by Niko Malek, News Analyst.
As the debate rages on about the efficacy of Spotify's business model (particularly in comparison to iTunes), I came upon an interesting survey regarding iTunes libraries that has garnered hundreds of responses on Tumblr. One of the questions the survey poses is,
Many users responded with not only the titles of their top tracks, but also the actual play counts. From this data, it seems that an iTunes top song rarely gets played over 150 times. But in the spirit of optimism, let's say the average top track has 250 plays (though there's debate on this very site about some who claim to have 1,000+ listens).
Obviously, these aren't definitive statistics, but I think a bit of intuitive guestimating is safe to use in this case. Now here comes the meat: I wanted to compare the payouts of a top-played song (250 play count) between iTunes and Spotify. According to Facebook, Spotify has hit 20 million users, though Spotify itself is sticking with its most recent statistic of 10 million users, with 3 million of those being paid subscribers.
Again, let's be optimistic and go with Facebook's numbers. Now, let's assume that 80 percent of paying subsribers are Premium users and 20 percent are Unlimited (which is very unlikely). That means, at the rates reported by UK-based artist distributor Ditto Music...
Unpaid (17,000,000) = $0.0051 per song
Unlimited (600,000) = $0.0078 per song
Premium (2,400,000) = $0.0153 per song
(source: Ditto Music)
With the top song being played 250 times on average, payouts are as follows:
Factoring in the distribution of subscription types...
(.85)(1.275) + (.15)(.2)(1.95) + (.15)(.8)(3.825) =
So it seems that the vast majority of songs earn more if they're purchased from iTunes than streamed from Spotify, with the exception of top-played tracks. Not promising, especially considering the actual payout figure that's been floating around is closer to $0.005/stream.
In Spotify's defense, one might argue that a growing user base and ratio of paid to free subscribers will eventually tilt this balance. But this quick calculation shows they still have a long, long way to go.
Simon Monday, July 23, 2012
I have for a fact listened to songs over and close to 1000X.
Visitor Monday, July 23, 2012
I have for a troll listened to troll over and close to 1000trolled.
Myles na Gopaleen Tuesday, July 24, 2012
If you are saying you have listened to one song over a 1000x, then you need to get a life.
@mattadownes Monday, July 23, 2012
I'm not sure this is entirely accurate as I've had to rebuild my itunes collection a couple times due to corruption, but since 2006 (when I got an ipod and converted to itunesish use) I only have ~160 songs that I've listend to 20+ times.
Jeff Robinson Monday, July 23, 2012
There has been some discussion up here about how much money trickles back to bands from the labels that set this stuff. I have recently learned that at least one of the major labels doesn't ask for payment from Spotify or Pandora, but rather equity in the company they license their catalog to. I am now trying to fathom how the major label retroactively re-writes or re-negotiates each individual deal with each band signed as these deals present themselves. In other words, the major label rolls the dice hoping to strike it rich- perhaps not expecting to get paid EVER and almost ensuring with the myriad services coming online, that the major label act will earn close to nothing for the use of their music online. Indie bands will get paid, although a pittance and will NEVER have the opportunity to earn from equity in the company. Pretty shocking.
Central Scrutinizer Tuesday, July 24, 2012
"how the major label retroactively re-writes or re-negotiates each individual deal with each band signed"
Major labels do it they way they always have, they don't pay until an old catalog artist who is scraping by decides to hire an accountant. Then after verification that they are getting screwed and the contract they signed is so full of loopholes and vague language that they must then hire a lawyer to fight the labels lawyers.
Then the artist's will and finances will be drained by the lawsuit and they wind up as another story on DMN
Visitor Tuesday, July 24, 2012
The only way things like Spotify are going to work out for artists (and for a major labels as well) is if they can get really significant adoption rates comparable to Facebook.
Even then, most artists won't make that much money, because there's too much supply chasing limited demand for most music that gets released (i.e, most songs never get listened to more than 15 times by any given listener and most listeners probably won't ever listen to most of the available catalog, because it's so huge.
