Ratio = 140:1 iTunes Song Download

whats a zune

Where have you been girl?!!  It's Miscrosoft's music streaming service.  Basically the same thing as the other services on the page. 

I think she was kidding...lol its just NOBODY actually has one :P

False, I own a Zune HD

Uh, I have one.  And I would never trade it for that other brand. More storage, less money, more portability and access.

Microsoft just killed the Zune on Monday. Enjoy your Zune, it will be your last.

Streaming is basically a monumental rip off to artists and labels. Highway robbery. Another way to screw the people that put these very weasels in business..the MUSICIANS AND SONGWRITERS..same as it ever was..same as it ever was...

Spotify represents an early stage template for legalized cloud based file sharing and the pitfalls and challenges that lie ahead. It also represents an opportunity for artists to step forward and demonstrate they have the power of choice and who they choose to do business with in today's world.

"You do realize that when fans can create playlists in the cloud and share them with their friends; the incentive to purchase music will drop, again, dramatically. Spotify's record shattering low licensing fees and the resulting drop in sales will be a devastating 1 - 2 punch and many will not survive.

While these licensing fees may work for Spotify's business plan and the revenue projections they are using to raise $200M in VC financing; they sure as hell don't work for musicians. Unless you are one of the major labels holding a 20% equity share in Spotify. I wonder if that had any bearing on the licensing fees Spotify negotiated? What do you think?

Can we stop, Spotify, Amazon, Apple, etc.? No way. but in this clearly diminishing revenue future artists have power, the power to withhold their music from these services. Can we stop them? No. Can we force them to the negotiating table for higher licensing fees? Absolutely.

Spotify has clearly set a very, very low compensation bar and if allowed to continue unchecked will set the standard for cloud based licensing going forward. I saw yesterday that Neil Young and Patti Smith just licensed their music to Spotify in foreign markets. I felt as if someone had punched me in the stomach.

Are we so resigned to failure and power that we just capitulate in the hope that everything will turn out ok? Do we simply adapt and embrace the future, as musicians, as our compensation goes from rivers to "streams" to a vapor "cloud"?

Or at some point do we say I'm not caving this time, I'm going to stand up for my future."

Seems like the complaints about transparency and about streaming music ripping off artists are misplaced. 

I don't understand why no one seems to understand that Spotify is operating as all private businesses do in concern to the screwed up system that is American (and global) copyright & music licesning law.

BMI and ASCAP do not reveal their rates and exact figures either. They do not reveal how they calculate their payments. This affects artists much more signifcantly than the sole income stream of streaming music.

If all the people pissing and moaning about Spotify and streaming music would get together through a 501(c)4 and start lobbying Congress to rewrite the DMCA...and update all of the copyright laws so that they fit the modern world...then Spotify, BMI, ASCAP, Rhapsody, Zune and the like could be legislated to conpensate copyright holders with more transparency.

Right now, all of this complaining just sounds like luddites pissing in the wind...like listening to people who don't vote complain about politics.

The poorly written DMCA is real the problem.

"update all of the copyright laws so that they fit the modern world...then Spotify, BMI, ASCAP, Rhapsody, Zune and the like could be legislated to conpensate copyright holders with more transparency."

What precisely do you mean by this?

What precisely do you propose?

I am eager to hear what you mean because for the moment I haven't got a clue what you are specifically proposing...

I'd ask you to lead the charge against spotify, you have such a big heart and great attitude but when I read where you say "if all the people pissing and moaning about Spotify would get together." Well, I noticed you didn't include yourself as having a problem with them, but you do have a problem with ASCAP and BMI, and rightly so, but you are blind to the fact that streams aren't just not paying, but have created a river of other small streams to bleed the writer and artist to death.

I'd be glad to lead the charge against the whole damn bunch if someone will give me the vehicle with the keys.

Show me the money!

On June 23, I will get my latest BMI quarterly accounting and on the low side it will be the equivalent of 3 years' Spotify income and BMI pays the artists, the songwriters their 50%+ directly.

An old saying in the music business is if you're getting half of what you think you're owed, you're streets ahead.  It's when you're getting 10 cents on the dollar, you're getting ripped off.

With Spotify, my guess is we're at the nickel level.

And I get my quarterly BMI payment of ZERO dollars every quarter for last 20 years, regardless of how often my songs are played. But my monthly SoundExchange payment of > ZERO, for each and every play (Spotify, Rhapsody, Zune, Napster, you name it) since signing up a year ago.

There's no question that Sound Exchange is better at paying artists than labels.  In fact, all it requires is the artist registering with no further formalities.  It should be as straightforward for labels but it isn't, as often the "label" is a production company licensing to other labels who are inadvertently credited with the digital performances still vested in the original label.

BMI/ASCAP/SESAC require in addition to the writer affiliating, the songs to be cleared (registered) individually.  I see you've done that for 43 compositions under the name Sebastian Gnolfo.  

In spite of your being an accomplished bass player, all the releases you list in your online bio are highly obscure.  

Extrapolating from the number of your unique "listeners" on a particular streaming service, I doubt if you're selling more than a handful of paid downloads per year.

But even so, the relatively low level of plays for your recordings (albeit in the 000's) will result in a modest amount of money coming your way from SoundExchange, as you coyly enumerate >zero. 

For Atomic Brother, you have a very low "play" to "subscriber" ratio of circa. 2, which suggests listening once is enough for many.  A normal ratio is 5. 

As a contrast, your former band Otto's Daughter has an extraordinarily high ratio in excess of 50 from a base of few subscribers which suggests someone pumping their plays!  A normal ratio is 5.

BMI does try to compensate for unsurveyed works.  I suggest you make your case directly to them and you may be surprised by an ex gratia payment.

Meanwhile I'll quote your manifesto :

Radio works much differently. I hate radio royalties. They could be so simple, but they aren’t. Each radio station counts the exact number of times your song was played on the radio and provides this to the performing rights organization (in this case ASCAP, BMI, OR SEASAC). The PRO collects the licensing fee and the data. They then pick a sample period (typically 2 weeks) from each quarter and count only the songs played during that time. If you’re outside the sample period you’re out of luck. The PRO then applies the magic algorithm and if your song was playing in any of the sample periods you’ll get paid your royalty. (BTW-this is often true for TV, too.)

I’ve had songs from over a dozen releases played on commercial and college radio all over the States, some of which have made CMJ, Gavin and Hits! charts and have never received a single royalty payment from radio. Since the advent of streaming I’ve had songs from less than a dozen releases played on a dozen streaming services and I get paid royalties.

I would like to chime in here just because I, as a music fan, want to know how best to support my favorite artists and help up and coming artists I find that I like.  It seems like streaming, scrobbling, etc., might doi more harm for the artist than helping.

I don't have anything to do with the music business other than enjoying the music I choose to buy on CD, vinyl when I can find it, or an occasional mp3 album or single download from Amazon or i-tunes.  I prefer to buy the CD, or vinyl (truly I love vinyl), and the joy of the experience of reading the liners as I listen for the first time.  I guess I am a dying breed though.   

I do what I can to support my favorite artists, and I am always looking for new artists to enjoy.  I don't look to radio for that any more.  I like my music real, and not so electronically and technologically manipulated to the point of sounding like what I call "Robotica".  I want to hear pure voices with no autotune.  I can't find that on the radio at all any more.  With a few exceptions the music played on main stream radio these days is rubbish.(IMO)  To that end, I have learned how to scrobble and stream, thinking I am helping, but is that actually the case?  Am I just putting more money into the hands of the people who really don't need it? 

Is there a better way?  I usually buy multiple copies of CDs and singles I like, and gift them to family and friends.  I love my music and I read all the articles I find on the state of the music industry today and it worries me for all musicians and singers. 

In my ignorance it seems that you have to be with a major label, or be a very long term indy to get radio play at all.  A major label not only sucks the artist dry financially, but wants control over everything the artist records.  A new indy artist has a tough time breaking through.  If I am wrong can someone clear it up for me?   I really want to put my support in the best places possible, as on the artists pockets.

Thank you for supporting us on iTunes and Amazon!

As a practical note, on both iTunes and Amazon, there will be a copyright notice listed on the download listing.  If it's the artist or small label that is the primary beneficiary, they will be listed, not a major label.

With compact discs and vinyl purchases, you're supporting a large ecosystem with a small percentage theoretically and usually finding its way to the creators.  I am very happy for purchasers to buy our vinyl from our licensees, even though we see a relatively small amount at the end of the day.  But "small" is a lot bigger than "tiny" as in Spotify!

If you're on facebook, join some music oriented groups like this one :

https://www.facebook.com/groups/fabmab/

according to your own unstated taste in music!

Periodically there is an appeal for funds to help someone battling medical costs, such as this one :

https://www.facebook.com/events/427006563997959/

I also support MusiCares charity for musicians, the only feature sponsored by NARAS (Grammys) that I care about. 

A little help from my freinds.

As a result of a Shindig Magazine article about a vinyl album I recorded in the 70's, I created an indie label and website for distribution of a re-mastered CD version of my album "georgie only me". iTunes doesn't accept record labels with less than 20 albums in their stable and signing on with one of the many rip-off huckster promotion websites wasn't an option.

It was a blessing in disguise. The reaction, though slow in coming has paid off thanks to the Shindig article and fans like yourself who restored my faith in the independent American enterprise.

Thank you

I understand your struggle as a label. As a person, who enjoys music I feel also deceived. however, I see different problem: Artists are driving cars and posses houses which I will never have. As a student I cannot own music I  like because the small amount of money I have is not enough to buy them. Spotify and Zune are the only ways to listen to the music legally. Second thing, American law supports artists, but not the listeners. You should compare the law in Europe and America. In Europe the law stands behind a listener, and still, artists are richer than an average member of a community.

Hopefully you understand my struggles too.

Sounds spot on to me..... I have a friend that works at google, who was describing the concept of the forthcoming google music.  Same concept, cloud based file storage and sharing.... My first response was " you know what this is going to do to artists, right?"

Did Niel Young and Patti Smith do this? Or did whichever label that controls their music do it. The contract I have from before any of this stuff existed gives me the same percentage from a download as if a record had been made, artwork created, packaging manufactured etc.  The record companies are raking in huge profits from back catalogues with contracts written in the days when only physical products existed

All This Digital Stuff Is New To Me ..I KNow Its Here I Know What They Tell Me But I Don't Know How It Works. But What I Do Know Is That Since I Been Pressing And Distributing My Own Music I can keep track of Whats Sold. I HAve Certain Songs That I Use For Promotional USe Only. So With These Comments I CAn Almost Get The Picture !!!

if you think Spotify is bad, read this - the trichordist is telling it how it is!

https://thetrichordist.wordpress.com/2012/06/05/artists-know-thy-enemy/

I have a hard time staying objective about anything on that site. Lowery is so strongly oppossed to any advances in digital music, that he often comes off as simply uninformed and unwilling to take the time to adapt. Besides, the whole site is based off of a moot point - an "ethical internet"? That's like saying "ethical karma". Ethics only exist in the hands of people, not in the medium itself.

You don't know what a Zune is? 

That's the stupidest question I've ever heard!

You actually read it not heard

Streaming is a ripoff for the artist?

