# Artists Settling for Streaming: “Is Pepsi Ok?”

You know when you go into a restaurant, and the waitress seats you and asks if she can get you started with some drinks while you take a moment to look over the menu, and you say “I’ll have a Coke,” and they say “is Pepsi ok?” and you just go ahead and settle because it’s what they have and saying “no, it’s not” won’t magically make a Coke appear, and no one at the restaurant is going to run across the street to get you one?

## Fun With Math!

In 2015, Spotify reported “over 75 million listeners enjoying over 20 billion hours of music.”  So, that means the average streaming listener is playing 266.66 hours of music a year, let’s just say 267 for simplicity’s sake.  A little less than 45 minutes a day spent listening to music.

20 billion hours of music: let’s say that you can listen to 17 songs an hour (the ol’ 3 and a half minute average, not taking into account those who enjoy 17 minute improvised free-form jazz tracks), that’s a possible 340,000,000,000 (340 billion) songs streamed.

## 0.5% = \$4,270,000 = \$0.002 per stream…

Now, Drake was the most streamed artist in 2015, with 1.8 billion streams.  Holy shit, 1.8 billion streams, guess he’s getting the biggest chunk of the royalty pie, right?  Well, 1.8 billion divided by 340 billion (our estimated total songs streamed) is 0.5%. That’s his share.

Spotify claims they pay 70% of their revenue to rights holders, and that 70% “is split amongst the rights holders in accordance with the popularity of their music on the service,” so it’s not a pay-per-stream model.  Last year, Spotify made \$1.22 billion, so 70% of that is \$854 million, and 0.5% of that is \$4,270,000.  That’s Drake’s cut.  Well, more accurately, that’s the cut of the people who hold the rights to the songs, and then they dole it out accordingly to the performer, the writers, the producers, and I’m sure the labels probably keep a buck or two for themselves (sarcasm doesn’t work very well in written form, I’m well aware they take the biggest chunk, save your comments).

This would work out to \$0.002 per stream, which is a little off the mark of the \$0.006 — \$0.008 per stream that Spotify claims was the average.  And although a lot of this is admittedly speculation based on estimates, I’m getting to my point, which is the other number they mentioned…

### 46 million people streamed at least one Drake song once.

If 46 million people PAID for a Drake song, ONE Drake song, at the regular iTunes rate of a buck… well, no need to get out the calculators for this one, that’s a possible \$46 million dollars in revenue in 2015.  If they all bought just two of his songs, that’s \$92 million dollars in revenue.  Now, this may seem stupid to you, you’re thinking “of course 46 million people won’t pay to listen to a Drake song, they’ll listen to it if it shows up in a playlist but you’re fucking crazy to think they’re ALL going to buy his music too.”

Why?  Since Drake is the most popular artist, let’s compare him to the most popular movie currently in theaters… Batman v Superman.  It’s generated \$682 million as of writing this.  The average ticket price reported by Variety is \$8.61, which means roughly 79.2 million tickets were sold (so far).

Sure, some of those are going to be significant others dragged along to a movie they didn’t want to see in the first place, some people went and saw it twice, but that’s not important.  What’s important is that it’s not insane to think that 46 million people who have even the most passing interest in something would be willing to pay money to consume it when a lot more people are spending a lot more money for a one-time experience.

### “But some ARE willing to pay money to consume it, they’re willing to pay \$9.99 a month to consume as much music as they want… unless of course they just take the free version, then they’re willing to listen with ads, which generates money so we don’t have to!”

And this is why music is considered so devalued, and why I feel artists are settling.  In no other sector of the entertainment industry is this acceptable to creators.  Sure, Netflix exists for movies, but they’re not showing brand new movies that just came out in theaters, they’re not even showing brand new movies that just came out on DVD/BluRay/Digital Download, everything’s at least a year old by the time it makes it to Netflix and had a chance to make some real money, and they certainly don’t make it available for free, AND not every movie ever made is on there.

If the music industry did that, said all brand new music was only available at retail on CD or on iTunes for 6 months, THEN available on streaming platforms?  People would use that as a justification for piracy, because again there’s no perceived value, there’s this belief that music should be free or as close to it as possible.

