This was presented by Digital Music News at the Vienna Music Business Research Days symposium this morning.


135 Responses

  1. Anonymous

    “Spotify claims per-stream payouts reach $0.05 (half-a-penny), though this is considered exaggerated”

    That’s the point where I stopped reading, as clearly this is just another “report” based on rumor & innuendo.

      • JJ

        My statements, not from my PRO, but what I get through TuneCore is roughly $.005 per stream. That is for the full band on songs that we own 100%. Those reports are not exaggerated, it’s just now the payment musicians get from their PRO – which is significantly less.

        • Anonymous

          More numbers here, from Rosanne Cash.

          According to Hypebot, her music was streamed 600,000 times. Result: $104 for Ms. Cash.

          And here’s what she has to say about streaming:

          “‘If you stream, it’s just dressed-up piracy. Brin on the haters — I don’t care. I’m in this business and I see young musicians give up their missions and dreams all the time because they can’t make a living. Someone has to speak up for them.”

          SOURCE: Rosanne Cash, Facebook

      • Anonymous

        I mean, I get statements from Spotify monthly. I can see the blended per-stream rate on millions & millions of streams per month, and it’s well over half a penny per stream at this point. Maybe our independent artists are just getting better rates than everyone else somehow??

          • Jay Cooper

            My label also gets Spotify statements every month, and, yes, the per stream payout average is well over .005. The rates vary a little based on country and paid v. free streams, but it is an easy rule of thumb for anticipated Spotify revenues that 20K streams = $100, and it invariably ends up being more than that every month. For the last year at my little indie label, Spotify is our 2nd largest revenue source. Paul, I can say this – I read your material on Spotify with interest, but if you deny this simple, mathematical fact this tells me that you are engaging in fact-free advocacy rather than analysis.

    • Anonymous

      OK I lied and read the rest. Nice to include those last two charts which really illustrate how music revenue has stabilized since Spotify launched in the US compared to the previous decade.

      Not really sure why the anti-streamers are so keen to get back to an industry in freefall.

    • YouDontKnowMe

      $0.05 is not half a penny, it is five freaking cents. Get your math together.

      • TypoPolice

        There are more important issues here than debating a typo which was copy/pasted from the article

        • Tim Wood

          It shows poor editing & fact-checking, which doesn’t inspire confidence.

          The graphs lower-down are pretty, though.

  2. There is something...

    And plan B is ? Paul ?

    I hate people who always moan about something but fail to offer an alternative…

    • Anonymous

      “fail to offer an alternative”

      Alternative? To what?

      Streaming was never a source of income for artists.

      It’s not exaxtly a secret that iTunes sales are the only reliable way to make a living as a recording artist in the real world.

      • Char

        Streaming was never a source of income for artists. Right, but it will be in the near future. Just wait and see.

        • steveh

          Blind faith and insistence cannot substitute for hard evidence.

          At the moment there is no hard evidence that streaming will succeed in providing a sustainable income for recording artists in any of the major music markets.

          Sweden and Norway are a-typical. Before streaming iTunes has almost no presence and piracy was uber-rampant in those small markets.

          • Anonymous

            Actually, it does. Audio-only streaming has this in common with the Scandinavian welfare system:

            It hasn’t caught on anywhere else.

          • Rubby

            Sweden is one of the biggest havens of content pirates on Earth, and their judicial system was working overtime to get Snowden to the fascists in the USA. I’d say. Sweden is no longer the sweetie we once thought she was. Tech tyrant nutcases have taken over there as well.

            Developers, go to the back of the bus, and leave the content to the skilled.

          • Mojo Bone

            Atypical, or just ahead of the curve? Perhaps it’s no coincidence that Spotify has been operating longer in these countries?

          • steveh

            You are wrong about Spotify operating longer in Scandinavian countries.

            Spotify started by invitation in October 2008 in Sweden and fully launched with free registration in the UK in Feb 2009.

            The UK, a large music market, has nothing remotely like the same Spotify penetration as in Sweden. And no observers of the UK market are predicting such penetration.

            Sweden is a-typical.

          • jw

            The difference between the UK & Scandinavia is digital downloads.

            Digital downloads never took hold in Scandinavia. In the UK, digital downloads actually took off very fast. You had buzzed about acts like the Arctic Monkeys hitting #1 before a physical product was even available, making digital en vogue… it was all very well orchestrated.

            But we’re going to see digital downloads taper off dramatically in the coming years, which is going to put everyone in a much more similar position to these Scandinavian countries. And the indications are that this is a good thing.

            And downloads tapering off isn’t a music-specific thing, it’s a function of greater changes in general consumption habits… the way we interact with technology is moving towards subscription, towards access, towards the cloud, & away from media ownership, local storage, manually transferring content between devices, etc. This isn’t something where the music industry can just put a stake in the ground & dictate how consumers are going to interface with the digital music product… we’ve already been through this, if the industry refuses, consumers will find a way to meet their own expectations.

          • steveh

            “The difference between the UK & Scandinavia is digital downloads. Digital downloads never took hold in Scandinavia. In the UK, digital downloads actually took off very fast.”

            Thankyou for confirming my point that Sweden is a-typical compared to the major markets.

            How it all pans out in the years to come is still not a completely forgone conclusion. You may be right, or then maybe some completely new development will occur that launches a whole new cycle.

            But what is nonetheless correct, measurable and certain is that in 2014, as of now, streaming penetration in the major music markets is way, way down from being anything like it is in Sweden.

            The big question is whether Spotify can stay in business, losing shed loads of money, long enough to reach the massive scale of penetration it needs.

          • jw

            If Sweden weren’t a-typical, the streaming adoption rates would be the same. It’s easy to tell that Sweden is a-typical simply by looking at the numbers. In many ways you are simply stating the obvious.