What is the answer?

Force subscribers to streaming services to pay $100 a month?  How much money will artists get that way?

How much money did artists get during the alleged salad days of vinyl and CDs when record companies had artists under contract?   After the advance and recording costs and promotion and percentages for managers and agents, they got to split a penny 5 ways. 

How many biographies and autobiographies do I have to read of artists in unrecoupable situations? 

Yet you can point your finger at streaming with authority and call it a ripoff for artists.  What's your alternative, asshole?

um, not streaming?

Yeah. Screw the consumer. Streaming should be banned!

Even without Spotify, the consumer has never had so many options for legally consuming music. Nobody is suggesting screwing the consumer.

I would love to get screwed ;) 
 

The final consumer should be given only one method of getting music in a legal way. This would heal the industry right away. Sony, Hitachi, Sanyo, IBM, LG etc. - blame them for the piracy growth. They included CD rippers into their devices and encouraged ppl via ads to buy these to rip music into CDs then mp3s, directly. People used what they were sold, then shared what they ripped when te Internet became popular. In both cases there was no strict law to discourage ppl of ripping and sharing. So in fact these companies keep making money on piracy if you can see my perspective.

the alternative is to pay fairly for access to music. why are you so offended that artists should be paid fairly?

The alternative is right there in this article and many more articles on this site.  The alternative is sell CDs, downloads, vinyl yourself or through itunes, amazon.  The profit difference is shown by a ratio right there in the article.  Maybe that was too subtle for you.

Anyway, it's a choice that someone who sells music has to make.  Stream and get very little revenue or sell direct and get maybe some revenue maybe not

Just a slight correction here - this is not an "either or" scenario - virtually everyone who allows streaming on any of these services also has their music for sale on iTunes. Artists make their music accessible in hopes of spreading the word - it is better to have ten thousand people stream your song than no one listen to your music at all. The more people who stream and are exposed to an artist the more will purchase it. The Arctic Monkeys, for example, kickstarted their career by giving away music and the exposure the got from doing so lead to tons of sales.

So to accurately judge the payout from streaming music one would also have to compile data on how / if / streaming music increases digital sales, ticket sales, etc. but this would be tough data to come by...

And having said all that, I still believe streaming services should increase their payouts to artists. Another legitimate and substantial stream of income for artists will only help the "music economy" - the industry must understand that these are the people taking the brunt of the financial risk in producing new music - devoting their money in many cases and also thousands upon thousands of hours of their time with no definite payout. All facets of the industry refuse to work for no pay and are very defensive about this - but the ask the most important component, the artist, to work for no pay for many years at the start of their career and then poorly compensate them once there is money to be made.

If I can stream it I won't buy it...bottom line. Maybe I'll go hear someone perform live, but why would I buy the track...because I feel bad that the artist is only getting $.00008?

Sorry but all market researches on the topic show there's no cannibalization btw downloads and streams. If your music sells, it will generate revenue from various streams (download, streaming, cd sales, live shows...etc).

Saying streaming impacts download sales is like saying radio impacts cd sales.

"Sorry but all market researches on the topic show there's no cannibalization btw downloads and streams."

I'd be genuinely interested to see your source for this, since all logic should point to the contrary.On a purely personal, anecdotal level, I know that I wouldn't be downloading as much, if anything, if I was paying $120 a year for music.

Thanks for the backup b/c I don't believe the "streaming doesn't negatively effect sales" bs

You'd be surprised to see the stats.

Ownership is still extremely important for most people (well yes it really depends on some demographic and social factors, but generally downloads are in a good shape despite of streaming services).

Just a couple questions about that market research 1. What was the demographic? I suspect that a large portion was over the age of 30.  Did the ages of those involved in the market research acurately reflect all music consumers? and finally who funded/did the research? spotify maybe? if not give us a link.

Then be reasonable about the price of a cd.. if they really want to nip this in the bud all they have to do is price point their cd's at $10.. I'd gladly pay that especially because I get the jacket with that.  The problem is and always has been that the record companies control distribution, marketing and every thing else including the musicians under contract.

You are right. This article puts the emphasis on the per stream rate. But have a closer look the results. Spotify outperforms all other services by miles when it comes to the overall revenue. Let's use another perspective for the same data.

Don't know about the visitors here, but I'd rather haven a full time job that pays me $40 an hour than a job for 3 hours a week with a $100 hour rate.

In the end the overall revenue is the only thing that counts.

Of course you can daydream and think what would happen if Spotfy also was able to pay $0.028 per song. That will probably never happen. Why?

Let's do some math. About 70% of Spotify’s revenues (advertising + subscriptions) gets paid to the rights holders of the music. This is before Spotify covers their own operational costs (which are still higher than the remaining 30% )  Each month the pay out is calculated based on the revenue and the number of streams. 

How many songs do people stream? 20 songs per day maybe?  That would mean 600 a month? Let’s say 700 a month for the sake of an easy calculation. You pay $10 a month, 70% is for royalties, so $ 7 is paid out to labels and artists. Now let’s do the math:

$7 for 700 streams means $0,01 per stream

Okay, this is in a perfect world where every user pays 10 bucks a month. You know that is not the case, only 20% is paying. Still Spotify was able to pay $ 0.005 per stream . Not that bad if you ask me, advertising revenues are quite well I take it.

I do realize that this calculation is oversimplified, but it explains why Spotify just cannot pay more per stream. Live with it our pull your music.

I totally agree with your ending statement.  "Live with it or pull your music.  My vote?  Pull your music and throw a serious scare into the VC community.

This is your David and Goliath moment or you could just be "virtual road kill" and hope for the best.

Right! The artists decides. If it's a wise decision to pull your music awaits to be seen.

Spotify is currently a music consumer's dream, and Hans, you are furiously defending it like the consumer that you are. 

I'll give you credit for that.

Unfortunately since you're not on the other side, and have nothing truly invested artistically, financially or otherwise, I find it rather insulting that you'd tell someone to "Live with it or Pull your music". 

For someone who likes to champion such a forward thinking concept and company, that's the kind of language we're used to hearing from a very, very old model and it's legacy of (quickly diminishing) employees. 

You know this company is notorious for it's lack of transparency, and since it behooves you, the consumer, you still champion it. 

Sad. 

Really? You are right. The "live with it or pull your music" is a faux pas. I take it back.

And as for the lack of transparancy I can acknowlegde that. I like Spotify as a concept but not as a company. It's a real arrogant bunch evading every question about the payment structure.

What I like is the streaming concept and I am convinced that musicians will benefit from streaming as well. It just takes more time. I hate the constant short sighted focus on the stream rate in stead of looking at the big picture.

It took four years in Sweden to get 35% of the population to use Spotify and look at what has happened to artists there.  In the US not even 1% is using Spotify now. Imagine what will happen if 35% of US inhabitants start using Spotify or streaming services in general. That would be over 120 million users.

So what I really defend is streaming and not Spotify. To be honest I started to use Deezer next to Spotify and this service has some serious advantages over Spotify. I even think of switching.

Thanks for correcting me. 

Spotify does not ever want to publish its rates, nor should they.  Just like Netflix or any other subscription service, they are negotiating with their providers (the labels) to get the cheapest rate possible for them to access the catalogue.

You either negotiate a deal that you feel fairly compensates you for your art, or you refuse to be a part of it.  But Spotify is not going to help you set that rate (nor should they), just to take profit out of their own pocket.  The argument to force an industry to disclose its pricing structures is in total violation of free trade and fair business practices across industries.

I do realize Spotify cannot disclose details, but why not paint the big picture? That shouldn't be to hard?

Unless there is a govt/industry set and enforced minimum rate for plays, the gatekeepers/companies can change it to whatever suits them and their profit margins.

This has happened all over stock photography online. People used to get minimum $50 per image used, then it went to $20, or $5 or 50 cents. There's absolutely no set standard, and the drive is always for it to go lower.

Bottom line is, unless you get big enough to start selling out large halls, you're not gonna make any money in music. You can get that big off of a hit song, and at least Youtube seems to pay reasonably well for videos, but I don't know why anyone should put their stuff over to Spotify because it just undermines their other online outlets.

Make great videos, post them to YT, post tracks to the download stores, offer your own music streaming for free ON YOUR OWN WEBSITE.

THe only possible advantage to streaming is the exposure, but you're probably better off sending product to college radio etc, where your plays can be tracked by SoundExchange.

Honestly, if someone thinks less than a penny a song is viable, they should be laughed out of business. The Lady Gaga numbers alone are a giant red flag that these guys are scum. Their proximity to the jerks at Pirate Bay makes me suspicious as well.

I've been using Spotify since the day it was made available in the U.S. I've bought about 5 albums since that time. I don't buy albums anymore for the most part. Neither will most people once they have the right setup to use it everywhere. But you what? If the album is really good you'll get paid more over time. The tunes that become your favorites-maybe you'll paly that song 1000 times or more in your lifetime. I spend so much more money on live shows now because A. I have so many more favorite bands than before because I'm exposed to so much more music than before Spotify and B. I have much more money to do so because of spotifys superlow fees. Who the f&%k decided we should have to pay $20 for a garbage cd you'll listen to once and discard whithn a year anyway. We should all be thankful we can explore new music so affordably and if your music is good you are gonna make money. If you have one ok songs and the rest of your album sucks you will make a fraction of a penny and deservedly so. The albums you listen to most over time should earn the most profit and with Spotify they do. The best music earns the most money. Could or should it be more money? Hasn't the artist always been raped by the industry regardless of the medium? At least this is a good deal for all consumers and many artists. If I listen to your album once and find nothing there worth a second listen why do you think thats worth more than a penny? You should pay me for wasting my time

You're covering a lot of ground here, but unfortunately a lot of your points are just unfounded. What's happening now for artists is that a huge portion of the music ecosystem that's been in place is being removed. So, to say you can go to more shows is great, however album sales offset touring costs, and honestly while some things make touring easier it's still a sharecroppers game at most levels, and when you get to the highest level you're dealing with an entire new realm of gatekeepers and big business. 

The artist that is getting the hurt the most by the issues we're talking about here are not the artist that came from the land and time of $20 cd's.

You say you have "more favorite bands" which to me is a strange oxymoron or misnomer in a way. Not that it's a bad thing to honestly enjoy more music, however that does spread things thin. I'm not arguing that this isn't good all around, though we're in a time where artists and labels are trying to figure out how to survive within that paradigm. 

What streaming services are doing is allowing you to explore new music more affordably, however it's also changing the way you value music and content in general. That might mean you find more of your "favorite" band, that might mean you find more bands that "suck" as you say. It's the listeners decision to listen, and then it's an option to support them further but there is no one, two, or even three ways that equal a valuation or direct income stream for an artist or label anymore. 

The best music does not earn the most money, it's never been like that ever and now it's more real than ever. 

What earns money is ubiquity and unavoidability. 

We should pay you for wasting your time?

This is the type of entitlement that the new media and technology has spawned. 

Teach your children well....

"It was my understanding there would be no math..."

~ Chevy Chase, as Gerald Ford

There's been lots of talk down the years about a 'music like water tax' built in to monthly isp bills. Even Sky and Virgin in the UK have or were going to launch such a service with a monthly fee attached. 

