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The Biggest Song on Spotify Makes Three Times as Much on iTunes…

This is the reason why windowing and delays will always be a problem for Spotify and every other streaming music service, as long as downloading is a viable format. This breakdown was presented recently by Kevin Watson at the International Music Summit (IMS) in Ibiza.

avicii1

aviici2

The full presentation is here.

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Comments (35)
  1. Me

    …and there are more than 3 times as many iTunes users as Spotify users. Therefore, if Spotify had at least 3 times as many subscribers they’d logically be close to being even.


    Reply
  2. Vail, CO

    So sad. EDM and younger fans don’t even download, yet it’s three times as much revenue.


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  3. Anonymous

    Yes, again:

    Streaming makes absolutely no sense for artists. It’s fair to say it took a while to wrap our heads around that fact but I think we get it now… :)


    Reply
  4. GGG

    ONLY 3 times? Um..if anything this is good news for streaming….since it shows it’s closing the rev gap. A track that costs .99 or probably 1.29 only makes 3 times as much as a stream that gets at most not even a penny. That’s supposed to defend DLs?


    Reply
    1. Paul Resnikoff

      From one perspective, this is closing the gap. But keep in mind that Avicii’s demo is less interested in iTunes downloading, and far more interested in streaming (just look at the graph). So, the amount of iTunes downloading is far, far lower, yet the revenues far, far higher. That’s the point this of this article.


      Reply
      1. GGG

        Right, but I think the REAL point is that “the amount of iTunes downloading is far, far lower”


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        1. el visitor'

          Ah no… the real point is getting paid and having a sustainable ecosystem. I don’t really care what services are at what volume of business – what I care about is paying my rent. So take streaming off the table and I can pay rent. Take Itunes off the table and I can’t. It’s that simple. And that’s the difference in perspective between pundits and working musicians.


          Reply
          1. GGG

            If paid downloads are only paying out 3 times as much as streaming, which is still fairly small, that’s one hell of a reason to start backing streaming. It shows that streaming rev is growing pretty substantially.

            Also, I’m not a pundit, I earn my money when, and only when, I make money for my bands. At the moment, I’m working with 6 acts, 4 of which are full-time musicians, i.e. have no other job. If your only rev stream in 2014 is iTunes, you need to start being more creative.


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              1. GGG

                This article doesn’t really prove much of anything. And it actually barely even talks about scaling except to say that 90M subs would generate $7B for the industry. And that’s bad why? The argument is just throwing out 30M as a ceiling, which is just for subs. Doesn’t take into account 30M paid subs probably means 100M+ users, which would generate a fuckton more money.

                Look, at the height of music sales, even an artist that sold 10M records had more than 10M people interested in listening to their music. Just like Beyonce sold 1M+ but has over 60M fans of Facebook. PLENTY of people have NEVER bought music for countless reasons. Now imagine if essentially all those people were monetized almost every time they listened to music. You’re telling me that wouldn’t be a good thing?


                Reply
    2. hippydog

      Well, lets look at the math :-)

      Normalized to $1 million
      Youtube: $1 mil = 333 mil listens
      Spotify: $1 mil = 139 mil listens
      downloads: $1mil = 1.5 mil downloads

      on youtube you need 222 listens to equal one download
      on spotify you need 93 listens to equal one download

      going by the graph above of course


      Reply
  5. Anonymous

    “The Biggest Song on Spotify Makes Three Times as Much on iTunes”

    And what do you think it would make if it wasn’t on Spotify?

    Five times as much? Ten? Twenty?


    Reply
    1. Paul Resnikoff

      That’s the question I think every major artist is asking themselves at this juncture. How much more will you make if it’s not available on Spotify?


      Reply
      1. Anonymous

        So again, if Youtube paid out a fair rate like Spotify, this song would be making more from streaming than downloads.


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      2. Anonymous

        If the song wasn’t on Spotify, those people would just go to Youtube to listen. The song would make less overall revenue.


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  6. cool

    This is VERY GOOD NEWS FOR STREAMING.

    Spotify revenue is about $1.4 billion a year worldwide.

    Itunes sell about $6 billion worth of downloads a year worldwide.

    $6 billion / $1.4 billion = 4.28 ratio between the two

    but the song actually earns more from Spotify:

    $5.2 million / $1.8 million = 2.89 ratio


    Reply
  7. Stu

    Yet Avicii is one of Spotify’s biggest supporters in the artist community: everything goes up there day-and-date with iTunes, and he’s spoken out about its role in his success several times. Would be interesting if other artists look at that success and see it as a reason to hold out from streaming…


    Reply
  8. There is+something

    And this study doesn’t tell us how many people bought the song after listening to it on YouTube or Spotify.


    Reply
  9. Spotify Shill

    The important thing to understand is that this song is now on millions of playlists. Therefore it will continue to earn money for years and years from Spotify. It is however, less likely to keep selling iTunes download in the years to come. So not only is Spotify catching up on short term revenue, but Itunes is loosing against streaming in the long term as well.


    Reply
  10. TuneHunter

    Not so good news for musicians!
    iTunes (music part of it) will be history in 3 years.
    Thank you UMG boys.


