Thomas Hesse used to be the digital-business boss at Sony Music, but nowadays is an angel investor and startup founder (of still-stealthy Jamm Music) in his own right. He’s also written a column for Billboard that may hint at what the latter company is planning. His focus is on the music-streaming world’s equivalent of “whales” in casinos: high-spenders.
“On the surface, that seems like an odd metaphor for the streaming music business, because all subscribers pay about the same amount of money per month. But since a relatively small percentage of those consumers spend far more time streaming, rights holders who collect royalties on streaming music would do well to treat them like whales, because they bring in most of the money,” wrote Hesse. “Every 1,000 users generate $3,310 worth of royalties each month. But just over 20% of users generate about 80% of total streams, according to industry estimates. That implies that only about 200 of those 1,000 users will be responsible for distributing 80% of the royalty pool — $2,648 — while the remaining 800 will account for just 20%, a relatively paltry $662… Essentially, the heavy streamers determine what labels and other rights holders get paid.”
Hesse’s argument is that music marketing should be zeroing in on these heavy streamers “who determine chart success, allocate the vast bulk of streaming revenue and have money to spare”.
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