Whatever, these figures should be the knock out punch to anyone thinking of getting into artist management. You have to be a true music lover to get into it me thinks.

What does asshole have to do with it? I liked your reply so far, being a musician myself, but why asshole as your last word? Are you a CEO of one of the streaming co's? Very immature indeed... 

As a kid in the 1950s, my friends and I fed jukeboxes almost every day.  What a ripoff that must've been for artists.  Jukeboxes everywhere in the US.  A guy came around who switched out the records and took the quarters.   Somehow I doubt that Fats Domino or Bill Haley shared that $ at all; moreover, unlike today's pissed-off performers, the stars of the 50s and early 60s had no forum to air their beefs 

I was not a kid in the 50s, but I have the feeling that was the time period when people didn't own records at all. TV was owned by a very few people as well as radio, and the jukebox had the important function of provide an affordable way to listen to music.

Therefore you shouldn't feel guilty: it was another historical picture.

Nowadays, people can effort to buy music, but they don't want to because they think "music is freedom, everybody should be able to listen to it".

So they spend 700$ to get the new iPhone but then they declare that paying 10$ dollars for an album is too much.

Interesting point of view, I guess.

why is he an asshole? 

someone needs to lay off the caffeine.

If you really want a (forgive the pun) apples-to-apples comparison of the iTunes Song Download ratio, you need to show this data broken down by territory. It's misleading to compare revenue that's almost entirely derrived from non-US customers to the price a US customer pays for an iTunes download.

Sorry guys - streaming versus download comparisons are wrong. if you want to do a real comparison, look at streaming versus radio play comparisons. 

While there's some validity to that statement, you need to look at what these streaming sites are.

Spotify is an ON DEMAND streaming site, which is nothing at all like radio...

Besides, you can compare streaming sites to other streaming sites, and Spotify pays the worst, while offering much much more than just 'streaming'. IMO they should be paying songwriters multiple of what 'regular' streaming sites do, not fractions...

On demand streaming is tantamount to pseudo ownership.  Therefore comparable.  Radio streaming with limited control like pandora can be compared to radio.  

If you want to get technical, even iTunes sales are "pseudo ownership".

But they are not comperable to permanent downloads. If anything they're comperable to tethered downloads, where once you stop paying, you stop listening.

if you really want to get technical, even physical cd/vinyl/tape sales are pseudo-ownership.  We bought a personal use license is all.  The medium never mattered. 

Whoa.

Lovely stuff!

Jesus. What did radio pay you?

...what is the answer to this question? I see there's a debate as to whether Spotify is more like radio or owning, but just for context, what are artists getting for radio, and jukeboxes as long as we're on the subject...

It's mystery what the BMI/ASCAP magic numers are. But oversimplfied it's like this.

The PRO takes a 2-week sample of music played each quarter. The number of plays of each song is counted against the grand total of all plays. A magic algorithm is applied to determine payout. However, songs that don't meet a certain plays threshold are not paid out. Songs that are not played in the sample period, are also not paid out.

Versus online & satellite (paid by SoundExchange) every play of every song is counted monthly. The number of plays of each song is counted against the grand total of all plays. A magic algorithm is applied to determine payout. All songs are paid out. No threshold applied.

Radio digitally reports all plays of every song to BMI and ASCAP. They could pay the same as SoundExchange but they don't.

I'm curious, do you know if SESAC does the same as BMI and ASCAP? I never hear much about SESAC.

disgusting numbers.

THIS IS INSANE!

A major part of Spotify's lower rate is the free service, which none of these other companies offer. If Spotify paid the same rate as any of these others, they would be in even deeper financial trouble than they already are. Though I think that free plays should cost the same, regardless.

Let's not forget that there are mechanical royalties and performance royalties from these services as well, per play. The labels wouldn't see the money, but someone does.

Spot on on Casey! Spotify will never be able to pay much more per stream.

BTW In the statements I have the rate for every stream is $0.005 so for paid and free.

And people ask me why I am not representing bands or labels any more... if this is what the labels are making, you can only imagine how much less the bands are making and then you can imagine how much MORE less then that the support contractors are making...

The comparison of 140 streams on Spotify to 1 sale on iTunes is not a fair one. Spotify has a free service so you will have a lot more people listening to your music than you would having people purchasing on iTunes. According to the IFPI over 95% of music listened to is pirated so likely 95% of those streams would have netted you zero in the past.

Spotify may have the lower rate but the amount is much higher than the other online services - would you rather have $400 or $4000? The consumer has choosen and compared to piracy only spotify is worth switching to.

A fairer comparison would be to show how much total revenue iTunes paid this label rather than focusing purely on the per stream rate. Is the label making more or less money overall post spotify introduction?

I would argue that all streaming revenue should be compared to all download sales revenue. From there a comparison should be made of what the penetration is of streaming versus downloading (far less people use streaming) so we can accurately see what source brings in more revenue on a market share basis. Then we can see what the real picture shows.

I have had enough of the "we make less money per stream than per download" garbage to last a lifetime. Of course you do! If more Indie artists would spend as much time trying to increase the number of streams instead of worrying about how much they make per stream, they would be a lot better off. Streaming is all about quantity. And streaming makes consuming music vastly easier than downloads. Most people will only download a song once. But people can stream the same song an unlimited amount of times. I have songs I have listened to over 1000 times, with ease. And that number will only go up, especially with playlists. The artists of these songs would have made a nice amount of money had this been via a streaming source instead of a download. Especially since I use Rhapsody now, not Spotify. With Rhapsody, a play from my computer, phone, digital music player, etc. is all a paid stream. With downloads, it is nothing.

Streaming services are making it easier and easier to get streams too. Not just with apps and playlist features, but also by their social features which allow friends to share music completely legally, for free. The artist gets paid for that those plays, even if the people never listen to that artist again. And if they like that artist, the artist could be in for hundreds of plays, easily. Where in the paid download world, that artist may have gotten nothing because sharing wasn't as easy, or it may have even been done illegally. The social world combined with the streaming world makes it possible for music to spread like never before, be consumed like never before, by everyone with a subscription. Indie or major, it doesn't matter. Getting new fans is vastly easier now because there is zero risk involved for a listener. Artists often forget that most people who consume music via paid downloads are often conservative with their downloads, because if they end up not liking the music, they are out money. This risk is non-existent in the streaming world. There are also admitted music pirates are switching to streaming because of simplicity, and giving artists streams and therefore money they would never have gotten otherwise.

So what is my point? Indie artists need to stop worrying about the money made per-stream and work on increasing the amount of streams. I would argue that streaming actually puts Indie artists and Major artists on a level playing field. The average listener doesn't know the difference between a major artist and an independent one. The only know what kind of music they like, and on Spotify or Rhapsody, it is all equally available and easy to access.

Thank you!

* So what is my point? Indie artists need to stop worrying about the money made per-stream and work on increasing the amount of streams.*

BS.

Did you actually read it, or did you just skip to the end? Argue against the points, or your comment of 'BS' is worth just that.

So Erik, are you another member of the "I have songs I have listened to over 1000 times, with ease" bullshit spreading society?

My God the streaming companies' PR kool-aid is tasting strong today!

"I have songs I have listened to over 1000 times, with ease"

Seriously? Do you actually have data for this? - and I mean that as a genuine question. Because years ago if someone had asked me how many times I had listened to my favourite songs, I would probably have said, like you, maybe a thousand times. But since I now have software tell me how many times I have truly listened to a song, I find that even my year's most favourite songs max out at around 50-60 listens (albums that I've had for decades may be more, but I don't have data for that, obviously). Songs that I consider I like a lot may only register 30 listens, and others that I thought were okay may only get listened to 10 times or less. I was very surprised. And since finding this out, I've been more concerned about streaming services and their economic viability for artists and labels.

But 50-60 listens still means (at a ratio of 25:1) that the artist is getting twice as much as they would for the song if it were downloaded.

But less than half for the Spotify ratio of 140:1. And most of the albums I buy I listen to significantly less than this.

Well listening to a full album is a different beast entirely, unless you only listen to music by listening to the album. Not many people listen to complete albums anymore, myself included. It is becoming all about individual tracks now, which are easy to listen to more frequently compared to an album.

Spotify may pay less than other services, but I would strongly argue this label's report is not the entire story. I have been following a lot of reports on estimated pay from Spotify, and some contracts appear to allow for a tiered pay rate. Premium tapping out at $.007-$.009, far above the rate shown here. And far above the picture of the quarter of a penny. If Spotify's contracts were more transparent we would know more, but we don't know anything for sure. It is all speculation.

Once Spotify starts restricting more free users, subscription plays wil increase. Spotify struggled for a long time to get the subscriber ratio above 10 percent. But they surpassed that prior to launching in the US and will surpass it significantly once again. Then we can see where the pay-per-play stands.

"Well listening to a full album is a different beast entirely, unless you only listen to music by listening to the album. Not many people listen to complete albums anymore"

The data I gave was for the most played individual songs on an album, not whole album plays. But anyway, I would challenge your claim that not many people listen to complete albums anymore, since digital album revenues rose a whopping 43% last year (source: http://bit.ly/xNBGXG)

A fairer comparison would be to show how much total revenue iTunes paid this label rather than focusing purely on the per stream rate. Is the label making more or less money overall post spotify introduction?

Our U.S. iTunes revenues fell 30% the day (15 July 2011) when Spotify went live in the USA.  2H2011 was extemely challenging financially.   We have yet to see any meaningful uptick in Spotify revenues.   That's why there was so much "static".  Especially from those like me who opted IN. 

iTunes is still 80%+ of the pie.  We are truly fearful of those revenues not being replaced by streaming ones.

Spotify is a plain and simple pump and dump operation, except the small label never was invited to be part of the scheme (which now looks post faceplant to be still born).

I remember the day Spotify went live. Barely anyone could even get in to Spotify because of the limited amount of invites given out. They had maybe 300k users on the first day, and that is probably generous. That is less than 0.1% of all Americans. There is simply no way Spotify ate 30% of your revenues since day 1. Even to this day, Spotify sits between 3-4 million active users in the US. Roughly 1% of all Americans. Your revenues may have fallen by 30%, but Spotify isn't to blame. It is simply too small. And Itunes sales were actually up from previous quarters in the US last time I looked.

I am using my full, real name here.  I have no hidden agenda.  

Far from it, I opted IN for Spotify.

I am reporting real world data points and you've taken out your pecker to take a leak in response.  Other than pushing the silly Spotify helps sell more iTunes meme, your position makes no empirical sense.

Why?  

If Spotify could take over the USA market the way they dominate Sweden, I'd be cheering and looking forward to massive increases in income.  But the early indications are all bad ... we're losing revenue far faster than gaining.

Look at the other established Spotify European markets, like Germany and the UK. Who is making a living off Spotify there? We're making pennies, a few per cent of dismal paid downloads in those markets.   

Fact :

Spotify crushed our iTunes directly distributed downloads until December 25, 2011 when they finally recovered.  We experienced the impact from the week of Spotify (USA) launch ... it was not a one day phenomenon, more like 5 months of consistently weaker than normal sales.  

