30 01 13

The dangers of seeing streaming music royalties as a ‘trickle’


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For the most part, the debate over artists’ income from streaming music services has been conducted in trade publications and websites.

It’s breaking out now though: check the New York Times’ feature headlined ‘As Music Streaming Grows, Royalties Slow to a Trickle’, which kicks off by focusing on an individual New Yorker who now spends $10 a month on Spotify rather than $30 a month buying music, and then jumps back to cellist Zoe Keating’s reveal last year of her Pandora and Spotify payouts.

Cause for angry fist-biting from executives at Spotify, its rivals and the labels who are so invested in them? Well, don’t jump too fast.

Actually, as the article progresses, it does touch on the important issue of scale, with Metallica manager Cliff Burnstein given a prominent place to suggest that “There is a point at which there could be 100 percent cannibalization, and we would make more money through subscriptions services. We calculate that point at approximately 20 million worldwide subscribers.”

20m subscribers? Spotify has 6m, Deezer claims 3m, Muve Music and Rhapsody are both past the 1m mark, and these are just the Western streaming firms. For such a young sector, streaming music is actually well on the way to what Burnstein sees as a key milestone.

What’s more, the NYT characterisation of Pandora’s $202m of content acquisition payments in 2012 and Spotify’s $500m payouts so far as “relatively little” compared to downloads seems a bit off, omitting to add that there is still no smoking-gun evidence – certainly in the US – of streaming growth putting a dent in download sales.

The other key point left out of the NYT piece is consideration of the recent sales figures from Sweden and Norway, where streaming has reached mainstream status and kicked the music industry back to growth – becoming a healthy (and often the biggest) source of income for many artists.

However, the article does end with a quote from music lawyer Donald Passman noting that just like CDs, streams will see royalty rates rise as they become mainstream. The key for the industry in 2013 is to persuade artists of its ‘Jam tomorrow’ argument. Maximum transparency will be the key.

Stuart Dredge
READ MORE: Analysis News
One response
  • Puiu says:

    With the income that artists make being a “national secret” for some labels, it’s hard compare different services.
    The only thing we can be sure of is that cloud streaming will become mainstream soon.
    I wonder what will happen to labels when artists will be able to sell and promote their music without the need for them to use them.
    We can think of all this as replacing labels with streaming services.

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