We’re starting to get a sense for what different music platforms are paying.
The data is from the just-released ‘Fair Music: Transparency and Payment Flows In the Music Industry’ by Rethink Music, an initiative of BerkleeICE (Institute for Creative Entrepreneurship). And it largely confirms estimates for YouTube and Spotify’s free service, both of whom are notorious for lower payouts to rights owners (including labels, artists, and songwriters).
Apple’s newly-launched paid service, Apple Music, is showing a flat $0.00200 based on an agreed-upon payment during its current free trial. Initially, the platform was planning to pay artists nothing, according to contract details unearthed by Digital Music News. But Apple agreed to pay royalties on trial streams after being publicly lambasted by Taylor Swift.
Things changed pretty quickly after that point: within about one day, Apple changed its tune, despite numerous complaints from independent labels and artists prior.
Meanwhile, Tidal is emerging as a surprisingly strong payer, thanks largely to its paid-only approach and limited free trials. That could include higher-end payments for premium fidelity, a hallmark of Tidal’s predecessor, WiMP. Additionally, Tidal’s approach towards streaming is more artist-friendly, with higher payouts and artist ownership designed to solve persistent compensation problems.
Unsurprisingly, Spotify’s per-stream payments on paid streaming is far superior to its ad-supported payouts. But oftentimes, it’s difficult for artists to figure out the difference. According to the royalty statements shared and reviewed by Digital Music News, per-stream payments are often lumped together, without distinctions between paid and free (perhaps intentionally).
Here are the most important numbers, though:
iTunes downloads: $0.7
Apple Music downloads: $0.002
Here, you should do it Pac-Man style:
(Apple Music downloads: $0.002 < (iTunes downloads: $0.7)
An iTunes download is a one-time purchase. Revenue from streams is ongoing. At .002 per listen, 350 listens = 1 purchase. Over several years, it’s realistic to expect revenue from streams to exceed the revenue from one purchase. We all have to unwrap our heads from the first week, upfront business model.
That is ridiculous I dare you to go to your iTunes, turn on your play count tab and see how many songs you have listened to 350 times each.
You can’t assume that everyone who streams a track would have purchased it if streaming wasn’t available. Also, I’ll stream lots of music that I listened to in the 60’s and 70’s but I’m sure not going to buy it. There’s income that the artist would have never seen.
You have to think about the longterm revenue concept.
Let’s say, you earn about 2000$ in one year from selling your record physically or via itunes download purchase.
So you can pay your bills from this.
If this 2000$ stretch over 20 years, you onky get a 100$ a year. What can you do with a 100$.
The biggest problem with this is, you can not refinance your investment on producing the record. You have top pay everything in advance and get it back probably over 10 or 20 years…
Noone would do something like this in a normal business environment, spent a lot of money with nearly no chance to recoup it in an acceptable time…
Streaming is a ridiculous business model only working for the big players in the business
Apple Music does not appear to be promoting the sale of music through iTunes, at all.
Is there any update to the actual Apple Music numbers (non trial) no one seems to have this information.
Pretty soon the music industry is going to be extinct except for a few mainstream artists! We need to Stop this Insanity!
Actually, the music industry is like Bruce Willis in the “Sixth Sense”. It’s already dead, it just doesn’t know it yet. It commited suicide the day it agreed to embark on the Spotify train.
this is great.
No. It died with Napster.
On the contrary, given social platforms like YouTube and Facebook, it’s easier than ever to get recognized and get a career started. I didn’t say “easy”, I said “easier”. If someone pays for a streaming service they’ll likely be using it all the time. Hundreds of tracks a day per subscriber being played. If streaming wasn’t available how many tracks or albums would that person buy in a given month? One, two… probably not more than that. Then they get to play that content forever with no additional money going to the artist. Let’s not even bring up the losses when people “share” their purchases!
Our current report shows Aspiro/TIdal at 2.7 cents a stream and Microsoft/Zune/Xbox at 4.07 cents a stream which is up from the rock solid 3.7 cents per stream they’d been paying.
Whoever can, please provide the total number of dollars all those NERRRDDDS delivered to music industry and musicians last year.
I mean 2014.
I mean $ to music not total revenue.
My assessment: without Pandora and normal land Radio they are about 35% of music FLOW and total cash to music in 2014 is below $3B. If they are 35% and if they are the winning business models of subs and ads music business will never go over $20B.
Just monster noise making and $100B+ LIVE dollars to 2000 lucky, proper star alignment, musicians!
Again it is completely useless (and misleading) to look at the per-unit royalty rate.
What matters is the market share / volume / penetration rate / audience, etc, etc.
Look at the bigger picture.
“it is completely useless (and misleading) to look at the per-unit royalty rate”
It’s actually extremely useful when you have bills to pay.
Spot on. Too bad the writer of this article and some anonymous visitors just don’t get this.
But will Paul dare post an updated chart once Apple’s free trial is over? Hmm?
Well, technically, the free trial is rolling on a three month basis. And there are paying subscribers already.
If you buy a download from itunes, how often does it get played over the lifespan of you having it?
50 times? 100? If the answer is at least 100, then streaming it that many times just became more profitable for the rights-holder than a download.
The problem is, nobody knows and nobody will ever know exactly how many times a song will be played. The assumption that any given song will be played 50 to 100 times is not necessarily true, and in many cases is not true at all. This is one of the many problems with streaming: the lack of predictability in terms of play count.
It has been suggested that the grand average track play number between downloaded tracks played a lot and downloaded tracks played very little is:- 10
What does that mean exactly?