It was not just my experience, other labels were reporting it at the time.  I tried to get a broader based sample but failed to get my digital aggregator to 'fess up their numbers.

My guess currently is that Spotify is not catching on in the USA; same for iTunes Match.

"cording to the IFPI over 95% of music listened to is pirated so likely 95% of those streams would have netted you zero in the past."

exactly, I think you get the point.

streaming services give artists some revenue (even if negligible) instead of nothing when their music gets pirated.

streaming services give artists some revenue ... instead of nothing

It's a little more nuanced than that.

Yes, in Sweden where there were almost no paid downloads for us before Spotify, there has been incremental income. Bus fare.

In the USA and Canada where there was a significant minority willing to pay for downloads and quasi subscription models like e-music, we're seeing this market eroded.  More dollars lost than Spotify dollars gained.

The Canadian market is now on par with Europe for poor numbers in paid downloads.

I have songs I have listened to over 1000 times, with ease.

This is a bare-faced lie!!!  Stop bullshiiting us please...

The social world combined with the streaming world makes it possible for music to spread like never before, be consumed like never before, by everyone with a subscription. Indie or major, it doesn't matter. Getting new fans is vastly easier now because there is zero risk involved for a listener.

In other words:- a Ponzi scheme...  (otherwise known as a pyramid selling scheme)

Actually no, it is not a lie. Believe it or not, it is not that hard to accomplish. You have to take into consideration every play. In the car, on the go, sitting at the desktop computer, and plays on household sound-systems. You don't have to be actively engaged to listen to a song and count it as a play. In fact you don't even have to be in the same room or building for that matter to count it as a play/stream, but that is a different story. I often use custom playlists on shuffle to serve as a very customized radio station. Luckily for artists, Spotify, Rhapsody, etc. count plays from a playlist as a full stream. I also never said that I listened to the tracks over 1000 times, right after the track was released. Many of these tracks I have been listening to for years. I have not listened to any track over 1000 times in a single year, but more like 200-300 times in the first year and over 1000 over all the years. In the streaming world, it doesn't matter when it was played, it is still getting paid for.

I may not have any solid evidence that I listened to tracks over 1000 times since I change operating systems very frequently. But if I could add up all the play counts from when I first ripped a cd to Win98SE up until now, there would be many I have listened to over 1000 times and hundreds of tracks I have listened to over 140 times, the amount necessary to equal an Itunes sale from Spotify streams. I may listen to more music than a lot of people, but I highly doubt I am alone.

Between listening to songs thousands of times and changing your operating system so frequently, maybe you should get a job...or a life...

and reading lengthy blowhard comments on DMN

I also never said that I listened to the tracks over 1000 times, right after the track was released.

Excuse me but this is a debate about streaming and you clearly implied that your listening of tracks 1000 times was on streaming. So you are a liar and a bullshit artist.

Many of these tracks I have been listening to for years.

How long have you been listening as 100% streaming subscriber? And is streaming your ONLY source of listening? What about all those CDs you have ripped since Win98SE?

from when I first ripped a cd to Win98SE up until now...hundreds of tracks I have listened to over 140 times

Two points about this:-

1. You are talking about a 14 year period. From an artist-income point of view I would have to ask you the fundamental question:- Would you prefer your week's wages this week or 1/728th of your weekly wages per week over a 14 year period?

2. If you are a fanatical listener as you claim to be, there must be many tracks that you try out just once or others you just play a few times. That would pull down your mathematical average of plays-per-song to much much less - way below 140.

Sorry but your pathetic over-egged PR spin does not wash with people that make a living out of creating music - the very people that shitheads like Daniel Ek left out of their equations when creating their Ponzi scheme.

It doesn't matter how many times you have listened to you purchased music. That's not the point. Streaming is about convenience and easy access. Far more people will listen. That makes it easy to have streams equal a paid download.

And another side effect, people even use streaming services to listen to music they bought in the past. Out of sheer convenience.

I never said I listened to all tracks via a streaming service. In fact I believe I said: "The artists of these songs would have made a nice amount of money had this been via a streaming source instead of a download." So you didn't read what I said.

How long have you been listening as 100% streaming subscriber? And is streaming your ONLY source of listening? What about all those CDs you have ripped since Win98SE?

Doesn't matter how long I have been a streaming subscriber. The point isn't how much money I have made artists from my plays, but how much they would have and will make in the future from my plays using streaming.

1. You are talking about a 14 year period. From an artist-income point of view I would have to ask you the fundamental question:- Would you prefer your week's wages this week or 1/728th of your weekly wages per week over a 14 year period?

I can't really follow your argument here. Assuming a person buys your track, you get paid one sum essentially upfront. Streaming is distributed over a period of time. I can follow that. But it doesn't take 14 years of streaming to equal an itunes sale. It took me roughly 14 years to equal over 1000 streams of certain songs, which in streaming terms would be substantially more money than a sale from itunes. Not to mention that a good chunk of the streams are usually done in the first year, which in my case for my most played songs would be about 200-300 streams. So it won't be instant cash, but if at the end of the year it turns out to be equal or in the case of 200 streams, more, then what is the problem?

2. If you are a fanatical listener as you claim to be, there must be many tracks that you try out just once or others you just play a few times. That would pull down your mathematical average of plays-per-song to much much less - way below 140.

Yes, there are. But not as many as you would think because I don't buy songs I don't think are worth the money and I don't buy many CDs unless I buy them for the sake of collecting them. Now there are hundreds of songs I have streamed and only listened to them a few times. But I wouldn't have bought those songs anyway, so the artists still come out a little further ahead because they got paid for a few streams when they wouldn't have gotten paid at all.

If people don't listen to songs very many times, that isn't Spotify's problem. Spotify makes it just as easy to listen to a song 10 times or hundreds of times. There is no denying that not all people listen to an artist's music enough to equal a sale. But if Spotify is used to the fullest and used to reach more people, then not only can it average out, the artist can come out ahead.

In your earlier post you arrogantly declared:-

"I have had enough of the "we make less money per stream than per download" garbage to last a lifetime".

But you are using data re-your somewhat extreme listening habits from CDs, downloads and CD rips - not specifically from streaming. How credible is that?

When you actually talk about streaming everything you say is "if this" or "if that" or "had this been via a streaming source instead of a download". It's all based on flimsy conjecture.

While CD sales decline, month after month musicians and artists are seeing relatively solid income from paid download sales such as iTunes.

And at the same time they see thousands of streams that produce just miserable and scary income amounts, from these new streaming services that proclaim themselves as the "future of the music business", while displaying a woeful lack of transparency.

And when someone makes the completely credible and sensible comparison between per-stream and per-download income you call it "garbage"?

Why are you so keen for artists to embrace streaming instead of paid downloads? I don't get it...

Holy shit! Why are you so angry about this? Casey is making excellent points. He didn't imply that he had streamed songs over 1000 times. He said that he owns music that he has listened to the frequently. Streaming hasn't been around long enough for that kind of listening, but the whole point is that given time to mature, streaming will be a very viable option for artist.

Consider this: A song has 100 regular listeners after one month of being available. In that month, those regular listeners streamed it a total of 1500 times (15 songs/month/person, very reasonable if not low). Now, assume that from those hundred listeners, 50 new listeners are added every month with the same rate of streams for each (also reasonable, assuming half the listeners have a friend that likes similar music). This will continue in similar fashion for each user every month. Let's see what the streams per month are at in the future.

1 month later: They have 2250 streams/month and 150 listeners with a total of 3750 streams.

2 months later: They have 3375 streams/month and 225 listeners with a total of 7125 streams. They have already doubled streams per month and listener base.

6 months later: 17,086 streams/month and 11,390 listeners with 48,258 total streams.

1 year after their initial month: They have had a total of 580,859 streams from 12,975 listeners and a rate of 194,620 streams/month.

You may argue that half of all listeners convincing a friend to be a regular listener sounds extreme, but that is the entire point. If you make good art, that should't be hard. Particularly with the ease of streaming along with its simple linkage with social media

The whole point is that streaming is in its infancy, and given time, the benefits to the artist will only grow (and in a quasi exponential fashion at that). This will be a major driver of the music industry, like it or not. And as has been pointed out several times, this is an excellent distribution system for any independent artist.

If that isn't a perscient argument for the advantage of streaming for the average music creator, then you will never be convinced, so you should not argue with others.

Nice try but in practice it does not work like that.

We run our own label - we can confirm the numbers in the original post - and we have heard numerous reports from other labels - and I've heard no-one proclaiming the kind of exponential increase in streaming listenership you indicate.

If we were seeing that kind of growth we'd be screaming hallelujah and shouting it from the rooftops.

What you have described is a figment of your imagination.

And in fact what you've described is rather like a pyramid scheme. Kinda fraudulent.

What we observe is a rather flat amount of streaming, roughly corresponding to peoples listening behaviour. A steady rise but no more than the general rise in streaming usership. (we get thousands of streams per month by the way).

So people are listening to tracks on streaming in roughly the same amount as they did on CDs or downloads - but for much cheaper. And this is the scary thing, because if streaming replaces paid downloads and CDs our income is going to dive.

I think the only thing that drives streaming is that it's much cheaper than buying downloads or CDs for the consumer. That's all. And it's kinda less technically risky that messing around with torrents, so more convenient.

What's wrong with buying downloads?

What makes me angry is the utter lack of sympathy from streaming evangeslists such as you for musicians and artist who feel they will suffer economically from this development. Why are you so hard hearted about it?

I agree with Steveh that listener numbers will (unfortunately) not match Average Music Listener's projections. Mostly, though, I'm replying to see just how narrow the Digital Music News coment reply columns will actually go ;-)

Apparently individual responses narrow to an incomprehensible single letter deconstruction that signals the end of useful commentary. I anticipate complete reduction in one additional comment

Average Music Listener has no grasp of real-world markets. Most new songs/albums have at max a few months of hype/attention, and sales drop off very dramatically after that. So for his exponential fan base growing to infinity, sorry, nope.

Additionally, with streaming there so much music availabe, and increasing all the time, that no one has time to listen to it all... so it is phyically impossible for all artsists to have exponential listener growth.

etc.

No one has enough time to listen nor enough money to buy everything on Itunes either. Your comparison is irrelevant.

Furthermore one fo the advantages of streaming is that streams don't have to die off after the first few months as sales do. If people keep listening, it stays strong.

To those saying Spotify is cannibalizing your sales....

Spotify has a global user base of 10 million active users, as confirmed by Ek in late May. Roughly 3 million of which are paying.

One can guess that there are roughly 3 million active users in the US. Spotify has yet to hit 1 milllion paid users in the US. That means that roughly 1% of Americans use Spotify, and even less pay for it at this point. There is simply no way Spotify impacted sales by any noticable amount. There is also no way Spotify will be able to generate near as much as Itunes, which has a user base of roughly 50 million in the US and over 220 million globally.

Sounds familiar ;)

Can Spotify streams really hurt sales?

As a point of interest, can someone tell me how much of the song has to be played on Spotify (or elsewhere) to register it as played. The whole thing? 60 seconds? 1 second?

Thanks.

I can't remember, there's a limit where the stream is counted or not, 30 sec I guess.

Also the revenue varies whether or not the track is fully or only partially played, there is a prorata/ratio applied.