    Reply
  11. FarePlay

    Time to do something for working artists and get out of this black and white argument. Selling recorded music is and always will be a positive income driver for artists. It’s not a battle, it’s about a new delivery system working in parity with existing models. There are a lot of us over forty who prefer to own music as well as younger listeners who feel the same way. One doesn’t replace the other.

    Also, it is important that the artist be able to choose how they want their music distributed, If the artist believes they are better off not having their music on interactive streaming services, that choice needs to be theirs. If they want to delay the release of their music on an interactive streaming service that choice needs to be theirs.

    If they are signed to a label and don’t have control over their digital distribution, they don’t have that choice.


    Reply
    1. GGG

      Everything in this post still exists. All this choice still exists, provided you don’t sign that new YT agreement ha. You can print all the CDs, vinyl you want.

      The entire music industry, every band, tried for a decade+ to get people to buy music again, and it failed. So why keep trying when there’s a working model we can make even better?


      Reply
      1. FarePlay

        Hardly failed. If you consider the revenue paid downloads and physical sales have contributed to revenue.

        There’s really no logic to your stance, other than as a shill for streaming services. What would be the advantage to eliminating these sales, other than to tell potential investors in Spotify or another service that streaming is it, invest now.

        Cause you’re certainly not getting paid by Apple or Beats Music.

        As far as YT, the deal stinks and at some point that has to become a factor in people’s decisions. Unless you’re a tool.


        Reply
        1. GGG

          See, your problem is you see any remotely pro-streaming argument as something saying physical/digital sales should cease to exist. Nobody is saying that.

          It’s not an argument about stopping CD/iTunes sales, it’s about bolstering streaming so Spotify or Deezer or whichever service you want has 100M+ users. So that almost literally any time any person listens to music it is generating revenue.


          Reply
          1. FarePlay

            Dude you got the problem. Unless they’re two of you.

            “The entire music industry, every band, tried for a decade+ to get people to buy music again, and it failed. So why keep trying when there’s a working model we can make even better?”


            Reply
            1. GGG

              What’s your argument here?

              I mean, yes, I do have a problem. The industry spent ten years trying to convince people to buy music again and it went nowhere. Streaming, something that can monetize every single person on the planet, is clearly growing. What’s the problem here?


              Reply
              1. FarePlay

                The “industry” has done very little to promote the sale of recorded music in the past ten years. They chose to be on the defensive, which has allowed others to push “their” agenda.

                Streaming may be wonderful for you. Personally, I think it sucks.


                Reply
                1. GGG

                  It’s not even that I think it’s wonderful. Again, you automatically go to the complete opposite end of any argument. It’s that we have the chance to directly monetize every time anyone plays a song, and this includes everyone that NEVER bought music before. If that’s at the expense of some sales for a couple years, so be it. It’s about being realistic about how media consumption, not even just music, but as a whole, is going to exist in the not-too-distant future.

                  You want to buy vinyl until the day you die? Great! Good for you, and the bands you support thank you immensely. But most people aren’t you. That’s what you need to realize.


                  Reply
                  1. FarePlay

                    There are actually many of us who think streaming music services suck. Beats Music may make me change my mind, they actually have someone who understands the music business running the company. Not some ex-employee from uTorrent.

                    Why do you think you speak for the majority?


                    Reply
                    1. GGG

                      From a consumer stand point, what’s bad about Spotify? Sometime it loads searches slow, people hold out obviously, but other than that I don’t really see why someone would say that platform sucks unless you went into it wanting to hate it.

                      And I’m not speaking FOR the majority. I can read graphs and industry-wide sales figures.


  12. GetWithIt

    Today. Once. iTunes pays for a purchase. And purchases will drop SHARPLY over the next 3-6 months. Spotify will keep paying Avicii for years and years to come. it’s an annuity model, rather than a lump sum up front. and if you write timeless songs, you will reap the benefits. stop being so short-sighted.


    Reply
    1. Faza (TCM)

      Yes, but how long will that last? Mind that Avicii will need three more years of comparable plays just to match what he has already made on iTunes. It doesn’t seem likely he will keep up the same rate, for the simple reason that even a year from now people will likely be listening to something completely different. At the same time, it’s possible that further sales will be made through iTunes, leading to an Achilles v. tortoise situation.

      But wait, what about inflation? What about opportunity cost? A dollar now is worth more than a dollar next year and considerably more than a dollar in three years.

      Say that, accounting for the inevitable drop-off and time value of money, Spotify ends up earning the same amount as iTunes downloads have earned to date, in ten years time. How on earth is that even considered remotely sensible? If anything, it suggests that windowing is a sensible strategy – put it on Spotify after sales have trickled off and you might even enjoy additional revenue from fans who already bought it (after they pay their subscription, it doesn’t cost them extra, no matter what they listen to).


      Reply
  13. grunt

    ugh. luddites. hate to say it, but people have complained about change since change raised her bitchy head. instead of complaining about change, figure out how to use it to your advantage.


    Reply
  14. hippydog

    Quote “This is the reason why windowing and delays will always be a problem for Spotify and every other streaming music service, as long as downloading is a viable format.”

    What??
    Your gonna have to connect the dots for me..
    cause I have no idea how you came to that conclusion from that presentation..
    I didnt see ANYTHING that backed that up?


    Reply

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