            However, when you start to examine WHY Sweden is atypical, it becomes clear that we’re simply behind on the timeline, but that we’re headed in the same direction. The digital download is a function of antiquated technology, it’s a relic of a very slow moving internet where we waited for files to download before we accessed them. The modern internet is fast moving, & we access files as they download, & local storage is all but removed from the equation. The digital download has nothing going for it: The file quality is what it is, you’re stuck with it. Transferability is limited if not non-existent, & inconvenient where available. Maintaining an organized library is a pain, & a waste of valuable disk space that can & should be used for OS & application purposes. Anyone with any critical thinking skills whatsoever can see that this format’s days are numbered. The death of the digital download is a foregone conclusion. Ultimately, we’ll see the hardware manufacturers putting the final nails in the coffin, & we’re starting to see that with Apple killing off the iPod Classic. This is a sign of a much larger trend. You can’t ignore the signs.

            So the digital download, the primary differentiator between the U.S./U.K. & these Scandinavian countries, pretty much has a tag on it’s toe. And we’re making progress on all of the secondary differentiators (which I covered in a comment below, but can be summed up as we’re behind in terms of broadband & mobile access). So then it becomes… not a matter of stating the fact that we’re different than these Scandinavian countries, it just becomes a question of how long that’s going to remain true. And whether or not Spotify survive to see the death of the digital download.

            Well, the ones who are “killing” Spotify are the labels, & they have a vested interest in Spotify’s survival. Not only do they have an equity stake in the venture, they don’t have a backup plan for Spotify dying. Trying to go back to digital downloads at that point is going to be no more successful than trying to go back to CDs after Napster. So the gun is in the hands of the labels. Are they going to pull the trigger? They would be STUPID to. There’s too much at stake here. Ultimately, everyone is going to play ball. It’s just a matter of… are the investors going to pump more money into Spotify to keep it afloat, or are the labels going to relax their take to keep Spotify afloat? There is no scenario where it makes sense for anyone to put Spotify out of business, even if this means that the artists are the ones who get shafted in the interim. (However, most of Spotify’s streams, the ones that make a difference to their bottom line, anyhow, are major label artists, & streaming doesn’t necessarily factor into those artists’ income. So Spotify could conceivably stay afloat without shafting indie artists… I think those payouts will continue to grow indefinitely.)

            I mean… these are all very basic observations. The future seems very clear from where I’m standing.

            What “new development” do you think might occur? And who do you think would possibly pull the trigger on Spotify?

          • steveh

            Your reply is erudite, lucid and thought provoking. But it is, I think, missing one key element.

            You say:- “The death of the digital download is a foregone conclusion.”

            And you say:- “There is no scenario where it makes sense for anyone to put Spotify out of business, even if this means that the artists are the ones who get shafted in the interim.”

            So here we have a Scylla and Charybdis, rock and hard place, dystopian nightmare for the music creator in the non-Scandinavian markets. On the one hand the slow death of the download, from which a reasonable income can be made – and on the other hand the incessant corporate push to establish corporate cloud-based streaming even if “the artists get shafted”.

            So what is missing from your dystopian forecast? Is simply this: respect for the actual creators of the music.

            I’m no Marxist, but surely by any definition of fairness the creators are above all entitled to the due fruits of their creation. This factor does not seem to exist in your world.

          • jw

            I understand that it comes across that way… I’m trying to approach the situation as a realist. But that’s not how I feel at all.

            The truth is that the recorded music industry is pretty stable right now. Without streaming, we’re going to return to the gradual decline that we’ve seen in years past, & who knows where that ends up? It’s only a rock & a hard place in the way that dying of cancer versus suffering through chemo is being stuck between a rock & a hard place. Given the choice between a rock that might be miserable in the interim, but offers an upside, and a hard place that means certain doom & no upside, I’m going to take the rock every time. If you’re only willing to entertain solutions that don’t involve “things might get a little worse before they get better,” then you’re not going to find one.

            Now I’m not suggesting that artists are the least deserved of income, & I’m not saying that they SHOULD be squeezed. It’s just that they’ve put themselves in a place to be squeezed by signing with a major label. But you can almost chalk it up to semantics… in all likelihood, even if those artists are recouped, the label isn’t passing all the Spotify income along, anyhow. And the ones who aren’t recouped aren’t owed anything, anyways, & therefore can’t be squeezed… at worst the streaming revenue isn’t going to be counted towards their recoupment. But where I’m coming from with that is that I just don’t see the labels subsidizing Spotify on behalf of the artists. You know as well as I do that the labels would put the burden on the artists because they can. That’s not that I don’t have respect for the artists, I’m simply accounting for the labels not having respect for the artists. It’s unfortunate, but it’s definitely a part of the equation.

            I’m not trying to argue for consumers or tech companies or anyone at the expense of artists, I’m looking for a future that’s healthy & sustainable for everyone, & trying to find the best realistic way to get there, even that means short term challenges for the sake of longterm health. The industry tried clinging to the dying legacy format once, & where did that get it? Why not learn from the past & try something different this time? This isn’t an issue that will be solved passively.

        • Jr565

          Someday! You’ll make money from streaming someday! In the meantime just let us use your music to build our business while paying you crap. Oh and cannibalizing your sales while we’re at it.

      • There is something...

        It’s not a secret the the iTunes best days are probably over and that users want streaming and don’t care what you think.

        It’s not streaming the problem: major labels screwed everyone by making deals that serve only their purpose and not the artists. If the majors negotiated deals with lower or no cash advance and higher royalty rates, everyone would make more money. But of course, they had to share that money with the artists, and for a major label, it’s not a good deal.

        • Mojo Bone

          Slight correction: the majors screwed their artists; no surprise, that. I know of some independent recording artists who self-publish and are generally pretty happy with their Spotify payouts, though none have claimed they can subsist on that alone. Anecdotal evidence is still evidence.

  3. DNog

    “There is something” i’m pretty sure this is a news site and Paul is in this case just sharing a report not starting a campaign to come up with an alternative solution. You must not watch any news program ever with that mindset.

  4. There is something...

    You must not read this website often because half of Paul posts are in fact rants about how streaming doesn’t work… The other half has been about Dr. Dre.

    • Anonymous

      “half of Paul posts are in fact rants about how streaming doesn’t work”

      …while Ari’s and Nina’s posts are anti-musician tales about the wonderful world of streaming and theft.