$0.025 per stream isn't bad at all. If Spotify paid this much, the music industry would be saved. At this rate, one listen of an album would gross about 30 cents for the label. That's for ONE listen of an album. There are albums that I have listened to hundreds of times.

This is what the indie label gets. Think they will tell us what they pay to the artists?  Doubt it.

Commoditization.

We always talk about Spotify, but we forget that with Deezer pays 2X with fewer subscribers.

True! They can because they have no on demand free service. So less streams.

What's an Indie label? Ain't a label, a label?

Because one is smaller than Sony, and who isn't, make you an Indie?

Tired of the moniker. If you paste something on something else, that's a label. It doesn't know if it's independent or not. 

Sorry you don't make any money, Mr. Indie Label. Most musicians don't either. That all started with Napster. And is the reason, most people believe EVERYTHING on the internet should be FREE!

Griff

You are correct. A label is a label. Just another person or organization between the artist and their audience.  

We hear a lot of crying here from people who run "indie" labels because they are getting squeezed from major labels on one side (which has always been the case) and 100% DIY astists from the other side (which has become infinitely easier in digital).  "Indie" labels can't attack the DIY artist w/o looking like a-holes so they attack larger labels with more vigor and venom.  Welcome to the machine.

as an indie, for a while there, revenue from sales (itunes) was increasing dramatically (around 1500 track sales a month), and you could see a direct correlation between promo efforts & sales.

then, quite rapidly, that changed. despite millions of more music-related hardware being sold (ipods, iphones, ipads) sales actually dropped-- this despite more and more effort daily put into promotion. it seems that this related to the rise of youtube and streaming as the prime way to listen to music.

more and more time was spent on promotion, (the tweet to promote the blog to promote the video to promote the website to sell the t-shirt to sell the song,) and less and less on the music. projecting into the future, it seemed like the hyping/creating ratio would only get worse.  streaming plays went up and up, and the daily views on youtube from mobile devices increased. with all the hours inolved, i felt that i was paying to have people listen to my music.

so i stopped releasing music publicly.

i win, you lose. i have more time to create; you don't get free music.

Streaming is still relatively small, except for in Sweeden. A struggling economy is likely more the blame for a drop in sales than streaming is.

no. it started 4 or 5 years ago, while the economy was still hot... and just as streaming (youtube, pandora, etc etc) was gaining momentum

4 years ago is when the recession started.

Pandora wasn't very hot in 2007-2008. Not really any hotter than it was a year before. Their growth is more recent, and if anything fuel sales. Virtually all the on-demand streaming (Rhapsody, Napster, Zune) was flat during that time and really only started gaining ground in the last 2 years.

Youtube is another matter entirely, though I can agree to an extent.

I wonder how many artist have put their music on hold for a better day? I know I have. I get requests all the time to release more music, but as much as I love music, it is a busines. If I can't make money at it, I can't spend money on it. As an alternative, I opened my studio to the public. With that I'm doing fairly well.

Here's to a better day.

DC

The only way we could grow or maintain iTunes revenues over the past 5 years was by dropping our download prices.

We're at the $3.99 price point in the USA.  UKL 1.79 in the UK!

Why?  Because even at $5.99, there is no longer consistent demand.  I often wonder how other labels are doing at $9.99. Your post gives me an indication. 

The good news is that we can make money at $3.99.

We would make even more money at $1.99 per album of controlled compositions if A) if iTunes would permit us and B) if we did not have this competition from "FREE".

I've been using streaming services for about 4 years now (Rhapsody, Mog, RDIO, Spotify, and now back to Rdio). 

Frankly, I don't know why consumers deal with digital music collections. The abillity to access everything without having to manage thousands of files is well worth the $10/month - and is far less than what I was dropping on physical or digital albums per month. 

I have a physical collection of vinyl, which consists of titles I consider worthy of owning. 

For the consumer, streaming is efficient, cost effective, and eliminates buyer's remorse. 

It blows my mind that we're worried about the per stream payout from streaming services when the alternative even 5 years ago was zero dollars. USA Spotify isn't a year old. The concept of access in place of ownership is brand new (though streaming isn't, but smart phones make streaming more ubiquitous). 

Though there's only pennies now where there was nothing before, people are ready to write it off as ineffective. 

We need these kinds of innovators to see where the culture of listenening is heading. 

...my two cents. haha!

And a great two cents. 100% True

US: 3 million users that not even 1% of the population

Sweden: 3,2 million users that 35% of the population (9 million)

A popular local Swedish artists makes $ 25,000 a month from streaming.

Explains a lot IMHO

depressing...

We need a standard licensing fee for streaming . How can Zune pay $.028 per song and Spotify is paying only $.005?

Don't order the Porsche yet...

Streaming sucks for songwriters. Not surprisingly, it's why my royalty statements have been low. 

Spotify...hmmm.

Licensing fees work for Spotify and revenues projections to raise $200M; but they sure as hell don't work for musicians.

If a label gets ~$.7 per $.99 download from iTunes, a song is going to have to be listened to 140 times to equal $.005 per play, Spotify's payout to indie labels (apparently). Obviously the interest in a song is going to be front loaded, probably listened to several times per day at first.

Just for the sake of argument, let's make up some numbers. Let's say 2x per day over 4 weeks. That's 56 plays. 1x per day over the next 4 weeks. That's 28 plays, totalling 84 plays. That gives us 44 weeks left in the year for the other 56 plays, meaning one play every 5.5 days. And then plays in the following year bring the value of a play down below $.005.

Obviously that's simplified math, but I'm not getting the picture that $.005 is THAT far off. Not in the way the service is characatured, at least. And we're all assuming that major label artists, or artists like Dylan & McCartney who cut deals directly, are getting a much better rate.

If I pay up front for all of my plays by purchasing an mp3, I'm going to listen to that song more frequently. If I have access to an entire library, I'm going to listen to more artists. And so a single song might not get those 140 plays. It might get half of that. But other artists are going to get those other ~70 plays.

So because we're doing away with up front payments, & people aren't invested in particular songs, some of the hit song profits are going to be skimmed off the top & imparted to not-so-hit songs, & so there won't be seeing the current hot-or-not disparity between singles. But I'm convinced that, in the bigger picture, it's going to be in the same ballpark. And (hopefully) the payout is only going to get better as subscriptions mount.

It looks like many people are in favor of fair pay to artists. There are two issues with this idea:

1. Fair is not an objective definition.

2. Artists make a product - music. The price and demand are inversely related.

If we control the price by abandoning streaming and asking people to always pay $1 per song or $12-$18.98 per album we risk getting back to the early 2000s behavior. The price was too high for people, and they found a way around it - P2P sharing (Napster).

I'm all for artists getting paid (I run a small almost non-profit label focused on helping local musicians). I just don't see how artists or labels can go around the market forces. Artists need find a way to adapt to the world and make a living with revenue streams that are available.

@Peter V: Paying $1 to download and keep a song is too high? Do you know much goes into even creating one song? We have adapted a "something for nothing..entitlement" mindset that makes $1 for a song seem too high. Its the attitude of the people who feel they are entitled to everything, and think that just because they don't have the money they should get something for next to nothing...or pirate it. Sometimes we need to just do without until we get the money to pay for it. 

At any rate...I look at Spotify as way for artists like myself to "advertise", and then lead the fans to my webpage to purchase the music..if they are "real fans". If they are "real fans", then they will be treated mighty special and be part of an "exclusive group" with certain benefits...like an exclusive club/fraternity/sorority. 

I think you missed the point of supply and demand. Sure, it would be great to get paid $1 per download, even better $10, or what the hell $100. But if the price point is too high, there will be no demand, and hence no sale.

The flip side is supply. If the artist doesn't get paid enough then there will be no supply (no songs written).

There seems to be no shortage of songs being written, but their does seem to be a drop in comsumption via traditional channels.

If you accept that market forces set the price of goods, then I'm sorry, but how much effort you put in to producing something has no effect on the price, except by you choosing not to create the good anymore, thus reducing supply.

Why the iTunes ration comparison?  What you don't see here is the number of songs that this same label sold on iTunes.  Give us all the data before trying to convince of one side of the argument.

Of course streaming doesn't pay what downloading pays.

So, the ration is 140 to 1 for streaming on Spotify compared to purchase on iTunes.  Seems to me that there are two pertinent questions here in assessing the fairness of subscription services payments to artists (assuming the label pays the artists at the same rate as if it sells a digital download of the track, which is another question involving contractual arrangements between those particular parties).

My first inquiry is whether over the life of a fan's "consumption" (not ownership) of a track, that fan could reasonably be expected to average 140 streams.  I know, there's a factor for time value of money - the future streams being less valuable.  But, let's assume that Spotify keeps up with inflation, as well as with the relative value in monetizing a track download or other outright purchase.  And, let's ignore for the time being the fact that an owned track can be transferred to others going forward.  It's of course an arbitrary question here, but no doubt empirical evidence is available. 

To me, this does not seem at all hard to imagine: once a month X 12 years.  I'm making a rough base assumption - that over the arc of the ownership, 12 years is a reasonable figure given that a fan presumably listens with decreasing frequency over a longer time period.  And, factoring in (again, roughly here) that varied ages of fans - hence, time to stream that track - ultimately boil down some average.

The second question is more of an observation: many more tracks would be consumed in a streaming model - this is definitely the case in my own use, and I do think it's do for most if not all others, to a greater or lesser extent.  Sure, if I were required to listen only to that which I'd purchased, I'd listen more often to fewer tracks...far fewer.  But that's neither here nor there, frankly, since the alternative is really more incentive to increase my collection without any payment.  So, in aggregate, why not assume that artists/labels (not to conflate these except for the limited present conversation) will do fine?

Now, it's a given that monetization of music plays must be over a much longer time period with streaming, but that may be a blessing in disguise.  More music that has lasting value, perhaps?  More artists that have longer careers?  Less production of flavor-of-the-moment music and more production of "timeless" music?  Sounds good to me.

You are talking about a putative 12 year period over which a stream-bytrack-bylistener play count reaches 144 - 140 being the amount of streams in the original poster's equivalent to the income from one iTunes paid download. OK?

As I previously posted in reply to another poster:- From an artist-income point of view I would have to ask you the fundamental question:- Would you prefer your week's wages this week or 1/624th of your weekly wages per week over a 12 year period?

Or alternatively would you prefer your month's wages this month or 1/144th of your monthly wages per week over a 12 year period?

the wages analogy misses the mark.  the artist isn't performing the song for the listener every time it is streamed (or performing just once if the listener purchases a download). 

for the artist (or label), streaming vs download is more like leasing or selling something that you have created. 

@ 140:1 the question is would you rather sell your song once to the listener, get $1 now and never see another penny from that customer for that song OR would you rather lease that song to the listener at a rate that gives you that $1 only after they've listened to it 140 times but every time in excess of 140 that they listen to that song you continue to make money from that listener for that song?

of course it isn't an either/or question. choosing one does not preclude also choosing the other. 

and if the song you are offering isn't any good then being able to sell it is obviously the better deal: you get that $1 even if the buyer never listens to it or listens to it once, decides it isn't any good and deletes it and never listens to it again. but if the buyer really likes the song and listens to it more than 140 times, you've not made as much as money as you would have if the same person had chosen to listen to it via streaming.

and of course, this is also assuming that the person who purchases the song for download doesn't also listen to the song via streaming. 