Enter iTunes, a buck a song, so if you only liked two songs on an album?  Shit, that’s only \$2 you gotta spend!  Such a great deal, right?  Who wouldn’t do this?!  Well, you let me know when a song hits 14 million digital downloads.  The RIAA says that Justin Bieber’s “Baby” is the best-selling modern single at 12 million copies, and shows only 10 other singles with Diamond (10 million+) certification, one of which is Elton John’s “Candle in the Wind 1997,” so I can tell you right now that’s not digital sales.

SO, when that didn’t work, they said “ok… what if we figure out a way for people to not really have to pay for each song, but they can still listen to them for really cheap?  Even cheaper than a fuckin’ dollar, which we thought was insanely cheap already!”  And streaming services were born.

### “Streaming is a great way to discover new music though, and a great way to decide if I like a song enough to buy it!”

Clearly only half of that sentence is true.  Again, 46 million people listened to Drake songs, most of them likely chose to, but they didn’t like them enough to open up their wallets.  In 6 years, he’s sold 37 million digital singles, again, that took 6 years, that’s not 46 million people listening to his songs 1.8 billion times in 1 year on ONE streaming platform (we haven’t even talked about Tidal, or even YouTube, where Hotline Bling itself has been streamed 680 million times).  And when you consider that 16 of his singles are certified platinum or multi platinum (go search this on the RIAA site yourself) making up at least 35 million of those downloads, and the best he’s ever done is 5 million copies of a song (the aforementioned Hotline Bling), that’s a relatively low percentage of discovery-to-purchase.

So, when Drake walks into a restaurant and says “I’ll have a Coke,” and the waitress says “is Pepsi ok?” he pretty much has to say yes.  If he says no… sure, he’s doing alright, 37 million downloads in 6 years is nothing to bitch about.  He can say no like Adele and Taylor Swift and a handful of other extremely successful artists have, but what about those who aren’t Drake?  What about the artists who are doing half the sales and streams of what Drake’s doing?  Or a quarter?  Or a tenth?  Or a hundredth  Mildly popular Indie artists who could make a living and do more shows if music had any perceived value, even if that means they sold 50,000 — 100,000 singles a year?

They all have to settle for Pepsi too, have their songs stream to make a sad percentage of what they could if people actually bought music the way they buy other forms of entertainment.  Because it’s either that, or stay thirsty.

NOTE: Buckley is more of an RC Cola man, and only got a 60% in Grade 11 math.

### 24 Responses

1. Raheem

If you’re a new artist, it shouldn’t be about the money it should be purely about getting your name out there and using any source of promotional tools you can to get people to know your name. Once you’ve reached enough people and created a loyal fan-base you should try and experiment with taking music off certain stream sites and see what works and what doesn’t. This is why a lot of new artists have to release two or three free mixtapes first to create a loyal fan-base and then they can drop an album and those fans will WANT to support you. I’d probably suggest streaming all the way up until your third album which if all previous albums have been successful, people will be happy to purchase your third album because they know you deliver great music. Nowadays, it’s hard to gain diehard fans that won’t replace you in a heartbeat with the rise of the internet, so it’s always about maintaining them and maintaining the quality. Loved this article.

• Troglite

You raise a valid point.

If your motive is to get the broadest possible exposure for an unknown artists, why copyright or restrict use of the work in the first place?

• Troglite

I was thinking more along the lines of a gorilla marketing strategy I employed in the 90’s.

Mp3’s were just starting to see common usage. This is years before Napster. I had several artists I was working with release one song as an mp3 that was not available on any of their cd’s. The timing was good, it generated a lot of attention. When the songs were pirated, none of us cared. They had served their purpose and posed no threat to cd sales.

The parallel, as I see it, is that an amateur act uploading their work to every free streaming service in the hopes of getting exposure AND making money may be guilty of trying to have their cake and eat it, too. Perhaps separating what is truly valuable from what is strictly promotional might be worth considering for some of those musicians (and the marketplace generally).

• Buckley

• AJ

Bullshit. That is the same as saying “oh you are a new Photographer, so shoot my wedding for free so you get the exposure.” It is a bullshit justification for people who want something for free or as cheap as possible.

If you are putting in the time, you should get paid.

• GGG

Not totally disagreeing with your sentiment, but it’s an ironic example to use because new photographers always do free/way cheap shoots when starting out. I know quite a few now legit photographers who shot bands for free a ton when they were starting out.