      That’s how you build traffic…

    • d

      and you must not read my whole comment where I said “in this case.” FYI, you’re “moaning” comments are creating a solution either, just saying.

      • There is something...

        Oh man, Paul finds every day a reason to make an anti streaming post. Sometimes you even get the same data recycled through several posts on a couple of weeks, just for the purpose of bashing streaming a few more times. As for solutions, as I’m not paid by DMN but just a visitor, I’d rather share them with artists and labels I work with. DMN writers a responsible for the content they share here…

    • steveh

      I concur. $0.005 or even $0.006 if you own your rights.

      The problem is this is still not nearly enough for streaming to be a viable replacement for CDs and download sales, unless subscriber numbers shoot up to vast levels way way above what we have now and way above the 40mill touted recently by Ek.

        • Faza (TCM)

          CDs weren’t overpriced. If they were, we’d see a revenue growth after their prices went down – because more people would be buying more.

          Look people, it’s not hard: the market price is what the market will bear. If you’re lowering prices and your revenue is falling, you’re doing it wrong.

          • hippydog

            Quote “CDs weren’t overpriced. If they were, we’d see a revenue growth after their prices went down – because more people would be buying more.”

            your logic is heavily flawed.. Revenue growth would ONLY happen if all other parameters had stayed the same..

            Lowering prices AFTER the consumer has moved on to a different product DOES NOT usually regain market share..
            IE: If you tried to open a store that sold cassette tapes, EVEN if you sold new ones at 1/8 of its original price you would still be out of business in a month..
            IE: when a company LOSES a customer, in most cases they have to work harder to bring that customer back VS finding a new customer (marketing 101)

  5. dave chapelle

    Please explain this to me (serious question): Everyone is complaining that streaming is unsustainable for artists. The reason it’s unsustainable is because artists don’t get paid by Spotify. However, their payment is determined by the labels. Isn’t the real issue here that the labels aren’t giving artists a fair cut? If that’s true, why is everyone pissed at Spotify? If the majors were to take in less or be removed from the picture, wouldn’t artists be fairly compensated?

    • Anonymous

      “Isn’t the real issue here that the labels aren’t giving artists a fair cut?”

      No, Spotify doesn’t pay independent artists either.

      And that’s not because Spotify is evil — it isn’t — but because its business model failed. Nobody makes money from Spotify. Except Mr. Ek, of course.

    • Faza TCM

      As an independent artist, who owns all the rights and has been on Spotify from pretty much as soon as my distributor (CD Baby) made a deal with them, I can confirm that the rates paid are pretty much on par with Paul’s presentation (the typo of $0.05 = half-a-penny notwithstanding, it really is around $0.005). All in all, the situation really has not changed much since the (in)famous “How much do artists earn online?” infographic that I had a hand in years ago: we’re still substituting models that offered some chance of business sustainability with a reasonable fanbase (several thousand) for models that offer little chance of business sustainability with a fanbase in the millions. To make matters even funnier (sadder), the very people who are making our business unsustainable (Spotify et al.) are at the same time burning cash like there’s no tomorrow. It doesn’t take a business degree (that I happen to have) to see that there’s nothing healthy or sane about such a market.

  6. Pelayo76

    The answer here seems pretty obvious. Prohibiting Youtube from streaming music would balance the equation right away. There is now return point, Streaming is here to stay but services that are not playing by the book should be legally shut down. The issue here is that Google is needs “free” content to be able to sustain their business but who is going to stop them? Hopefully the Government.

    • steveh

      Google seem to think they are more powerful than the Government.

      Google is certainly massively more powerful than all the recorded music businesses in the world put together.

      • Anonymous

        “Google is certainly massively more powerful than all the recorded music businesses in the world put together”

        They are all the recorded music businesses in the world put together. Google bought the rights to UMG/Sony/Warners entire catalogs this summer.

        All major label artists are Google Artists today.

        • Tim Wood

          Do you have a reference that says that Google bought thee catalogs outright? I found a few from 2013 that say Google purchased streaming rights. Those aren’t the only ones that still matter, yet anyway. 🙂

          • Anonymous

            All the majors and some of the indies signed the new YouTube licensing deal with Google in 2014 (see Forbes 6/18-2014 and several music industry magazines from June/July 2014).

            DMN published the contract; read it if you haven’t done so already — it’s the most scary contract I’ve ever seen.

            Google plans to launch the controversial service in the coming weeks, and it’s going to change the entire industry (for the worse, if you’re an artist).

          • steveh

            For the nth time:- the contract shown at DMN was the indie contract. No-one has published copies of the major label contracts, which are no doubt protected by weighty non-disclosure clauses.

            You really should calm down an d wait and see how this thing pans out.

          • Anonymous

            Sure, let’s see how you like it in a few months from now…

          • Blatherer

            If this doesn’t convince people to never sign a deal with a major label, I don’t know what will. No majors, no Youtube, no Spotify, except this actually makes them look good. I can’t imagine how depressing it would be to have your catalog owned by one of these majors and having them pawn it off for nothing.

            Nope, looks like its back to college radio and record stores and word of mouth.

    • Anonymous

      “Streaming is here to stay”

      Define streaming!

      Videos are as important as audio today — all major songs have music videos now — so you need to distinguish between full streaming and audio-only streaming.

      Audio-only streaming will be gone in a couple of years, but full streaming will indeed be around for a while. Not because artists suddenly are going to be paid — they are not — but because UMG/Sony/Warner licensed all their content to Google, and Google is going to stream it all for free on YouTube Music Key, or let you download everything for $10/month.

      That scenario obviously won’t last forever since major label artists won’t be able to make money anymore (consumers won’t buy downloads from iTunes because they can stream it all for free on YouTube (on release day), and very few consumers are going to pay for YouTube’s subscription service, which means Google won’t make money for its artists either).

