Follow Us

DMN on Feedburner
Connect with:
divider image

7 Streaming Winners, and 7 Streaming Losers…

If streaming is the future of music, is it a future that benefits you?

winnerslosers

letterwinners

1. Major Labels.

They are making hundreds of millions in upfront licensing payments from streaming services, drawing huge royalty percentages, and passing little to their artists.  That’s called a high-margin windfall.

2. Music Consumers.

Everything you want, anytime you want, with optional paywalls.  Music fans have never been happier, in the history of mankind.

3. Elite Spotify Executives & Board Members.

Guys like Daniel Ek, Sean Parker, and Martin Lorentzen will enjoy obscene wealth after their IPO.  Artists will not.

4. Goldman Sachs.

Goldman Sachs is a major Spotify investor that is guiding this company towards IPO.  When Spotify goes public, Goldman Sachs will mint hundreds of millions in profit, and they won’t have to pay royalties on that.

5. YouTube.

YouTube is already controlling this game, and driving the cost of streaming music access to $0.  They already dominate music consumption, and pay little for the privilege.  And when the streaming music sector collapses and consolidates, more traffic  (and advertising) comes YouTube’s way.

6. Pandora Executives.

Pandora may not survive long-term, but then again, neither do awesome parties!  Tim Westergren cashed out more than $15 million last year, and he’s just one.  They’ve already won this game.

7. Smart royalty management firms.

One iTunes download is relatively easy to track and process.  Hundreds of thousands of streams are not.  Which means that companies that can manage this massive deluge of data, realtime royalty management, and deliver reliable payments will secure business from companies that cannot.

 

letterlosers

1. Artists.

Outside of huge superstars, most artists have little choice but to play game.  Withhold from Spotify, and fans can’t find you.  Play along, and you get half-pennies in the mail.  That’s the future of music recordings for artists.

2. Apple.

The bigger YouTube, Spotify, Pandora, and every other streaming giant grows, the less influential iTunes becomes in music.  Sure, you’ll still play it on your iPhone, but Apple’s iDominance on the media software side is receding.

3. Indie Labels.

Indies like to play cheerleader for Spotify and streaming, but the reality is that they have little choice (see ‘artists’).  Indies will get disproportionately less royalties and percentages, from iTunes Radio or Spotify, and they will like it.

4. All the Other Streaming Services.

Beats has the influence and curatorial smarts, Deezer has more than $100 million to burn.  But this is a brutal game, even for them.  Part of the problem is that Spotify and YouTube are making extremely difficult to charge anything, and driving competitors into the ground.  Meanwhile, experts continue to warn that the entire space is completely unsustainable as a stand-alone, actual business.

5.  Publishers.

Major publishers are getting a tiny fraction of what labels receive from Pandora and other streaming giants.  And they have little choice in the matter, thanks to complicated licensing regulations that limit their leverage and ability to negotiate.  Which means, Pandora is playing their music, even though publishers don’t really want them too.

6. Producers and Engineers.

Credits disappeared from digital formats long ago.  Which means it’s also missing from the metadata.  Which means producers and engineers might get paid, but probably won’t.

7. The Pirate Bay.

Cry a river, but the stronger and more ubiquitous streaming grows, the less important downloading and torrenting becomes (at least for music).  Turns out Spotify was a lot more effective than suing dead grandmothers.

 

Image by Franco Folini, licensed under Creative Commons Attribution-ShareAlike 2.0 Generic license (CC BY-SA 2.0).

blue bar background graphic
Comments (21)
  1. Anaonymous

    Here’s pretty much the ONLY thing in this entire thing that matters:

    “Meanwhile, experts continue to warn that the entire space is completely unsustainable as a stand-alone business.”

    That is the reality. Both for these services, and for the artists – that will have no choice but to – rely on them.


    Reply
  2. Anonymous

    “YouTube is already controlling this game, and driving the cost of streaming music access to $0. They already dominate music consumption, and pay little for the privilege.”

    I feel like this is something everyone needs to acknowledge. Youtube & Pandora are the streaming services a majority of people use. Spotify is used by far, far fewer people… and pays out much, much more to rightsholders.


    Reply
  3. Lynch

    Apple isn’t losing at all. They still do quite well off digital downloads. And once those downloads take a big enough hit that it’s sink or swim, you better believe Apple will come out with a streaming service of their own. And with the brand name behind them, the consumers will flock to it immediately. They just aren’t in any rush.


    Reply
  4. matthew king kaufman

    Well put Paul!
    I didn’t know you had it in you.