• Raymundo

But taking wedding pictures is a job, that somebody hired you to do. As a (starting) musician you’re not being hired by anyone. You want to do it, so you’ll have to put in work for free. If you want a steady paycheck don’t work as an entertainer. Trust me, I’ve been making local radio for 5 years just to get experience and pray that somebody will actually hire me.

2. Been Here for Awhile...

I’ve been involved in this business and the debate for a long time now, and it always amuses me how articles – and indeed entire sites, like this one – start from the premise that the \$14.99 CD and all the money that business threw off is “THE” standard, that is empirically fair – somehow the “right” price – that we “have to get back to.”

Never questioning the system that led to those prices, or the prices themselves.

There are many, many factors at work in the modern music industry that are all impacting the price. It is hardly just “streaming” or “the internet” or “piracy.”

Likewise, there were a lot of reasons why music was priced the way it was – for a relatively brief period of about 25 years or so. Not all of them good, either.

Starting a discussion about what the recorded music business looks like in 2016 and beyond, from a premise that apparently assumes that the entire biz was originally placed on the face of the hearth by the hand of God himself, at a price-point of \$14.99, is just so dumb, it’s laughable.

Get some perspective. Do some research. Synthesize some independent thought. The \$14.99 CD was NEVER going to last. It was the product of a very unique moment in time, culturally and technologically.

Whatever comes next (on-demand streaming, for the foreseeable future, it would seem) will be with us for a while, and that will change, too.

• Buckley

At no point does this article talk about the \$14.99 CD being the standard (I mention how 14 million people bought a relatively successful album but 14 million people have never paid for a single, and that people aren’t buying music now the way they used to even though it’s considerably cheaper).

This also isn’t about price, it’s about people’s willingness to pay ANY price. I talk about how you can now easily purchase any song you want for a dollar, and that’s not happening. Not at the same rate people purchased full albums. It’s not because music was “better”, because again, the example I used was an album that certainly isn’t a front-to-back beast of an album. You can look at 90s album sales and find comparable situations (millions of people buying a pop album for those two big songs that were all over MTV and the radio).

It’s also about the perceived value of music. So many people now believe that it should be free. “the radio is free with ads, therefore a system where I get to choose every song I listen to as often as I want to should also be free”. But the point of the article is, NOT based on \$15 albums but rather based on \$1 singles, artists could be making a lot more than they are now. They aren’t, because even without streaming people wouldn’t buy it, so instead they have to settle. You say you’ve been involved in this business for a long time, but I find that hard to believe. No one who has ever created anything for a large fan base would actually say “yeah, I don’t care that it’s devalued and no one really cares enough for my work to buy it, but are happy to take it for free.”

• Been Here for Awhile....

I knew someone would take issue my “\$14.99 CD” as some sort of specific, literal point I was arguing against. I’m kind of happy it was the author. At least it allows me to actually engage you.

To be clear:

I KNOW you never actually said “\$14.99 CD.” I (made the mistake of, in this forum) used it as a metaphor for the general assertion that a very particular prior revenue model in the recorded music business is somehow sacrosanct. “THE” price that new models like downloads and streaming don’t “make up for.”

If the fact that, that was my point and not clear to you, isn’t too surprising.

The many actual, specific observations you made in your article are just awful. Just SOME of the first few (because there are simply too many to refute – really) are:

First, the premise that selling music is “Coke vs. making it available for streaming as “Pepsi” is so out of whack as to be comical. Coke and Pepsi are mere brands of the same essential product. The reason most people take whichever cola is offered at a particular restaurant is rarely about settling (although it some times is). It just about the fact that no one really cares, because they are essentially the same thing.

Same basic beverage, same price point, same quantity.

They don’t say “We have both Coke, which you can buy in a 6 ounce cup, and refill only that cup, whenever you want, for \$10.00 – OR – you can have a all-beverages-access card, that will allow you to have whatever beverage you want when you are here, for as long as you pay us \$10.00 a month for the privilege.”

THAT’s the analogy of beverages to audio. And it doesn’t exist.

Moving on, you really don’t know anything about listening habits if you would even imagine that 20 billion hours of music listening is spread over “a possible 340,000,000,000 (340 billion) songs” and so the (average?) payout is \$0.002 per stream… and so you surmise that Drake’s (and his team’s) cut is \$4,270,000.