      So new business models will begin to pop up while Google and the labels realize that YouTube Music Key was a mistake — probably in 4-5 years from now — and the most succesful of these startups will be very similar to the original YouTube we know and love today:

      Full streaming, no pay walls, financed by ads, regulated by ContentID, open and free for everybody.

      And that kind of streaming will be around for a very long time!

      • steveh

        you have become the equivalent of Tune Hunter in your incessant hyping of Youtube Music Key.

        I think we have to wait until it finally comes out in order to judge.

        The ludicrously named “Google Play Music All Access” has not exactly been a conspicuous success, has it?

        How do you know that Google won’t also balls it up with Youtube Music Key?

        We don’t even know yet if Music Key will be mostly audio-only or not. If it’s all video where do they get the “official” video content from if no “official” video content exists?

        • Anonymous

          “your incessant hyping of Youtube Music Key”

          You think I’m hyping YouTube Music Key? 🙂 I think Eric Schmidt would disagree…

          steveh, you’ve seen Google’s screen shots, you’ve read Google’s contract and, more importantly, you know that all the majors signed it. It happened. In the real world. UMG/Sony/Warner licensed their entire catalogs to an advertising agency.

          You’re not stupid — how can you fail to see the consequences?

          • steveh

            The majors have signed licensing agreements with all the other major digital services – in this respect what’s the big deal about Youtube Music Key?

            And you haven’t given any precision as to whether you think Music Key will be primarily music/video streaming or audio only.

            And if it is primarily music/video streaming where is the video footage for full album streaming going to come from?

          • Anonymous

            “The majors have signed licensing agreements with all the other major digital services – in this respect what’s the big deal about Youtube Music Key?”

            Aside from the fact that it’s biggest licensing agreement in history?

            These paragraphs from Google’s contract:

            “Provider’s entire catalogue of Provider Sound Recordings and Provider Music Videos (including Provider Music Videos delivered via a third party) will be available for the Premium and Free Services.

            Provider will provide Google with the same Provider Sound Recordings and Provider Music Videos on the same day as it provides such content to any other similarly situated partners

            All existent UMG/Sony/Warner content will be available on the service — for free! Not some of it, not 3 weeks after publishing, as is the case with Spotify more and more often, but all of it, on release day. No more windowing.

            “you haven’t given any precision as to whether you think Music Key will be primarily music/video streaming or audio only”

            Why would I do that? The information is available everywhere (I’ll post a link to Android Police in another comment below, it may take a while to turn up).

            But this is full streaming, so it includes all existing content, and you can use it as you like: As music videos, as audio-only, online or offline (paid subscription only).

            The latter is obviously the primary selling point — and the reason you’ll never buy a song from iTunes again (unless Apple’s new interactive format will blow us all away when it arrives). I don’t think anybody knows for sure what Google intends to show for songs that don’t have videos, but some sources say it’ll be album covers by default with the possibility of adding other visual content according to user wishes, and that sounds plausible to me.

            This is indeed a very big deal steveh, and it’s going to change the entire industry.

          • steveh

            I already read that Android Police article.

            With regard to whether Music Key is primarily video streaming or audio streaming the article is completely ambiguous.

            With regard to “All existent UMG/Sony/Warner content will be available on the service — for free!” the Android Police article makes clear that Music Key will be a $9.99 per month ad-free subscription service.

            To quote Android Police:- “Specifically, it looks like YouTube Music Key will offer ad-free music, audio-only playback (for background or screen-off listening), and offline playback.”

            Where do you get this idea that it is “for free”?

            OK this could develop into a big deal – or it could also fall flat on its face like the completely crappy “Play Music All Access”.

            You don’t know – I don’t know – I don’t think anybody knows.

            All we know for sure is that Youtube as it currently works (and as originally bought by Google) is very popular. This is a given. But Music Key is going to be very different. Perhaps all the many millions who love Youtube are going to think Music Key sucks. Just as they tend to think that major labels suck. The fact that the major labels have signed a licensing deal is neither hear nor there.

          • Anonymous

            “With regard to whether Music Key is primarily video streaming or audio streaming the article is completely ambiguous”

            I don’t understand your problem here. Like I said: You can use the service exactly as you wish — for video streaming or audio-only, your choice. In Google’s words from one of the screen shots:

            “Now play music on mobile any way you want it — with or without video, in the background, or with your screen off”

            “Where do you get this idea that it [UMG/Sony/Warner’s complete catalogs] is “for free”?”

            It’s not my idea — read Google’s contract: “Provider’s entire catalogue of Provider Sound Recordings and Provider Music Videos (including Provider Music Videos delivered via a third party) will be available for the Premium and Free Services.”

            The additional services you describe — ad-free music and offline playback — are Premium only.

            “OK this could develop into a big deal – or it could also fall flat on its face like the completely crappy “Play Music All Access”.”

            And that’s pretty much is what I said above. I don’t think the service will survive for more than a few years. People don’t want to pay for Premium.

            But again, it will take a couple of years in denial for Google and the majors to accept the fact that the model doesn’t work. You said it yourself, Play All Access Music, or what ever they call it, is a total disaster. Like Google+ and a lot of other Google failures. But they all have this in common that they stay around for years.

            And our problem is what we’re going to do in the meantime!

            We know for a fact that Music Key will offer all the content you can possibly dream of — for free — until the model falls apart.

            And you don’t have to be a prophet to see how that’s going to affect the rest of the market…

          • steveh

            OK I’m glad to see that you don’t see Music Key as a forgone conclusion of slam-dunk success. But for sure Yes – this Music Key venture will be very significant and we will all be watching it closely.

            Surely the labels have already essentially licensed the “free” bit, which is what’s there on Youtube already (with content ID).

            The “Key” thing (if I may coin a phrase) for Music Key is how many people are prepared to pay $9.99 per month.

            If not many people go for the paying Premium option then the whole thing will be dead in the water.

            And will Google care if it’s a flop? No I don’t think so. The rest of their business is so massive I don’t think this means an awful lot to them.

          • Anonymous

            “we will all be watching it closely”

            And it’s just around the corner (within weeks), according to Reuters…

          • Adam

            You assume the contracts the labels sign will be the same as the one you saw. It won’t be.