But if the adoption rates do rise high enough, at least there will be more money available for the few tracks that succeed in breaking through in a major way.
music is a process Tuesday, July 24, 2012
I don't listen to songs. I listen to albums. The way the artists intended the material to be listened to.
Visitor Tuesday, July 24, 2012
I don't buy singles, I buy ALBUMS. The way the labels wants me to buy them.
TheFuturist Tuesday, July 24, 2012
Album listener here as well and always will be as long as they continue to be made.
Corey Tate - www.spacelab.tv Tuesday, July 24, 2012
What's the math on an average-priced CD for comparison? How much does the old world value of a CD cost, where we had to pay for all of our listens upfront, rather than one at a time? I'll bet we're paying for way more than we actually listened to?
Paradox Tuesday, July 24, 2012
Comparing Apple to Oranges
You're assuming that the person who "stream" would also buy the MP3 if the "stream" option is not available.
HansH Tuesday, July 24, 2012
This sure is comparing apples and oranges. The big difference is that with streaming you can listen without paying upfront. There is a way bigger audience for that.
If have checked the Ditto rates and I can acknowledge that they are accurate. Wanna see for yourself? Here is a genuine Ditto statement: https://docs.google.com/spreadsheet/ccc?key=0AvsnOsOPV5nCdHczTzNBTkYtdk1hY2VzajlhOEZvVmc
I believe that the high exchange rate of the British Pound is an important factor here. Could be a great tip if you a still looking for an aggregator.
Mike B Tuesday, July 24, 2012
This whole discussion is ridiculous... It assumes that the only alternatives are Spotify or iTunes and ignores the fact that all songs are available for free listening on radio and free downloading from everywhere across the web. It also assumes that Spotify cannibalizes iTunes downloads and is not additive. The fact is free, Spotify and iTunes are among a myriad of alternatives that also include Pandora, Sirius and Slacker, etc. Each has it's own economic model and payouts to rights holders vary. None are mutually exclusive and levels of cannibalization are hard to measure. The good news is that someone is still willing to pay and having many alternatives that fit different user needs/demands is a great way to vacuum up whatever discretionary dollars are available. Debating which model is more fair to the artists is not going to change the fact that all of these alternatives exist and many of them are legit and at least provide some revenue and it is obvious that trying to constrain the content to one model (i.e., iTunes) will only serve to reduce the size of the overall revenue pie.
R. Bobby Tuesday, July 24, 2012
If you ain't first, you're last!
dubist12 Tuesday, July 24, 2012
An accurate rate comparison should be; How much per listener per song per spin does BMI/ASCAP/SESAC pay in comparison to the streaming services. It could be approximated taking the annual license fees paid to the PROs (by broadcast radio), dividing it by the number of songs played per year on that srtation divided by the average number of listeners. Comparing Streaming to purchasing in iTunes is like comparing CD purchases to radio spins in the old days. They are indeed apples and oranges. It woule be very informative if Dig Music News would do this research and present it in this forum. We may find out that Spotify's low rates are actaully not that bad compared to a radio spin. Maybe not, but it would be nice to know.
David Touve Thursday, July 26, 2012
Regarding ASCAP/BMI/SESAC payouts compared to Spotify...
Voila. I worked on this last year, using pretty much the same design you suggest
@robsavitzky Tuesday, July 24, 2012
More research needed.
@tampa_rick Tuesday, July 24, 2012
i-Tunes, The Facts
wow....$8.64 somebody pinch me.
@taylorwalderson Tuesday, July 24, 2012
@markez Tuesday, July 24, 2012
@jamplify Wednesday, July 25, 2012
250 times for a top-played track feels low.
David Touve Thursday, July 26, 2012
250 Sounds familiar...
I reckon we need more data on this one. And, folks who buy singles may have very different play count distributions than peopel who buy albums.