So let me break down the Average Streaming Pay Out. Help you Understand How this works! Ok Here I go.... Artists, on average, earn $0.00217 per stream A song needs to be streamed 456 times to make $0.99, the typical price of an iTunes download According to the infographic, Spotify, which is a typical reference point for most artists, pays an average of $0.003 per stream which equtes to 330 streams being equal to one $0.99 download. However, on Spotifys website, they claim the spread is $0.006 to $0.0084 for an average of $0.0072 or 137 streams per $0.99. Spotify also does not pay on a per stream basis. Their formula takes into account their monthly subscription revenues and an artists overall popularity. spotify-royalty-formula Now lets analyze what it means. There are two key differences between streams and purchases/downloads we need to look at: When you purchase a download, you pay up front for the ability to listen to the song an unlimited number of times When you listen to a stream on Spotify or other streaming service, the royalty is allocated on a pay as you go plan If someone was to purchase the song for $0.99, would they listen to it at least 456 times? 330 times? 137 times? Also keep in mind that artists do not receive the full $0.99 from a download. Lets compare the numbers in a sense of RPMs, or revenue per 1,000 impressions, a common metric used across the digital advertising industry. According to the infographic, RPMs earn artists an average of $2.17 and are as high as $8.10 to $10 on Deezer and Rdio, respectively. On Spotify, RPMs are, on average, as high as $7.20 according to their website. The table below, from Monetize Pros, shows that average CPMs/RPMs for typical digital impressions range between $2.80 and $3.00 from data collected as of January, 2014. So by comparison, music doesnt have the lowest RPMs for digital impressions and is right in line with industry standards. From TIME, here are the 10 most popular songs on Spotify from the week before Thanksgiving, 2013, with an estimate of how much money they’ve generated in royalties since they were released as of December, 2013: The Monster Eminem 35.1 million streams, $210,000 – $294,000 Timber Pitbull 32.0 million streams, $192,000 – $269,000 Royals Lorde 65.3 million streams, $392,000 – $549,000 Counting Stars OneRepublic 57.7 million streams, $346,000 – $484,000 Hey Brother Avicii 46.5 million streams, $279,000 – $391,000 Wrecking Ball Miley Cyrus 60.4 million streams, $363,000 – $508,000 Roar Katy Perry 64.6 million streams, $388,000 – $543,000 Wake Me Up Avicii 152.1 million streams, $913,000 – $1.3 million Hold On, Were Going Home Drake 47.1 million streams, $283,000 – $396,000 Burn Ellie Goulding 53.8 million streams, $323,000 – $452,000 What about live music? There has been tremendous growth in live music and concerts, with many indicating that this is where artists will earn the bulk of their revenue. So much so that the Record Companies have added a large chunk of it into their infamous 360 deals. According a Pollstar analysis, The concert industry grossed a record $5.1bn in North America in 2013. Historically, the goal of touring was to promote album sales, but with an explosion of music festivals in recent years, live concerts have become a large focal point for artists to earn revenue. Revenues from live concerts are split between the concert promoters such as Live Nation, Artists, and Labels. Is this a sustainable approach? Live Nation, the biggest player in the concert promotion industry, earned a whopping $4.5bn in revenue from concerts in 2013 according to their annual report. However, they operated at a loss of $39.6mm. Concerts are very expensive to produce and often operate at break even or at a loss. This is because historically, touring was used as promotion rather than as a profit source. Big name artsits, however, still get paid big bucks to perform at festivals. Jam bands and EDM DJs rely very heavily on revenues from their live shows. Phish is a prime example who have a strong cult like following from a touring philosphiy that is modeled after The Grateful Dead. Jam bands and EDM artists are very similar as they provide a different experience at every show. Phish actually turns every live show into a potential music sale by recording every show and selling the downloads. The Grateful Dead allowed anyone to record their live shows for free to share the music. They allowed free music sharing well before the days of Napster or the internet. Artists who can master the art of touring and live shows can earn significant income, but in general, touring and live shows need to be taken in conjunction with music sales and other revenues. Up and coming artists, especially, are not making the big bucks to perform live. Live music on its own, does not seem viable to restore the entire industry.
Posted on: Wed, 10 Dec 2014 18:16:43 +0000
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