            Big artists will be able to control windowing just as before.

          • Anonymous

            “Big artists will be able to control windowing just as before”

            Not according to Google’s contract. Please provide documentation.

          • Adam

            The contract you saw was for “indie” artists. You have NOT seen the contracts for the major labels which I promise you will be different. Learn a little about how these things work before spouting off in 100 comments.

          • Anonymous

            “the contracts for the major labels which I promise you will be different”

            That’s not what I hear, please provide documentation for your claims.

            And again, Google is going to launch YouTube Music Key within weeks, so this has never been more important for all undecided indies:


            You will never sell a song again if you sign Google’s new contract! Your entire catalog will be available for free on YouTube on release day!

      • Anonymous

        Yeah… no. Firstly, there is no such thing as “full streaming.” Secondly, audio-only is what we call music. And in the streaming industry, it is growing very quickly with ZERO signs of slowing down. This video music idea is a gimmick. It is fine to have, but most people truly don’t give a shit. They will watch it a few times and then all they will care about is the audio. Most music is consumed passively anyway in which case no one is watching the video or pictures.

        • Anonymous

          “there is no such thing as “full streaming.””

          Sure, there is. Full streaming is what people want. That’s why YouTube is the world’s most important music site today and Spotify failed.

          “audio-only is what we call music”

          Er yeah, that was true for a long time. Or at least until Jailhouse Rock. 🙂 Today, it’s an integrated experience, and video is as important — and expensive — as audio.

          And when you hire a nice director and invest a million in your video, you’re not in the mood for Spotify…

  7. D'Man

    Streaming is good when it’s NOT the whole catalogs, albums, etc. Here is a marketing plan.

    Set to have a 14 song album.
    Release 1-5 songs ONLY on YT, Spotify, etc…all the streaming sites, every 3 weeks.
    Have album come out 1-2 months later and see what happens.


    • Anonymous

      Um, except it’s the other way around.

      Here’s the golden rule if you want to make money:

      Album first, Spotify 2-3 weeks later! Wait till you see sales drop. That’s the solution to cannibalization.

  8. Central Scrutinizer

    Hey Paul

    Haven’t checked in for awhile. The miserable state of digital music distribution has not improved much in the past year despite a couple minor victories against grooveshark and for pre 72 sound recordings.

    I was directed here from the trichordist. Their stories are all pretty repetitive google did this YouTube did that…….yawn.

    Streaming sucks for recording artists and songwriters. Nothing will change until the law is changed. The DMCA must be amended. Tech has had their time to make billions off the backs of “content creators” for long enough it’s time for the law to swing back and give artists some

  9. Big Swifty

    What is music worth?

    As soon as you can quantify that I can create a business model that will make money off of it.

    Easy right?

  10. Remi Swierczek


    Let’s talk to Google about Discovery moment Monetization.

    RIAA & LABELS are made of bunch of well paid polite golf loving individuals. All of them are clueless of changing environment and BRILLIANT OPPORTUNITIES for music industry.

  11. Bandit

    I like spotify and YouTube. Just hit play then hit record on your digital device of preference. Delete ads for spotify or not at all for utubes and you have a perfect digital copy of an artist’s entire catalog without paying for it!!

    Music has no monetary value it is worth nothing the spoils go to those who can figure put how to make maneuver from nothing. Pardon me Dire Straits

    • Anonymous

      “Music has no monetary value”

      The good news is that music is extremely valuable today!

      Samsung paid $5m for 1m copies of Jay-Z’s album in 2013, and Apple paid millions for 500m copies of U2s album now.

      Remove all music from the internet and see what’s left. 🙂

      Big Tech won’t survive a day without music and they know it — that’s why the pay millions for songs and albums now. Music is more valuable than ever before!

  12. Joe

    I used to be a musician. Now I grow vegetables. People appreciate a good vegetable more than a good song. I can get about .05 cents for a potatoe. I can’t get that for a song

    • Anonymous

      “People appreciate a good vegetable more than a good song”

      I love carrots, but that’s just not true. 🙂

      People love great new music and they’ll pay whatever you charge to get it — provided, of course, they can’t steal it without consequences.

      So let’s take a good look at piracy.

    • Anonymous

      No, streaming is a complete failure for music lovers.

      It doesn’t pay the bills, so nobody can afford to develop new acts and produce songs in the quality music lovers want.

      This means you only invest in safe acts. Result: Katy Perry all over the place.

  13. Jeff Robinson

    Has anyone asked how any payments of less than a penny are even legal? Isn’t the penny the smallest increment of U.S. currency?

    • YouDontKnowMe

      Have you ever filled up your car with gasoline at, say, $3.89 and 9/10c per gallon? How cay they charge 9/10 of a cent?

  14. JAIO

    streaming is a complete failure for music lovers.



    lmao listening to non-stop streaming music in my car driving up the highway to an interview to produce more music events.

  15. Drew

    There was an interesting debate going on recently as to whether streams were marketing or sales. Marketing for what I don’t know but it is an interesting debate. It is clearly obvious that streaming is not a substitute for sales. The fact is is that noone under the age of 35 will go back and buy physical goods in any sufficient numbers if streaming disappeared tomorrow. We can spend hours pointing fingers but that is a useless exercise. The answer may lie in a unified royalty rate for ALL streams regardless or “Interactivity” etc.. Paul, thanks for keeping the debate alive and ignore the people that bust your chops for frequently covering this issue. The debate is crucial for anyone involved in either content creation or the business of content monetization. Onward and upward..

  16. Anonymous

    Interesting article but I’m confused. On page 12, per stream payouts are listed as $0.05 (half-a-penny) but $0.05 = 5 cents, not half-a-penny ($0.005). Which is it, 5 cents or half-a-penny? Thanks.

  17. Versus

    The problem is PIRACY.*
    (That includes not only illicit downloads, but also all the illicit content on YouTube, Soundcloud, etc).