    Reply
  5. A Cautious Contrarian

    I don’t know, Paul. You may be right (and I for one am convinced you’re correct about the nefarious licensing practices of the majors) but I was educated in this industry in the pre-digital economy and then it was widely agreed that the most lucrative success anyone could have was to write a hit song. The thought went, write a hit song that gets played (a lot) and you’ll be seeing checks (from percentages of pennies that add up quicker than you think) forever. While the performer/label side was deemed sexier and more fun, the smart business people were in publishing. It strikes me that the streaming digital model could emerge as the master/performer equivalent.

    Unscientifically, I’ll add that I listen to a lot of older music from artists who are no longer recording music and who I have already purchased all I was ever going to purchase. It strikes me that those artists are generating revenues from my listening on Pandora, on Spotify, and even on YouTube that they were otherwise never going to get from me. These models need to grow in scale a great deal, I know, for my hypothesis to become correct but I think it’s not unreasonable to look to a time when many artists can expect long-term significant revenues (similar to what their songwriter peers are familiar with) from their records that people love.

    To conclude, I’d ask, what is the suggested alternative? If somehow the streaming companies are killed do we really suspect fans will go back to buying downloads, cds, etc.? I applaud your continued attention to the problems of the streaming economy but I think we have to figure out a way to make it work and not simply damn it because it isn’t where we need it to be yet.


    Reply
    1. JB

      Well said!


      Reply
      1. TuneHunter

        “If somehow the streaming companies are killed do we really suspect fans will go back to buying downloads, cds, etc.?”
        No need to kill anyone, streamers have play the best staff they can, custom delivery, the best for you or the best for Joe, NO SUBSCRIPTION – just charge you for discovery.

        You love it, it’s not on your playlist, you want to live it again – YOU PAY – just 39 cents, easy to implement.


        Reply
        1. Nick

          Like lala was?


          Reply
    2. Emmett McAuliffe

      Guess what? Ownership becomes the only way to guarantee that you can have music long-term, after these “unsustainable” streaming services close their doors. Ownership is king… again. Who would’ve thought?


      Reply
    3. Emmett McAuliffe

      “To conclude, I’d ask, what is the suggested alternative? If somehow the streaming companies are killed do we really suspect fans will go back to buying downloads, cds, etc.? I applaud your continued attention to the problems of the streaming economy but I think we have to figure out a way to make it work and not simply damn it because it isn’t where we need it to be yet.”

      We believe we have “a way”. It’s called The Digital Content Exchange. If you want more info, see this deck:

      http://www.authorstream.com/Presentation/frystew-1158142-new-dce-content-owners-explan/


      Reply
  6. Capt. Colours

    YouTube will scrape, stream, and curate music already present on their platform. When this launches, it’s over for everyone else.

    Enjoy your week.


    Reply
  7. David

    Spotify’s ‘transparency’ statement claims that royalties are proportional to usage. Which means no preference for major labels. Has Paul decided he doesn’t believe Spotify?


    Reply
    1. Paul Resnikoff

      I’d be very suspect and cautious while reading those statements, David. Which royalties are they talking about exactly? Because, I didn’t see anything about massive upfront payments to major labels in Spotify’s ‘transparency’ disclosure. Or, the shares granted to major labels ahead of that IPO, which also has been denied.


      Reply
  8. Admiral Analbeads

    Oh Paul, Buzzfeed is calling- they said they want their irrelevant rehashed lists back.


    Reply
  9. Deke

    Well, since the labels ate it big time when the CD went the way of the dodo bird, they probably see this as payback. But I wouldn’t expect them to share that windfall anytime soon. Those mansions in Malibu and Montauk are expensive.


    Reply
  10. TuneHunter

    Agreed on all but labels being the winners.
    Yes, they have some cash flow, but it amounts to less than 10% of value of goods.
    They are alive, still drinking champagne, at the expense of artists under their umbrella – with no respect to property under the management they will go hungry shortly after initial IPO splash.

    Bit of honor and creativity strongly recommended!


    Reply
  11. HansH

    Add one winner: This Indie Artist made $200,000 from Spotify in one year.


    Reply
    1. TuneHunter

      Hans,
      Ron Pop is most likely personal friend of D.Ek, Spotify star created, to help a friend and to have brilliant propaganda case.
      $200K with 57,000,000 streams is a joke. If one tune is 3 minutes long he is getting 7 cents for one hour of air time!!!!


      Reply
    2. Paul Resnikoff

      Welcome back, Hans.


      Reply
  12. Willis

    Another winner/loser – shareholders in any of these companies.


    Reply
  13. Anonymous

    Who cares about artists — fans are the real losers.

    Companies can no longer afford to invest the kind of money in talent development and music production it takes to create sublime works of art.

    The results are visible all over the place. And this is just the beginning.


    Reply

Leave a Reply

Connect with:


× six = 54

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

  1. OUR SPONSORS

  2.  
  3. Most Heated!