It means:- some tracks you download you might play 100 times – some tracks you download you might only play once. Put it all together and hypothesise an average – the suggested average would be 10 plays.
Streaming can never be as beneficial to the artist as downloads.
Yeah that’s right. It’s true that streaming is worse for artists than downloads in that regard and unless they are limited and capped they will never be.
It’s completely irrelevant if streaming is as beneficial to the artist as downloads or not, the market has shifted, it’s now easier to produce music, more people produce music (some of it really great and completely free or at the cost of a “like” on facebook or name-your-price downloads), plus the emergence and adoption of streaming services, all of this means competition and pushing prices down, it’s how the market works and what healthy capitalism relies on, adapt or die, simple.
That’s easy enough to check…look in your iTunes library and check the Play counts.
There are plenty of tracks I have bought which I play once a year or less.
But Apple will pay you $0.00 for every one of those streams. Maybe you should go back to school and learn that 50 X 0.00 = $0.00 or that 100 X 0.00 = $0.00.
Or for the sake of argument, 100 x.002 = $0.00.
This is repeated BS from “agencies”. The per play rate is not how the business is conducted. There is a flat pull of money per subscriber. How thin is the perfect play slice has to do with volume of plays. What the chart really shows us is how engaging or not each service is. Divide monthly income (9.99 or etc) by per play rate and you get average play per subscriber – and THAT is telling…
Shachar is right on.
That is not an accurate assessment, and misses a critical point that major labels, rights owners, and anyone tied into the recorded asset are trying to solve. Larger services like Spotify amass gigantic amounts of free users, all of whom collectively drive down per-stream royalties. So, take Spotify: 20 million paid subscribers, which increases the per-play, and 55 million free users, which drags it all down into the gutter.
This is not an indicator of success. Rather, it is an indication of an extremely narrow and sophisticated pump-and-dump play generated by investors like Goldman Sachs (a lead investor in Spotify).
So you can say ‘more users means more people means more success,’ except that it’s not actually working out that way for rights owners and artists. The only beneficiary is Spotify, that is, if they can successfully manipulate Wall Street to back an IPO predicated on a business model that is extremely flimsy.
That’s the game here, Shachar. Let’s not pretend otherwise.
Shachar when we get our quarterly royalty detailed statements from Orchard it lists all the plays and their associated per play rate.
This is what we get when we are in the “reality based community”.
You don’t seem to wish to belong to this community.
Berklee School of Music
As much as 50 percent of global recorded music revenue owed to creators is siphoned off by an orgy of intermediaries that skim, delay or simply withhold payments due.
A tangle of licensing bodies, antiquated copyright mechanisms, a lack of international standards and few financial incentives to do the right thing further hinder creators getting their fair share of ballooning global digital income.
Perhaps a tad over-stated, but you be the judge after reading The Berklee Institute for Creative Entrepreneurship’s whitepaper called Fair Music: Transparency and Payment Flows in the Music Industry (available as a free download here).
The academy’s report is a smartly written, well documented and intelligent study that the creative community and copyright policy shapers can use to rethink how licensing and income reporting can be normalized and standardized in the future. As it stands now, the system is creaking, wheezing, inefficient, and some might call it bust.
The paper’s central question:
“Of the $15 billion in global recorded music revenue for sound recordings reported by the IFPI for 2014, only a small portion of the money beyond the initial recording advances ultimately makes its way to artists as ongoing revenue. Faster release cycles, proliferating online services, and creative licensing structures make finances and revenue even more complex to understand and manage. To strike the right balance, we must address a difficult question: Are the compensation structures fair?”
Streaming services of course do not distribute collected revenue directly from sound recordings to artists, the authors explain. Instead, they use record labels or digital aggregators as intermediaries. Cited in the whitepaper, a joint study by Ernst
Wow, who doesn’t love a good manifesto every now and again?
Also, note that Apple is paying $0.00 for any non-interactive streams (Pandora-style) to iCloud or Match users. And… most of us are using free iCloud – whether we know it or not.
See Exhibit G of the Apple leaked contract.
The numbers for Apple are not actually in the Berklee report, which I’ve read, so I believe the DMN chart here is a bit misleading.
Uh, you might want to read the Berklee report again? Or, the one that came out this week? You can register for it on the Rethink Music site.
So, basically, artists are making more money from participating in these services than if they didn’t.
Meanwhile, outlook is bearish for Google!
Just today, Google added 60 billion to it’s market value today after shareprice rose on news of increased earnings from YouTube ads.
“YouTube has more than one billion users and that the number of people in the key 18-49 age group who watch its videos on mobile devices was greater than the number watching cable television.
Reuters reported that at least 27 broking firms raised their price targets for Google shares, with one predicting that the stock could rise as high as $800”
Notice the way the article says “its videos”. Your content belongs to Google now.
I think all artists should remove their music, until they will agree to pay them more.
But it won’t happen. It’s like me going on strike refusing to work until employers agree to pay me more money for what I do. They won’t. They’ll simply higher someone else who will charge the market rate.
The model suits the music industry as a whole, as they take a pretty much known income, i.e. a percentage of the subscriptions, and a known and advance cash-flow is better than a risky one, even if the risky one might lead to more profit (but could lead to a much smaller one or even a loss).
The industry is alive with true independent artists. Use your ears, go to live events and forget he majors. Streaming is fun, cheap and fast for reference and discovery. For the special artists/songs in your life that you love, buy their records and play it on your vintage turn table.