    Since streaming services must compete against free (which is not really “free”, unless you consider your corner grocery store free because you can just grab the goods and run without paying.), they cannot price properly. The market only works (if it works at all) if there is integrity and honesty in transactions. If people threaten to steal anything that is not insanely cheap (or even if it is), then creators cannot price their work in any way to sustain themselves.

    * Not the only problem, of course. There are other issues which have severely reduced musician income from recordings, such as the re-orientation towards singles (the “death of the album”).

    • Anonymous

      I’ve been telling people for years, we’ve got to get a handle on this piracy thing…get a bead on it. Not just Google……I mean, is there an internet search engine in existence that respects artists and creators?

    • Anonymous

      Whatever happened to the “end of the piracy decade” meme from 8-9 years ago? There was articles and commentards and shit talking about how piracy wouldn’t last past 2010. 🙂

    • Mojo Bone

      More correctly, THAT problem is one of “counterfeit goods”; misdirected benefits/compensation is still a factor in the decline of content creators’ incomes, but it seems pretty clear that in markets with sufficient bandwidth (eventually, that’s ALL of them) music users don’t feel a need to fill hard drives with redundant data that could be more efficiently hosted in the cloud.

      In any case, it’s a different argument than that of whether streaming is a viable business; in my opinion, it either is or soon will be. Whether any of the current crop of businesses have gotten streaming right is what remains to be seen.

  18. Justin Mayer

    i think streaming is a huge win for consumers, bigger labels and tech and telecom companies and an absolute disaster for most other people in music unless connected with one of the above…

    My ships sitting in the harbor and nothing i see in the industry gives me any reason to fire the engines up and steer her out to sea…

    I actually have a huge album shelved right now as it’s already fully leaked, unfinished, and i now see no further reason to waste any more time, energy and money on something that has already been taken and shared around for free and actually used as inspiration for artists/producers/teams/labels/businesses etc. to make their product and/or take a right piss at me. I shelved it as is i know i won’t see anything result in a fair and equitable pay off and i’m already suffering backlash from some of it’s content and/or its overall direction…

    An album that in the hands of a big label artist/team would likely make a good dent and be in a position to win awards etc. Its a good swing anyways and worth a go if a go can be afforded…

    Music isn’t about any that of course and i do it for the love, but that is still a pay off, the enjoyment, the chase of perfection and Mastery and of course wanting people to hear it, but when others are experiencing benefit from physically stealing my product before being finished, whether monetarily or not, and im not getting any fair or equitable trade off at any point during a forced unwanted transaction, then it’s not worth it, monetarily, spiritually, or any other way you want to think about it.

    People deserve to hear the music, and tech and streaming have seemingly made it easier to do that, but when putting a different hat on, its not worth it at the expense of my livelihood and sanity and well being etc. as lest we forget, you still have to find a way to get it in front of peoples faces somehow, and when competing with millionaires and huge massive conglomerate corporations, well, that costs and can cost a lot…

    There is hope out there, but without a team of people and a good size chunk of money to start with or by having time and age on your side where you can take a 10 year risk of a swing and a miss where you have to reinsert yourself into society within a system requiring credentials and education and experience where music can sometimes make you un-kissable, well, it will be extremely limited in its scope and what can be achieved, for the most part…

    The Music Biz is just far too toxic to just go out and just have fun, while paying for it, in more ways then one, and someone else is always benefiting…


    • Justin Mayer

      Just a quick add on.

      My former business and band partner, who went to school for music and who ever since i met him for the first time back in grade 6, was always mostly interested and focused on music, who i learned a lot from, hasn’t really even picked up his guitar to even just noodle in years…. YEARS!

      The lack of tangible feedback, the lack of opportunities, the lack of money, heck all of it, has just seemed to turn him right off, off of something he loved more then anything, anything, and he is super super talented. Its a shame.

      He has settled into a day job career that pays him a certain wage that allows him to cover his mortgages and other costs of living, having enough to build a wee tiny bit of security, and offers him a decent life with his soon to be wife.

      If the music industry does not adjust to the realities of the real world, it will continually lose more and more talent to other things. It can push its agenda as much as it wants looking for its sacrificial martyrs, but the reality is people who reside within monetary systems and jurisdictions need some form of compensation in order to 1. afford to live and 2. pursue anything reasonably well and to attempt to do things right.

      • Blatherer

        I’ve known plenty of talented people in all the arts who gave it up. It’s not unusual nor new. Dedication is the key to success, and so is talent, but the latter is secondary to the former. COmmitted artists make art no matter the outcome. That mania is what sometimes makes them great. That said, many people did shoot for rock music because of the possible benefits of money and girls, but you can still get the latter, and the former if you’re actually really, really good.

        Plus, I sure know a lot of people who have told me how talented someone they knew personally was, and most of the time they were wrong. These days, the level of what people consider talented has fallen to new lows, partially because there’s no money for career gatekeepers and tastemakers, who it used to take a lot to impress, but it provided a valuable filter so much of what got to an audience was worth hearing.

  19. FarePlay

    One of the reasons, so many of us are opposed to streaming, is that by offering their services for free, for so long, not only have they contributed to the perception that music has no value, they have also created a nearly insurmountable task of converting their free subscribers to paid.

    The recent ruling in favor of copyright holders being paid for pre-1972 songs is major and may collapse an already tenuous company, Pandora. Pandora isn’t focussed on making money by converting their subscribers from free to paying, their focussed on exploiting loopholes to pay less for music.

    Any artist who can sell music and has a new release would be foolish not to delay the release of their new songs on Spotify and other streaming services and this has been proven over and over again. If Spotify can float an IPO and becomes temporarily flush with cash, they will pay more artists for new releases. While they can.

    The future of music doesn’t rest with a digital delivery service, but rather the creators. If the creators cannot afford to work as songwriters and musicians any perceived victory that technology may claim will be a false one. The authors get this as more and more of them take a stand against Amazon.

    For fifteen years the digital community has talked about the benefits of exposure and the promise of alternative channels of income. For the most part these have not panned out and have only proven that musicians and songwriters survive when they can sell their recorded music.