Why are you so angry about this? Given time to mature, streaming will be a very viable option for artist. You are too quick to write off how easily music can spread via streaming. If you make good music, streaming listeners can very easily share with friends and boost the overall streaming, regardless of 140 per person.

Consider this: A song has 100 regular listeners after one month of being available. In that month, those regular listeners streamed it a total of 1500 times (15 songs/month/person, very reasonable if not low). Now, assume that from those hundred listeners, 50 new listeners are added every month with the same rate of streams for each (also reasonable, assuming half the listeners have a friend that likes similar music). This will continue in similar fashion for each user every month. Let's see what the streams per month are at in the future.

1 month later: They have 2250 streams/month and 150 listeners with a total of 3750 streams.

2 months later: They have 3375 streams/month and 225 listeners with a total of 7125 streams. They have already doubled streams per month and listener base.

6 months later: 17,086 streams/month and 11,390 listeners with 48,258 total streams.

1 year after their initial month: They have had a total of 580,859 streams from 12,975 listeners and a rate of 194,620 streams/month.

You may argue that half of all listeners convincing a friend to be a regular listener sounds extreme, but that is the entire point. If you make good art, that should't be hard. Particularly with the ease of streaming along with its simple linkage with social media

The whole point is that streaming is in its infancy, and given time, the benefits to the artist will only grow (and in a quasi exponential fashion at that). This will be a major driver of the music industry, like it or not. And as has been pointed out several times, this is an excellent distribution system for any independent artist.

If that isn't a perscient argument for the advantage of streaming for the average music creator, then you will never be convinced, so you should not argue with others.

(You repeated your post so I'll repeat my reply):-

Nice try but in practice it does not work like that.

We run our own label - we can confirm the numbers in the original post - and we have heard numerous reports from other labels - and I've heard no-one proclaiming the kind of exponential increase in streaming listenership you indicate.

If we were seeing that kind of growth we'd be screaming hallelujah and shouting it from the rooftops.

What you have described is a figment of your imagination.

And in fact what you've described is rather like a pyramid scheme. Kinda fraudulent.

What we observe is a rather flat amount of streaming, roughly corresponding to peoples listening behaviour. A steady rise but no more than the general rise in streaming usership. (we get thousands of streams per month by the way).

So people are listening to tracks on streaming in roughly the same amount as they did on CDs or downloads - but for much cheaper. And this is the scary thing, because if streaming replaces paid downloads and CDs our income is going to dive.

I think the only thing that drives streaming is that it's much cheaper than buying downloads or CDs for the consumer. That's all. And it's kinda less technically risky that messing around with torrents, so more convenient.

What's wrong with buying downloads?

What makes me angry is the utter lack of sympathy from streaming evangeslists such as you for musicians and artist who feel they will suffer economically from this development. Why are you so hard hearted about it?

Just to put it out there: I repeated because I didn't like how small things were getting, not to be obnoxious. Not that you said I was, but just to clarify.

Also, for clarification: I don't stream music. If it is a small label, I pay for a physical album. I like high quality music. If it's a large label, I know the artist is seeing that money and probably doesn't need it, so I steal it. (By large, I mean big four, so no one should argue about stealing from crooks)

If you are seeing more or less constant streaming rate, then you should communicate with your listener base or use other means to boost listenership. That indicates to me that your brand isn't expanding, so you shouldn't expect more revenue from anywhere, be it streaming or downloads. You are probably already locked into your label's potential, unless you start to manage your business differently. That was one of my 'axioms' that you failed to address.

If you address streaming like you do album sales, then you are not grasping the ethos of the streaming business model. You need to think of it differently and adjust your business model accordingly.

"If you are seeing more or less constant streaming rate, then you should communicate with your listener base or use other means to boost listenership."

Not only are you asking us turkeys to vote for Christmas but you are asking us to invest in it as well!

You will notive that even Cooking Vinyl, one of whose people posted a spirited defence of Spotify on another thread, do not have any Spotify links on their website - only buy links.

I wonder why?

Your naive extrapolation of exponential listener growth with streaming is not borne out by any data we have seen.

Are you one of those who bought facebook shares for $45 on day 1?

The only credible business model we see from Spotify is "all you can eat - cheaper - more convenient" - with the accent on "cheaper".

Spotify offers our music to consumers in a radically cheaper way - so if it takes off (ie achieves "scale") it will inevitatbly erode our income from paid downloads and CDs - inevitably.

Currently our ratio of sales income to streaming is at least 20:1 and we have every interest in keeping it that way.

Pointing people at Spotify is a form of slow business suicide.

Nice one Steveh. Yeah I remember the Cooking Vinyl case.

Maybe I can challenge you to run a little experiment? Check the visitor stats of your site and the conversion rate to a sale.

Add links to let's say Spotify for a week or two. Then maybe a large percentage of visitors (with access to Spotify) will stream one or a few tracks. (30 seconds of listening per track is enough ).

Check the stats again and let's see what happens to the conversion to sales and the income from streams.

Hey dude,

I also run an indie label. We don't make much off streaming either. However, I do believe in it's viability in the long term.

The most obvious reason for this perspective is that most people recognise that sooner or later storage will be mostly cloud based. When this happens, the cost of growing and storing your music library will likely be more than the cost of streaming it.

Next to that, it's only a matter of time before Spotify integrates with more devices, becomes more accessible, and gets a better api. As soon as they do, it will become more apparent to the already curious consumer that it's easier and more cost effective to stream from Spotify's catalog than it is to purchase and set up your own. Many people, such as myself, even stream songs they've already downloaded just because it's so much easier than syncing mp3's between devices.

Take even a very basic streaming service like Pandora for example: they don't even offer on-demand streaming, but they already stream more hours of music per month than youtube streams hours of video.

The consumer has spoken. They are over the mp3. They want to stream.

So here is what we're gonna have to do. We're gonna have to talk to ASCAP / BMI / Etc and push for new laws governing minimums on streams. We're gonna need to build stronger relationships with our distributors and streaming service reps, etc.

If you try to fight what the consumer obviously wants, you're gonna be swimming against the stream (no pun intended), and you're going to go under. 

Recorded music is so cheap and plentiful, who really takes it seriously any more?  If gold were as easily made available for so little money, it would become devalued and no one would prize it. When it's free, there is no commitment, no buy-in. 

A performer's preference is that the supply of recorded music be  limited.  If fewer performers were produced, standards would be higher, output constrained, music more highly valued and really listened to.

People have music going on all day long, but I don't believe they do a lot of close or intelligent listening. And much of the music, across the genre spectrum, is poor, in composition and performance.  It's like everyone is eating crappy fast food and saying how great it is.

Limit the supply and the price will go up for the better stuff.  That is the nut the industry must crack.

And so what?

Spotify payout is low, that's a fact.

But if your music wasn't on Spotify, you'd miss some revenue.

So what's the point of complaining?

PS: I'm a musician, producer and also working for the music industry

Good thing I let certain playlists play all night, over and over. 

Wonder what this represents in percent of revenue for the Streaming company, or what other expenses they have?

This article does not withstand any type of basic arithmetical or empirical analysis. 

My label is half the size of the purported, anonymous one.

This is a month old post that has just been picked up by DMN.

The streaming/download ratios are all over the map. Which ratio do we use to compute actual iTunes sales?

If we use the Rhapsody ratio, we come up with circa. 1000 iTunes downloads, which seems low for a 6 month period.

The Spotify ratio would give iTunes downloads of circa. 5000.

Without one outlier outselling album among my 43, my iTunes sales figure would roughly match up with this.  Otherwise, the implied iTunes sales figures are too low.

Now I have gone over my reported royalties for 2H2011 and royalties for Rhapsody, Zune, Napster and Spotify are all at the same miserable level, none of them achieving $250 in cumulative royalties over the period cited.  And Spotify lags Rhapsody in the U.S.A.!  

So I am crying foul.  The Spotify royalties cited here bear no relation to the other royalties quoted and would be indicative of a label of having a million selling title during the reporting period.

I now see where the original post employed poor editing.

Spotify: 798,783 = $4,277.39 = .005 = 140:1 iTunes Song Download

Should have the descriptor "Amount for" or similar added in this line item, otherwise the language indicates ratio for numbers of downloads not amount paid.

The third "=" sign is inappropriate.  "=" does not mean "represents".

So, what's newsworthy about 70 cents per iTunes single download?  Without knowledge of this label's actual iTunes unit sales, where's the meaningful correlation?

my distaste for Spotify is justified.

#crooks

Wow, this is shitty. 

Forget about the money for a moment.

With Spotify, according to the figures here, the number of plays was 798,783. That's a lot.

With Zune this label gets 15,159 plays.

This means Spotify allows them to get heard 52 times more than Zune.

Without Spotify they'd certainly be invisible to the digital music market.

Spotify gives exposure to a wide audience and is a good tool for promoting your music. That's it.

Looking at it as a revenue stream is a big mistake I think.

Forgive me if this question has been asked before, too many comments to read them all, but to me this comparison is wrong, hopefully somebody can explain to me if I see this wrong.

When I buy a song on iTunes I pay $1. Once. And get to listen to it as often as I want. The artist makes $1 from me for this specific song once.

When I listen to that same song on Spotify, I pay $0,005 for that song. Every time again. So I need to listen to that song 140 times to make sure that artists makes the same amount of money from me for that one song, is that correct?

Because that's the part I miss in the article, is that I pay for consumption with Spotify, not ownership. 

And previously I spent a lot of $1's on songs I would rarely or never listen to (OK, maybe once), but now I pay for every song that I listen to.

And I'm not an artist, so don't take this the wrong way if this comes across wrong, but I have news for every artist out there: This is what the new economy looks like. Consumers will start paying for consumption again, not ownership and that can make a big difference.

It's tough compared to what it used to be and it needs to be taken serious enough to assure you maintain the right compensation, but it's not going to go away, on the contrary. 

I personally can tell you that it is still better then what we had a few years ago, which was illegal and free ownership of music and that was even worse for artists. Back then you weren't making any money from me.

Good luck in getting fair payment, just want to advice you that it seems in vain to fight the system. The question is how you can get a fair payment with the new system.

No and no to your first assumptions.

As an end-user (as we call it) you pay 0,99 cts for an iTunes download.

After tax deductions, transaction fees, iTunes'share, mechanical royalties...etc, the record label (not the artist) receives around 70% of these 0,99, so around 0,68 cts.

The artist will then get a fraction of this revenue, depending on the situation (signed under a major record label, signed with an indie label, distributed via a digital distributor...etc).

It varies from 8cts to the full 68 cts...

Spotify: same principle, the 0,005 are what Spotify pay to the content owner (major, indie, distributor...).

Then a part of these 0,005 are paid back to the artist depending in his deal terms with his label or distributor...

I remember when streaming used an ad sales model and paid royalties fair and square.  They called it 'radio' back then.

I seriously do not get how streaming is any different from radio whatsoever.  At least at the 'legit' level.