So far off, it’s just mind-boggling.

And that was right after you acknowledged that Spotify payment are “split amongst the rights holders in accordance with the popularity of their music on the service, so it’s not a pay-per-stream model.”

Hello?

And your main point? Which is that “46 million people streamed at least one Drake song once.

If 46 million people PAID for a Drake song, ONE Drake song, at the regular iTunes rate of a buck… well, no need to get out the calculators for this one, that’s a possible \$46 million dollars in revenue in 2015.

This grade-school-failing “analysis” has already been beaten into submission way before you even thought of writing this masterpiece.

Here’s the simple counter-argument demonstration.

On any given day, in any given office, you can bring a dozen donuts and put them in the cafeteria (or at the reception desk, or wherever) and say “Free Donuts.” and they will ALL be eaten.

But that has ABSOLUTELY NO correlation and does not support an argument that, those 12 people would have otherwise gone out and bought a donut, that day. Indeed, it doesn’t even show that ONE of them would have ponied up to buy a donut.

To draw the example even closer, let’s stick with the same office scenario: Big afternoon meeting in Conf. Room A ends and the receptionist tells the employees “there’s Cosi sandwiches and stuff leftover from the conference.” Many, many employees make their way to the conference room to sample the goods.

Do you think that – in ANY way – indicates that those people were going to go to Cosi, that day, to buy the sandwich or whatever, that we know they chose to scarf in Conf. A?

You can ask these questions of a 12 year old, and they will tell you absolutely not. It is violates several rules of logic.

trying to build an analogy between the pricing of music to movies? “it’s not insane to think that 46 million people who have even the most passing interest in something would be willing to pay money to consume it when a lot more people are spending a lot more money for a one-time experience.”

Movies are entirely different than songs, from the consumer’s perspective. They are about 60 times longer than the average song, they require TWO senses (sight AND sound – and arguably a greater attention of both).

Many people listen to a great deal of music passively. As background, while they are doing other things, etc. NO ONE “watches” a movie that way.

And the last really baseless argument I’ll address is:

““But some ARE willing to pay money to consume it, they’re willing to pay \$9.99 a month to consume as much music as they want… unless of course they just take the free version, then they’re willing to listen with ads, which generates money so we don’t have to!”

And this is why music is considered so devalued, and why I feel artists are settling. In no other sector of the entertainment industry is this acceptable to creators.”

Ever looked at the economics of the average magazine or newspaper? Do you really think that the New York times pays their writers and editors and printers and distribution agents and delivery people for the less-than-50-cents [er copy they get form subscribers? Do you think that Car and Driver pays their writers, sends them to product launches and test facilities, buys their long-term testers, pays their printing costs and mailing fees on just the \$1.00 per month their subscribers pay?

Or, can you understand that these long-standing media businesses were, always have-been and continue to be entirely or almost entirely supported by advertising revenue?

“I talk about how you can now easily purchase any song you want for a dollar, and that’s not happening. Not at the same rate people purchased full albums. It’s not because music was “better”, because again, the example I used was an album that certainly isn’t a front-to-back beast of an album.”

Again, this is for many, MANY reasons. If you did ANY historical analysis, you would realize that the two revenue periods you are comparing were changed drastically by a myriad of other factors. Cell phones, the internet, texting, social media, etc., etc. No one was EVER going to buy music today in the same quantities OR at the same price as they did in the 1970’s ’80’s and ’90’s. And that would have changed even if there was NEVER any streaming or MP3 piracy (although those were certainly factors, as well).

IT WAS A MOMENT IN TIME.

And that moment is OVER. It was ALWAYS going to end. Realize that. Deal with it.

I honestly have no idea what you are trying to say with this summation:

“based on \$1 singles, artists could be making a lot more than they are now. They aren’t, because even without streaming people wouldn’t buy it, so instead they have to settle.”

So, what are you saying? WHY do you think people just won’t buy music, these days?

Finally, you can say that “No one who has ever created anything for a large fan base would actually say “yeah, I don’t care that it’s devalued and no one really cares enough for my work to buy it, but are happy to take it for free.”

Which is both a faulty argument and untrue even as stated.