    The fans didn’t demand streaming any more than the fans demanded piracy. It was a free way to get music, not a revolution; people saw a way to make money off artists.

    It’s simply a business that doesn’t reward artists sufficiently.

    • Anonymous

      The recent ruling in favor of copyright holders being paid for pre-1972 songs is major and may collapse an already tenuous company, Pandora. Pandora isn’t focussed on making money by converting their subscribers from free to paying, their focussed on exploiting loopholes to pay less for music.

      Pandora is not an artist charity, they are there to make money. There IS NOTHING WRONG WITH THAT. If there ISN’T a conflict of interest between distributors and producers – there is something wrong with the system. They SHOULD be in conflict with each other, one trying to lower their price and one trying to raise it, that’s how a market works and anything else is an obvious anti-trust violation.

      • Baby Boomer

        The only legitimate way to sell or hear music is via physical formats and over the air broadcasts (ignore the fact that radio doesn’t pay for pre or post 1972 recordings). This is how we did it in my childhood, in the 1960s and 70s, and this is how we liked it. This was when something called “good music” existed, but you wouldn’t know about that, you young devil. Now change my poopy diaper.

        • Anonymous

          Yeah nobody says anything about terrestrial radio getting away with paying nothing for decades. My opinion is either ALL radio should pay, or none should. None of this double standard bullshit, the only difference is broadcasters have more corrupt Congresspeople sucking their johnsons.

      • FarePlay

        Has nothing to do with being an artists’ charity. It has to do with making money from subscriptions. What you’re missing is the “FREE PART”. People create a product that people will pay for, that’s how the market works.

        • Anonymous

          Holy shit man, Pandora is radio. People have NEVER paid for radio, it’s always been advertisement-based. Not everything in the world needs a fucking subscription attached to it.

          • Fareplay

            You are right. Not everything needs a subscription, but Pandora always has and always will if they ever expect to be profitable.

            On the flip side, aren’t you really saying that Pandora can’t be profitable?

          • Anonymous

            You are right. Not everything needs a subscription, but Pandora always has and always will if they ever expect to be profitable.

            Um, no.

  20. Clarity

    Can anybody explain to me why independent artists keep complaining about Spotify when they can just sell their singles/albums from their own website directly to their fans?

  21. UweB

    I hate Downloads, Streaming and all this Stuff.
    Artist should just record a great Album and sell it independently.
    If they habe not much great to offer, they should not release it.

  22. jw

    Paul – There’s a serious critical thinking deficiency in your presentation.

    This type of data helps to explain why streaming is doing so well in Scandinavian countries…


    We’re behind in internet penetration, we’re behind in bandwidth, & our internet is outrageously expensive. We’re also 3 years behind in free streaming service availability.

    We have a lot of catching up to do, & this context is essential when trying to determine where streaming should be, where it is, & where it’s going.

    Our cell phone penetration is also behind, & our cell phone service prices are outrageous.

    >> The cheapest countries around the world to pick up a phone plan with data
    >> are India, Indonesia, Germany, Italy, and the U.K., each costing around $10
    >> (again USD at PPP) for that same plan that costs $85 in the U.S.


    Part of the issue is that so much money is going into the pockets of these service providers that springing for content services like Spotify or Netflix aren’t the no-brainers they should be. So to that end, all content creators should be in favor of nationalized internet access.

    But the good news is that we’re progressing in all of these areas, & even if we never get to nationalized internet, services like Google Fiber are going to help bring the price of all internet down into reasonable territory, & the speeds up to something internationally competitive (in urban areas, at least).

    And all of this stuff is going to spur streaming adoption, particularly subscription streaming.

    People who support streaming, & I try to stress this every time I comment on the issue… people who are optimistic about streaming don’t deny the present reality. But it’s essential to put it in the proper context.

    Here’s another interesting note, from NPD…

    >> One third (38 percent) of U.S. consumers surveyed reported
    >> that it is still important to own music, and 30 percent believe
    >> that listening to albums is important. Among consumers who
    >> listened to music on Pandora and other free music-streaming
    >> services, 41 percent reported that owning music was
    >> important to them; in fact, many free streamers attributed
    >> buying more downloads to their discovery on a radio or via
    >> an on-demand service.


    That shines a pretty dim light on growing the pie via any ownership model, but it sets the stage for mainstream adoption of streaming in the mid/longterm.

  23. Liston

    I really thought I was going to get some solid numbers in this presentation to back it all up in the end but there was like, Nothing.
    There is a big difference between the streaming services. Subscription is great but the levels needs to be higher that Youtube and Pandora pays today.
    Youtube payout is 1/5 of Spotify. Pandora is even less. If we had a Spotify premium world payment level, the music industry would be booming as it does in Scandinavia, they almost don’t have Internet radio there.
    Why can’t you point out what works and then we will try to make that business model the standard. It is better to tell people what the future shall look like instead of saying no to it.

    • Anonymous

      “It is better to tell people what the future shall look like instead of saying no to it.”

      Agree. Here are the facts we have to deal with: 1) Audio-only streaming failed, 2) YouTube is the biggest music site on the planet, but 3) it doesn’t pay artists.

      So we need to launch a free, non-censored, high-quality, ad-financed, artist-friendly, better-paying YouTube alternative — owned and operated by the industry — and use that service exclusively:

      No songs on Spotify, no songs on iTunes, no songs on YouTube.

      Make that service the only legitimate music source on the planet and make it so attractive that nobody wants to mess with illegal copies.

      Combine with Twitter (embed the videos in your tweets): Fans and media are literally a click away, the service is booming: 4 years ago, Lady Gaga had the most popular Twitter account with 7m followers, today it’s Katy Perry with 58m — that’s almost twice as many as today’s most popular YouTube account (which, btw, isn’t a music account)…

      • Anonymous

        So we need to launch a free, non-censored, high-quality, ad-financed, artist-friendly, better-paying YouTube alternative — owned and operated by the industry — and use that service exclusively

        Also known as “massive anti-trust violation”. There is a reason why this hasn’t happened. It’s illegal.