Internet radio does pay artists royalties from ad revenue or subscriptions. That has not changed. But it certainly isn't fair to have Pandora paying 70% of their last quarter revenue in royalties. And the CRB wants to raise it, significantly. Pandora brings in a lot of revenue for the music industry and raising rates or keeping them where they are will break them.

Spotify, Rhapsody, Rdio all offer on-demand services. Fully-interactive services require different licensing. Radio services are not alllowed to let people select which tracks they want to hear specifically, and not in the order they want. So radio cannot be interactive. So therefore radio licensing is different.

I am not going to lie, I was enjoying following this debate but I have now skipped to the bottom of the page, I would say around the mid-debate point to leave a comment.

So apologies if the point has already been made.

Whilst trying to adapt to a longer tail (well, it's still not really that long with a mighty share of all streams across Spotify consumed by the top ten artists of the Billboard 100 at any given time anyway), high volume micro payment work is incredibly alarming I will say this.

For years I have moaned at some very close friends who claimed to love music but were serial torrent abusers. Acquiring thousands of tracks for free, never paying for music, occasionally dipping into their pockets for a gig and the odd T-Shirt here and there. Now a few of them pay for Spotify and they love it, simply because they don't see it as that much of a squeeze on their wallet. It's easy, portable (they have the full £10 a month package, yeh I'm in the UK) and they were getting a bit fed up of worrying about computer security in the torrent world.

So my music fanatics friends who live physical still buy records, although not as many as they used at these times and some of my pirate friends, who paid for nothing, now pay for Spotify. IMO the oblique nature of Spotify is atrocious and cannot continue, but they have managed to convert some who years ago decided I am never paying for music ever again, to pay. Whilst the very small niche world of the fanatic continues to do what they always have, pay. That has to stand for something right?

A service for the two album purchased a year as presents (if that), 'I have learned the power of the internet and its power is free content', every man is arguably, really what the industry needs. Because if you take your content off services, chances are he still won't buy it anyway, because he doesn't have to. Incredibly sad, but true.

Has anybody considered a streaming service, by and for the artists themselves?

Seed money starts the service, then artists become the one-and-only "shareholders"

If any labels are involved, then the artists THEMSELVES (and NOT the streaming service) are responsible for making sure their labels receive proportional representation -- through a legal notice/label registration made with the service, artist's responsibility.

Then outside of actual operating expenses, 100% of weekly/monthly revenues could be shared proportionally among ALL of the artists whose work was streamed.

Is that just too simple for artists to understand, or what? LETS GET ON THIS!!

Ok, let's get this straight.  Streaming is not Downloading!!!!!!!!!  Comparing the two in simple terms of a per stream to a per download is plain moronic.  How much would you pay to listen to a song once.

Download = permanent sale of song.

Stream = 1 listen of a song.

To accurately compare pricing, you should also compare sales and what the artist actually gets from an iTunes download.  If the artist is signed to a label (most artists) they don't get anywhere near your holy $.70.  It's more like $.091 (statutory mechanical rate)+artist royalties (usually unrecouped, so $0).

So please stop saying that iTunes pays out $.70 to artists.  It doesn't.  By that logic, the $.0005 from spotify is also inacurate because you'd have to give the total received by the label to compare it to the total received by the label from iTunes ($.70).  It's also a stream, not a download and shouldn't be worth nearly as much as you don't own the stream in perpetuity as you would a download.

"please stop saying that iTunes pays out $.70 to artists"

Who said that?

This is what iTunes pays to the content owner/provider.

It can be a record label, a digital distributor OR in some extremely rare circumstances, an artist (if you meet the conditions from Apple: at least 20 products in your catalogue; ability to create UPCs and ISRCs; using a Mac running the "iTunes producer" software; having a U.S tax ID...etc, everything is here: https://itunesconnect.apple.com/WebObjects/iTunesConnect.woa/wo/0.0.0.9.7.3.1.1)

Good luck,

www.lostindigitalmusic.com

or go to a service like cd baby, pay once and they do it all for you, easy-peasy.  super easy to get on itunes, etc.

having said that, the micro-cents from streaming are eating into what was the cents from itunes. hard to see two or three hundred plays and receive pennies.

I know what you mean, but dude, to an IT guy who knows exactly what's happening on a network... streaming is downloading!

You may ignore that technical reality or invent a new way of explaining your point.

Amazing article if you are in the biz.  And the conversation is just as enlightening.

Is music streaming about revenue per play or _total_ revenue? I'd say it's about total revenue.

Je dois écouter 140x un titre sur Spotify pour rapporter autant qu'un achat iTunes. Semble logique.

Spotify is ronduit schandalig...

Spotify is ronduit schandalig...

So if Spotify gives the label $0.005 per song and the labels take ~70% that would mean the artist get $0.0015 per play.

No...

In September, Spotify was giving 0,0047€ to the Label or Digital distributor for one stream.

Depending on the deal terms btw artist and label/distributor, artist can get from 100% of this amount to...0% sometimes!

www.lostindigitalmusic.com

Admit it Daniel Ek, Spotify is a digital radio on demand. As such it has value, but don't kid us that you pay artists.

everybody can't be the beatles

Perhaps a better comparison would be the number of users who stream the tracks controlled by the label, rather than number of plays.  I'm assuming an iTunes Song Download is going to be listened to more than once. 

There's no question streaming will pay less than permanent downloads.  The only thing keeping cannibalization from taking place is the notion that music still can be "owned" by users, which is really an illusion once you take physical products like CDs out of the equation.  As long as you can listen to a song anytime you want to, whether you're at home, in the car, out jogging, etc.  the utility of access vs. ownership becomes indistinguishable, and anyone tech savvy and reasonably good at math would take the cheaper subscription option over $0.99 downloads. 

Piracy is still an option for people.  Illegality and immorality are irrelevant. Without effective enforcement, people will do what they can get away with.  Streaming is an attempt to compete with piracy through convenience and a cheap price.  Without streaming services, anyone tech savvy and good at math will take pirated copies over the $0.99 downloads. 

While I don't think the music industry will ever go back to the way it was before Napster came out, I do think there's room for improvement.  Piracy will never go away, but things can be done to make it less convenient.  The ISP's are supposedly coming out with an "elevated response" plan next month, which may help with that.  Once that's in place, labels can window when new content is made available through streaming services.  The idea is to make the users believe that paying $10/month for a streaming service, plus paying $0.99 for certain premium tracks, is a more convenient option than pirating everything.  And that may be as good as it's going to get.

Do not sacrifice your music to “the Cloud.”  You are essentially giving away your music hoping for exposure that WILL NOT lead to unit sales unless you have major support. Once your music is in the cloud anyone can hear it anytime anywhere for a subscription fee. Why should they buy your track or album? That’s where your income is at. Unit sales.  I suggest releasing a mix that incorporates a DJ voice introducing the track during the intro and cutting the song short with another voiceover directing the listener to where they can buy and then hear the entire track.  But you are also dealing with a mindset of people living off their parents who have come to expect things for free.

Buckbaran.com

I've been following this thievery for quite awhile now and am sick of hearing how empowered us indie artists are when we're being robbed blind.

You're seriously going to complain about earning almost six thousand dollars over the course of six months from a revenue stream that was virtually non-existent six years ago when you have complete control of distribution of your product over those channels.

If you don't like the money that you're getting from these services, pull your product off of them... it couldn't be more simple.

LJ,

Let me deal with your statement :

You're seriously going to complain about earning almost six thousand dollars over the course of six months from a revenue stream that was virtually non-existent six years ago

Very few labels are seeing this level of revenue from Spotify.  Our iTunes revenues are in 4 figures monthly but we have not come close to making a hundred monthly from Spotify worldwide.

The key factor why we're perturbed is that Spotify has cannibalized our sales.

We saw a direct correlation when Spotify went live last July in the USA.  At best, we gained 1 dollar of Spotify revenue for 9 lost dollars.  

For those who say we'll be getting a pension for life from Spotify, don't be so confident.  We're a deep catalog label and our sales (physical and digital) have continued at a meaningful level for 30 years.  What Spotify pays out in practice is not meaningful in a financial sense, unless you're buying a quart of milk. 

I have a direct account with iTunes.  They treat me essentially the same as a major and the majors don't like it.  After several years, I decided to see what the other services could do for me so I went with a digital aggregator to cover those extra bases that also provided a cost effective means of uploading the 90% of my catalog that was out of print.

We put our trust in these business partners.  You have to.  Once I opt in, I am going with their judgement as to the performance of a service like Spotify.  Some have bailed.  Mine hasn't ... yet.

For some to suggest here that we re-invent the wheel by setting up our streaming service or enable paid downloads from our websites is plainly out of touch with music business reality.

thank you. this is exactly the kind of real world info everyone needs to know.

we also experienced significant revenue drops as streaming has been introduced (though smaller, going from three figures a month to two)

i'm so tired of most of the posts here by uninformed people who are not even attempting to be professional musicians and/or who try to justify their own music consumption with illogical arguments and bad predictions. 

What's interesting is that Spotify totally disrupts the business of all of the bands out on the fringe. There are a lot of bands who's music I've bought that I don't listen to very much, i.e. I've prepaid for 140 plays but probably won't listen to all 140 plays. So, from that perspective, these bands were overpaid. And now that payment figures for those fringe bands are becoming more accurate based on number of plays, those bands are only going to get what's coming to them. And those bands should be upset at the advent of Spotify. Those bands are losing revenue (deserved or not). If someone who bought your record was only going to listen to your record one time, you're only going to get five cents. And you've effectively lost 65 cents. And those bands might not be able to make it in the new industry of recorded music. This is, in effect, another step past the cherry picking that iTunes introduced, in terms of income accurately reflecting popularity. And these are, generally, the people who are & should be raising a ruckus. (Even if it's a battle they're destined to lose.)

But the flip side is that bands with devoted fans who listen to their songs more than 140 times are going to make more than 99 cents per song per fan.

Whether $.005 per stream is the right price isn't the issue here. The real source of the dissent is that bands are no longer going to get paid for unused plays, & that shrinks the number of bands who can make a living playing music. (Just like how iTunes cherry-picking shrunk the number of songwriters who could make a living writing music. You have to actually write the hit songs now. And that's not necessarily a bad thing.)

The trade off is that I discover a lot of music on Spotify & maybe it makes it easier for the truly good bands to get to a place where they can make a living.

Whether the average song downloaded from iTunes is listened to 140 times or 70 times or 200 times or whatever, over the course of the life of the song (1 year? an album cycle? 5 years? 30 years?), that study needs to be done. And we can't really make any quantitative analyses until we have that information. Bands complaining about "waaaah I only got five dollars waaaah" doesn't really mean anything.

I totally agree that we need some proper data on how many times people on average listen to their favourite songs. It's not hard for people to look into iTunes or WMP and see the play count, so it really shouldn't be too difficult for market research companies to gather.

If the figures were high - say, around 200 plays for favourite songs - Spotify would then have some excellent ammunition against detractors. Would they fund such research? I suspect not - because I strongly suspect (based on data from my own listening habits) that the figures are much, much lower. And if it were shown that many purchased songs were only played 10 times or less, Spotify would be seen to be a much less attractive proposition for artists.

