An eagle-eyed follower first brought this New York Times article – In Shift to Streaming, Music Business Has Lost Billions – to my attention. Feel free to read it but here’s the “executive summary” plus some other thoughts:
As pictured above, in 2010, streaming brought the record industry 7% of revenue. Five years later, it was bringing in 34% of all revenue. (According to the Recording Industry Association of America (RIAA), the streaming category includes:
- Revenues from subscription services (such as paid versions of Spotify, TIDAL, and Apple Music, among others)
- Streaming radio service revenues that are distributed by SoundExchange (like Pandora, SiriusXM, and other Internet radio), and,
- Other non-subscription on-demand streaming services (such as YouTube, Vevo, and ad-supported Spotify).
Revenue from music sales in the United States has hovered around $7 billion since 2010. Revenue has been flat for several years and streaming is just not as profitable (for anyone) as CD sales.
In 2006, record labels still reaped $9.4 billion from CD sales in the United States, more than the total sales revenue of the business today. Last year, CD sales stood at just $1.5 billion, a drop of 84 percent in a decade. (Italics mine).
And even though revenue is flat and profits are down, I’m not feeling too bad for the people who connect us to artists. They are doing fine. Not mentioned (of course) in the article is how well all of this is working for the artists themselves who, historically, get the short end of the stick. (Which always amazes me because if no artists, then no revenue for record companies).
A page on Spotify Artists says this: “Unfortunately, the majority of music consumption today generates little to no money for artists.” (Yeah, because you don’t pay them enough you cheap motherfuckers!). They then go on to break down how artists get compensated. It’s worth a visit if this topic at all interests you.
Turns out an artist’s royalty payments depend on the following variables, among others:
• In which country people are streaming an artist’s music
• Spotify’s # of paid users as a % of total users; higher % paid, higher “per stream” rate
• Relative premium pricing and currency value in different countries
• An artist’s royalty rate. Recently, these variables have led to an average “per stream” payout to rights holders of between $0.006 and $0.0084. That’s less then one penny USD per play. (Italics, again, mine).
And so this explains why, despite the fact she would still earn a shitload of money, Taylor Swift pulled her songs from Spotify. I am not a particularly big fan of her music. But I will here give credit where credit is due. It appears she’s doing it on principle as much as anything else.
Bottom line – the people you want to feel badly for here are not the record companies.