#1. No one said “I don’t care that it’s devalued and no one really cares enough for my work to buy it, but are happy to take it for free.”

#2. The question is, what is the promotional value vs. the future sale? No one knows “the” answer and everyone is free to make their own call. If you only want to give away 10 hours of programming because you think it will entice people to BUY 20 more hours, God bless you. But if I want to give away 100,000+ streams because I think it will entice people to BUY 20 downloads, then you should just get the hell out of my way. No one knows who’s right, there.

So, thanks for questioning my position, and thereby continuing to prove that you’re really lacking a good deal of perspective on these issues.

3. DavidB

I agreed with most of the article, but I choked on this bit:

‘In the 90s, you pretty much had to buy a \$20 CD for that one song you liked.’

People keep saying this, or something like it, but it just isn’t true. I’ve several times challenged people to give just one convincing example, but they never have. Remember, to qualify as a convincing example it has to be a case where an album contains only one song that you liked, AND that is not available in any other way, for example as a single or a track on a compilation.

The article itself gives the example of Aquarium and ‘Barbie Girl’. But a moment on Wikipedia should show that this is a bad example, as ‘Barbie Girl’ was released as a single, and in any case the album contained several other popular tracks.

So I repeat my challenge. I’m not saying there are NO such examples, but if there are, I think they are few and far between.

• Buckley

Maybe this is just where I grew up, but all the record/CD stores I was ever in, it was pretty rare to see singles (and as I mentioned, even when you did, they were like \$5 or \$6, so people’s mindset would be “why spend \$5 for like 1 or 2 songs and a bunch of remixes of that same song when I can spend \$15-\$20 for 10 songs!”, even if they don’t know what those other songs are and probably will only ever listen to them once or twice while they keep hitting repeat on the single). As for compilations, they’d usually come out later, and we’re talking about impatient teenagers (despite what the Internet thinks, they’ve always existed, it’s not just a millennial thing), people didn’t want to wait for “Holy Balls, This Is Good Music! #15” to come out 8 months after all of the songs they loved in the summer are now boring.

Although there may have been other popular songs, I would argue that people bought it off the strength of that single first, and that’s the one that got the most play on the CD. Another example is Britney Spears’ “Baby One More Time”, an album whose title track is also probably the only reason most people bought it. Although there were a couple other popular songs, the radio and MTV played “Baby One More Time” way more, and that’s what drove sales. But fine, say there’s 3 songs that people really want (something I discussed in the article), still you can pay \$3 for that now. And people aren’t, not in the way they bought albums (Baby One More Time apparently sold 30 million copies worldwide, also something that’s not happening with singles).

4. HeyHey

I’m old enough to have watched the devaluation of music happen year after year, all thanks to the unrelentless efforts of Silicon Valley to turn content creators into slaves , like a hive working to create free and infinite content that feeds the Queen Bee(s) , from Google to Pirate Bay. It’s like watching a ship sink and you’re just sitting on the shore, helpless.
I sometimes wonder if a different mindset is the reason the film world didn’t sink ( yet ?) in the same manner as the music industry .

The music world is very fragmented , badly organised, very individualistic, artists aren’t directly represented ( organisations like the RIAA don’t really represents the interests of the creators, sometimes both interests align, sometimes they don’t) while people in the film industry ( in wich I have a foot) always seemed more organised and able to defend themselves.
Unlike music, it’s a field where people are FORCED to work with a lot of other people ( you can’t make a feature film alone in your bedroom yet) , producing or directing a film confronts you very harshly with the real world, you are constantly battling all sorts of physical constraints to be able to shoot the scene. All this makes you probably more attuned to risks and future dangers in commercialy exploiting your work.
Music on the other hand, you can live in a bubble and have very little contact with reality. You’re being slowly eaten by the Silicon Valley sharks and you might still believe everything is going just fine, until you wake up one morning…

• Me

Sorry, but Silicon Valley didn’t turn content creators into slaves. Record labels & music executives had been working that route long before Silicon Valley got involved.