I estimate the Grand Average of plays per track - ranging between tracks with only one play and tracks with very many plays - to be around 10.

And that could be generous.

Also one has to ask:- how many times does one need to listen to a great piece of recorded music?

Sometimes if some music is great or moving one does not need to listen to it over and over again - it kinda devalues the experience.

Or a certain piece of music or album fits a certain mood or situation.

Again one can ask:- how many times does one need to read a great book - or watch a great movie?

That's ultimately what I hate about this "music is like water" rubbish - much quoted by Daniel Ek (CEO of Spotify). It devalues music. Maybe that is the ultimate aim of these tech companies:- exploit and devalue music so people pay for our technology...

That's a good point. There are certainly many albums that I love that I nonetheless wouldn't want to play very often - the darker stuff, for example. The songs you can put on in the background on repeat while you're working are not necessarily what you want to listen to on those rare occasions when you can devote your full attention. These kinds of thoughtful artists may lose out through streaming.

A pessimistic possibility: we'll know when there truly is money in streaming when we see an influx of comic, novelty music trying to go viral.

James, I guess the answer you are looking for can be found in the Last.fm stats.

But the average listen to favourite songs is not telling the full story. Streaming makes users pay for every single listen even when it's not you favourite song and even when they just listen for 30+ seconds.

Well it has to be an average of how many times the average consumer listens to an average digitally purchased song... that's the only way we find the value of a play to ther consumer. And last.fm isn't going to tell you that because it doesn't discriminate between purchased or otherwise acquired music.

Seems like a lot of people are missing the point. 140:1 spotify to itunes... how many of those 140 listeners would actually buy it? If its a poor revenue system for artists right now, then work to put together a better model. Selling albums is dead due to the inconvinience and cost, selling songs on itunes suffers from the AWFUL itunes interface, and the endless restrictions making it difficult to put the music on your devices, or use multiple computers.

Streaming plain and simple is a system that will reach many potential customers that never would have found your music before, and reduces material waste. I think eventually it will be a lucrative option for artists, and those resisting are just afraid of change.

The real ones who stand to lose by digital advancement and file sharing are all the middle-men and the record company CEO's that will have to sell their solid gold toilets now that great musicians can reach listeners without selling their souls.

when the haystack is enormous, it all comes down to who has the bucks for advertisting. so great musicians/songwriters without major backing (label, whatever) will never make more than beer money from streaming.

For every artist complaining about how the Internet Isn't Fair, just remember that before the internet, you didn't have a stage of potentially hundreds of millions of people and the guy who said up your streams instead of sitting on your thumbs complaining how you're not getting paid enough is completely right. 

Because of services like Spotify, I don't download music anymore.

Because of services like Spotify, I'm no longer sharing those downloaded tracks with other people.

Because of services like Spotify, i'm hearing bands I had never heard before (some of which I have already managed to go to a show for). 

If services like Spotify are your only source of revenue, You're Doing It Wrong. Start your own website, set up your own pay to download service for your music and merchandise, and start promoting. 

I don't get why artists are so god damned entitled. Bands that make millions of dollars tend to be the ones that capture a large amount of listeners. If you're Green Day and getting 5 million listens on Spotify a month, that's a cool 25 grand from one of the worst sources of potential revenue outside of having your tracks straight up stolen. 

Why not gather together and start the CD Baby of streaming services? With this connected world, your potential audience is only going to get larger and larger as more people learn how to use computers. 

Please post here when there is a band that made it big because of streaming. 

I don't know of any artists who feel entitled. They all have websites, and work Facebook, Twitter, Myspace, Youtube, etc. etc. etc all the time.

Why not, when you hear a song on spotify you like and want to hear more of, go buy it for ninety-nine cents? Oh, because you do that four times, and you can't have your daily latte. (And you're only streaming that latte, not owning it.)

Justin Bieber got rich cause he was discovered on youtube.

You proudly admit that until Spotify came along you illegally downloaded and uploaded music - and then you criticize artists for being entitled? Unbelievable.

Yes, it would be great if only the pirates used Spotify and the honest people continued buying downloads. Streaming would then be just an additional revenue stream. But that scenario is never going to happen.

And CDBaby-for-streaming? How many people do you think are going to pay a monthly subscription to stream unsigned bands?

Many commenters (and the original article) are comparing streaming to itunes or to selling CDs and whatnot. What I don't think many people realize is that musicians hardly make any money directly from these sources. Record labels take a huge percent (an average of 90%) of the money from CD sales and itunes sales (and Apple takes a good chunk from their sales, too). And as we saw, streaming services pay very little for a song.

The biggest goal of all of these sales is not to directly make money, but to get FANS. Fanbases are what brings in the money, because fans go to concerts, which generate the most of a band's profit. 

So, in comparison to selling CDs and itunes, streaming is probably the best medium for bands, because consumers are much more likely to discover music on Spotify or Rhapsody (or Pandara especially, which is kind of in its own category) than they are on itunes or at a record store.

Fans do not bring in money. Fans blow air at you. People who spend money bring in money.

Many, many bands don't make money touring. People only have so much money, and when everybody has to tour to make money, the entertainment dollar is gone quickly . And what if a band never tours in your town? What's easier to do - spend 10 bucks on 10 bands albums, or go see one concert?

Record labels take a huge percent (an average of 90%) of the money from CD sales and itunes sales (and Apple takes a good chunk from their sales, too)

Feel clever, au fait with the music business, huh? 

Those (major) record labels front load royalties by paying huge advances.  They were also saddled with huge physical and employee overhead as they entered the digital age. Their DNA has always been to minimize back end royalties.  Ever since Darlene Love was paid $10,000 by Phil Spector for a one take session, artists have known this.  She also screamed "Rip Off", decades later. 

As a non major player, since the year 2000, it is impossible to make money from physical sales, no matter the gross profit margins.  So we got out of physical entirely, only licensing to those idealistic labels soldiering on.  We consider ourselves fortunate to receive anything from the $20 paid at retail.

In paying out 70% of gross US retail receipts, iTunes trod on a lot of toes in the music business.  No label - not even Buena Vista/Disney - ever received such a large piece of the pie, not after the retailer, the distributor (sometimes vertically integrated with a major but massive overhead) and one-stop took their cuts.

I had a terrific distribution deal with Warners but I never gave up digital.  Once iTunes revenues (not unit sales) surpassed Warner's, there was no putting the genie back in that bottle.

Someone else perceptively mentioned how "indie" labels are now squeezed on both sides, by the majors and the artists making their own CD Baby type deals.  It's an old story, really, successful groups have been setting up their own labels since the late 1970's.  What killed our compact disc business was the merch table, not Napster.  

We aim to pay out 50% of our gross receipts in royalties.  We have been at the 30% mark the last 2 years.
 

So one thing that hasn't been highlighted as much as I think it should, is that with streaming services you don't have to sell to as many listeners to (potentially) make the same amount of money.  As many others have said there are plenty of people out there (I'm one of them) that don't typically pay for music (If I really like a band I will buy their album from Amazon - especially if it's $5.00 or less)- but you do get paid when I listen to you on Spotify.  Also I listen to stuff on Spotify that I would never have listened to otherwise.

For example, while I'm at work all of the music I listen to gets scrobbled to Last.FM and over the last 3 years my top scrobbled song from Last.FM has 88 listens (though there were many missed scrobbles).  Let's say over the next 3 years I listen to Spotify almost exclusively.  Whatever my most listened to song is - it will get at least 90 listens - so that means we are still short 50 listens.  That can (especially as these services grow in popularity) easily be made up by people who would have never purchased it listening to it maybe 2 or 3 times each.  That doesn't even take into account that person that never would have bought it, but falls in love with it and listens to it 40 or 50 times.

I'm with the group that says the sky is not falling, but then I have no stakes in it, but then you are getting $.005 more per listen from me than you were a year ago...

i'll take your 70 cents (or seven dollars) now, thanks, rather than maybe over the next 5 years as you listen to my track 90 times, or don't.

"I don't typically pay for music". But why not -you obviously enjoy it a lot. Don't you want your favorite artists to be able to write more music? 

"I don't typically pay for the food" but I eat it all the time.  Sound odd? Why?

wake up people, the only reason Spotify can exist is because the alternative is worse...

https://thetrichordist.wordpress.com/2012/06/05/artists-know-thy-enemy/

Just curious, how much do radio stations pay?

This is still a great way to connect to fans.

the bands you love literally make nothing from the music they record. It is imperative to see them live.

welcome to the future: where people rob you with an algorithm

This needs to change! Music doesn't make itself, these companies will have no business if they don't have any...

Ouch...that's painful...

RIP-OFF!

This is why I won't put my music on digital streaming services.

I can understand how changing to a pay-per-play model can be scary for some artists.  They're used to being able to fleece their audience for the price of a full album, without their audience being about to hear the album beforehand.  How many albums have I bought that I paid $10-15 for and listened to once or twice.  Too many to count.  In the streaming model, they actually have to make music that people want to listen to over and over.  It's discomfiting for a lot of artists who are afraid they aren't making very good music that fans will want to put on repeat.

But you have to get with the times, folks.  The artificial scarcity that the music industry relied upon is gone, and it isn't coming back...ever.

do you think labels/artists can guarentee a hit? no, they have no idea, really; so every song on an album has got to be good. 

as well, do you think an album with a few hits sell better than one with just one? of course it does. do you think Adele (or Gaga) keeps selling with just one hit?

do you know a single artist who actually thinks, i'm gonna write a crap song?

how many albums have you bought, and tired of the 'hit' quickly, but ended up loving the rest the most?

sounds like another justification for not buying music you're listening to. 

I doubt anyone sets out to write a crap song, but many people do, and the market will take care of those now that we have a real-time feedback loop.  People who consistently write songs that people don't like won't make any money, as it should be.

I'm not justifying anything.  Whether an artist gets paid or not really isn't my problem as a listener, as long as I'm on the right side of the copyright law.  If the artist made a bad deal, that's on them, not me.

always fun to hear illogical ideas:

"people who write songs that people don't like won't make any money".

oh, i see. the way to success so far then has always been to write songs people DON'T like.  

real-time feedback loop prior to the internet: turn off the radio. don't buy that album in the store.

hey, slavery was legal too. everybody was just doin what the law said. 

I really hope you're not comparing slavery to piracy. 

This is what Spotify and others pay the record companies.  Imagine how little the artists get!

(4277.39 [revenue] * 0.15 [fairly common royalty rate]) / 87 [albums]

$7.37 per album

Hey. It pays for a like two Happy Meals at McDonalds. That should count for something.

Ouch. Musicians are getting F'd in the A.

THESE ARE PATHETIC! LOL

Just Curious, how must would you get for a radio play per song?

Wow. Just read every comment.  Now that's a debate/education/thorough vetting.

/paul

this is a serious joke. Why do we bother?

And Here's What Spotify, Rhapsody & Zune Are Paying Us...

Geezus, seriously!?

Dang. Shit just got real.

SUPPORT INDEPENDENT ARTISTS! Buy music y'all.

Just cancelled my Spotify subscription. Why? Cos they pay musicians one two hundredth of a penny per play, that's why