        • Anonymous

          “Also known as “massive anti-trust violation””

          Haha no, it’s known as exclusive releases!

          And it’s done all the time! Not to worry! 🙂

          • Anonymous

            Exclusive releases is not equal formation of a jointly-held company that leverages an existed business to build a new one.

            One is legal, the other is illegal.

          • Anonymous

            You are spamming two threads with your nonsense, so forgive me for repeating my answer from the other thread:

            I am completely free to choose how, where and when I release my music! So is any other artist and any label on the planet!

            Exclusive releases are the future — not only for musicians, but for the entire entertainment industry. Just ask Netflix…


  24. Dan

    Paul on those slides you claim:

    In 2014, streaming music:
    (a) is not financially viable for artists

    – where is your evidence? Streaming is viable for artists if they do it properly and have music that people want to stream. Just as those who make music that lots of people want to buy will do well and those that release crap wont sell that much. Your revenue from streaming may take longer to arrive than traditional sales but to claim it is not financially viable is nonsense.

    (b) is not a viable, sustainable business model overall

    – again where is your evidence? Streaming will work financially if enough people buy into it – just in the same way that if people buy enough Toyota cars then Toyota will survive long term

    (c) is driven by mega-acquisition and Wall Street interests

    Some may be but again lots of other business do this and manage to survive

    (d) offers only a short-term financial solution for major rights owners

    Nonsense – there are lots of small indies who make a mint from streaming.

    (e) has a speculative path towards long-term scalability

    doesn’t every single business on the planet?

    How about doing some research about what streaming actually looks like now and what it could become in the future? Why don’t you speak to Mark Mulligan and ask him about his thoughts (I noticed you used a couple of his slides) – I went to a presentation he did at the BPI in London and he was quite chipper about the future of streaming.

    The article above is just half baked speculation with no real substance to back it up.

  25. John

    Paul, I agree with many of your conclusions, but the following statement you quoted doesn’t add up for me.

    “At the moment, people need to listen to my song on Spotify about two thousand times before I’ve earned about the same as one sold CD.”-Anssi Kela

    2000 plays of one track paid Armen Chakmakian $0.60.

    Does Anssi Kela expect only to make $0.60 on selling a CD?

    • Nina Ulloa

      aren’t rates different for every artist? and sometimes per-stream rates are different too

      • John

        That appears to be true from other things I’ve read, Nina, but then I’d say that Paul is probably understating the issue by using Anssi’s quote. I would guess Armen would be happier if he made the profits of one CD from 2000 plays instead of $0.60.

  26. llama91

    It may be a good idea, then, not to use a ‘creative commons’ image license, which essentially pays little or nothing to that image creator, in your presentation about creators not getting enough money for their creation.

  27. Denis taaffe

    Hmm, as an indy artist with no label with a niche isnutrmental market (not top 40 major label crap,etc and I dont sell 100,000 or more albums year……), I make a $5-7 an album download or whatever price I set and $7 or more per album selling direct from my website. I don’t have to share any percentage of that money with anyone else.That would be a nice model for most bands. things like spotify for discovery and exposure and hopefully drawing people to the bands website nothing more.I think I would be better off just putting up a few songs with them for exposure knowing they pay crap.1/2 a Pennie per stream!?!? come on.That’s like a label offering $.20 per album sold,when I get ten times that on my own.(oh wait that’s like a major label deal…lol)….that would be sweet, a simple model, if you hear a band you like (single on on spotify for example) and want to buy or download the album, you go to their website and buy direct from them. As a test, I did recently upload 3 albums to spotify amazon google etc…itunes..so we will see the results.will keep them up there for a month..but I consider those to be a giveaway in exchange for exposure only .

  28. DJ Alan White

    The whole idea of paying artists for play, (streaming, Internet radio, YouTube or Sound Cloud et. al. is backwards. Labels are trying to make up for the claim that they can’t sell their music by charging people who PLAY their music on the Internet, i.e. streamers, YouTube, Internet Radio, etc. Yet in reality, in accordance with their idiotic Digital Millennium Copyright Act, they don’t even offer it for sale – they just offer to sell you the right to listen to it. That is not how it works. Song writers get paid for performance through ASCAP and BMI – artists get paid for sales, personal appearcnes, muech, not air or Internet play. Play is promotion. We’ve come all the way from record companies trying to pay DJ’s to play their music, (payola), to them now charging DJ’s to play their music. Terrestrial radio doesn’t pay and the record companies don’t charge them. Why? Because they need the promotion and they convinced radio that their common enemy is the Internet. In return radio doesn’t play anything that isn’t on an RIAA affiliated label. So it is entirely an insider deal – Independent artists and labels get screwed on both ends. The Internet is the way around that. You artists and independent labels are attacking the wrong people. Internet radio generally, and Spotify, Pandora, YouTube et. al. are not your enemy. They are your friends – they expose your music and your build up your name. Free promotion. Your enemy is the RIAA record companies who own maybe .00000001% of the music in the world but act like they own it all. Even if you have a major record deal they won’t pay you properly. They never have. For Independent labels and artists I suggest offering a legal disclaimer to Internet radio, streamers and even consumers. If you want to play our music, go ahead, no charge. And if you’d like to buy our music, please do. We will actually sell it to you. You will own it. If you wish to share if with your personal friends, go ahead. $.49 a track – $2.99 for an EP. $4.99 for a full album – downloads only – so no production or distribution overhead. It is the record companies greed and their lobbyist generated DMCA that is killing the music business, including your part in it. Screw ’em. They never paid anybody anyway. Re-invent Internet music – somebody – please. Build a Site for Independent music play and sales. Let the Internet play it and then you offer it for sale – or you could even let the internet radio station offer it for sale for you. Give ’em a little piece. The record companies will hate that but what do you care? They are the ones who are killing you. And that will work for you independents. Stop defending the greedy RIAA and let the labels be gone. Then you Independents will have clear sailing.

    • Liza Dawn

      Artists! Stand up and don’t let anybody rail-road you into thinking something smells like roses when it…..you know what !!!


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