5. Chinnichap Part 2

Pop music (and Rock music) is ALL ABOUT THE MONEY and enjoying the Rock’nRoll Lifestyle…

The reason anyone gets into the pop business is to have fun, get rich and enjoy the Rock’nRoll lifestyle… Huge mansions, luxury city apartments, beach homes in the best spots… Top end vehicles.. Range Rover, Maserati, Porsche, Rolls Royce, Bentley, Mercedes Benz .. You know the deal… even Fly Private…

This is what pop music is all about .. it’s a dream factory .. a way to change your life..

6. Chinnichap Part 2

If you ever lived in the UK then you’ll know that the recorded music singles business was hugely important in the 70s 80s and probably 90s too..

Lot’s of producers, songwriters and artists made fortunes by having massive selling singles in Britain and Europe. In the UK the single was setup to be profitable and there was always a Teenage Rampage to buy them .. Especially in the halcyon days of the 7″ pop single … they sold like hotcakes…

Ask Mickie Most, Nicky Chinn, Mike Chapman, Pete Waterman and they’ll tell you they made an awful lot of their fortunes just with singles sales alone in the UK.

7. UWin

Aww poor little artists only getting thousands, or millions instead of tens to hundreds of millions of dollars for only contributing to culture to society. While infrastructure collapses, people need food, shelter, medical attention, and education, medical practitioners are needed, etc, etc. Feels, such feels for them having to “settle”, while everyone else does backbreaking work for minimum wage and little to no benefits.﻿
Same thing when athletes or actors complain about not earning enough/as much as before, my heart bleed for you, really it does. Here, I’m playing the world’s smallest violin playing just for you, and it is free to download. No wait, changed my mind I want \$1 billion for each download of it, since I’m playing on the worlds smallest violin instead of working a real contributing job.

• OhTheHumanity

@ ULose : What a stupid and completely clueless comment.
You actually think that most artists are being paid millions ? You think that’s the norm ? Did you just arrive on planet Earth ? Poverty IS the norm among musicians and artists in general. That’s like saying ” Well, I heard that Formula 1 driver was being paid millions a year, so what are truck and taxi drivers complaing about ? Aren’t they being paid millions ? Awww, poor drivers…”. Lady Gaga and Jay-Z are no more the norm for artists than Michael Schumacher ( estimated net of 780 \$millions) is the norm for car and truck drivers.

Artists are being paid even more miserably than before, for the EXACT reasons that “infrastructure collapses, people need food, shelter, medical attention, and education, medical practitioners are needed,” as you mentionned : Greed from monopolistic corporations, from unethical sharks that control the delivery chain or aspects of the Internet.
Before you publicly display your ignorance, do us a favor and educate yourself.

• OhTheHumanity

@Ulose
PS : and the fact that you seem to think it’s perfectly Ok for corporations like Google to amass more capital than entire nations while the workers that feed the machine are being payed less than garbage pickers in most cities, tells me that you’re either a shill for those corporations , or even more clueless than I thought.

8. Nerb

Let me throw a different theory… In the 80’s and 90’s (a period from which I own a lot of records and cd’s), there was nothing else to spend money on. So I would spend my \$20 a month on music or a movie at the cinema. But today I have physical music, physical movies, internet cost, computer games, pay tv, pay music streaming, pay to use the road (toll ways), pay to go camping, pay, pay, pay, pay, pay…. so that \$20 a month (now maybe its \$100 a month) is divided so thinly, that buying a cd or a digital album becomes an absolute rarity. If it wasnt for streaming services, Drake would not have made a cent off me.
Plainly put, the music industry no longer has a monopoly over disposable incomes.

9. Nicky Knight

The record business is still buyout and you can still get lucky and get rich enjoying the Rock’nRoll lifestyle without touring and live performance nonsense..

All you need is to write & produce hit songs/records for the right artists at the right time and then wham… you’re on your way to buying a yacht or luxury car..

There’s never been a better time to be a hit songwriter, producer or artist..

You’re living in the golden era of the recorded music business… trouble is.. you don’t know it… Max Martin and Dr Luke know it..

10. Infinity Digits

Drake can just make his money the standard way ( and hope that his fanbase is as big as he thinks it is ) by doing stage performance tours like everyone else.

this is where musicians make the bulk of their money in the first place, and it always has been since the late 90’s.

they charge ridiculous prices for you to stand in a giant crowd with thousands of other smelly obnoxious ppl and do cringing ear-shattering screams and yells at the performer all night long so you cant even hear them sing in the first place.