Digital Audio Insider -- the economics of music and other digital content


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Digital Audio Insider is David Harrell's blog about the economics of music and other digital content. I write from the perspective of a musican who has self-released four albums with the indie rock band the Layaways.

My personal website has links to my LinkedIn and Google+ pages and you can send e-mail to david [at] thelayaways [dot] com.

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April 21, 2010

Our First Spotify Payouts
by David Harrell
Spotify Banner
As the old saying goes, if you lose money on each sale, you can make up for it with volume. I thought of it when the first payouts for Spotify streams showed up in our CD Baby account last week. (CD Baby began delivering content to Spotify in early 2009.)

The payments, of course, aren't negative amounts. Yet the amounts for individual streams are small enough that it will take an extremely large volume to add up to any significant amount.

For August and September of 2009, we received per-stream payouts of .02 cents, .03 cents, .06 cents, and -- my favorite -- an amount so small that it apparently rounds to .000000 cents! These numbers are all after CD Baby's 9% commission, so the actual payouts from Spotify were approximately .022 cents, .033 cents, and .066 cents per stream. I'm assuming that the different amounts represent streams by different Spotify user types (free, day pass, and premium) and/or regions.

A couple years ago, Glenn Peoples discussed the disparity between per-stream payouts and those for actual digital downloads, noting that it takes 70 plays at a one-cent payout to equal the revenue generated by a single paid download. At the .022 cent rate, the disparity is much greater -- it would require 3,500 Spotify plays to generate the same payout as that from a 99-cent iTunes download.

So when Spotify listeners (both free and subscription) use the service as a direct substitute for the purchase of music, then it likely has negative consequences for music labels. On the other hand, when services like Spotify steer some listeners away from P2P downloads, it's a positive for labels, even if the amounts are small.

Finally, you can make an argument in favor of the streaming services when they're used to stream music that the listener already owns. That is, once you buy a song (on CD or as a digital download) that's the end of the revenue stream for the label and artist, no matter how many times you listen to it. But if you listen to a track or album you already own via a streaming service, you make an additional micro-payment to the artist and label with each play.

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    THE LAYAWAYS

    Out Now -- "Maybe Next Year" -- The New Holiday Album:

    <a href="http://thelayaways.bandcamp.com/album/maybe-next-year">Joy To The World by The Layaways</a>

    "This is a sweet treat, deliciously musical without being overbaked for mass media consumption." -- Hyperbolium

    "Perfect listening to accompany whatever holiday preparations you may be making today." -- Bag of Songs


    O Christmas Tree - free mp3 lyrics and song details
    Away In A Manger - free mp3

    Download from eMusic, iTunes, Amazon MP3, or Bandcamp. Listen to free streams at Last.fm.



    album cover art from The Space Between

    <a href="http://thelayaways.bandcamp.com/album/the-space-between">Keep It To Yourself by The Layaways</a>

    "...about as melodic and hooky as indie pop can get." -- Absolute Powerpop

    "Their laid-back, '60s era sounds are absolutely delightening." -- 3hive

    "...melodic, garage-influenced shoegaze." -- RCRD LBL

    Where The Conversation Ends - free mp3
    January - free mp3
    Keep It To Yourself - free mp3

    Download from eMusic, iTunes, Amazon MP3, or CD Baby, stream it at Last.fm or Napster.



    album cover art from We've Been Lost

    <a href="http://thelayaways.bandcamp.com/album/weve-been-lost">Silence by The Layaways</a>

    "The Layaways make fine indie pop. Hushed vocals interweave with understated buzzing guitars. The whole LP is a revelation from the start." -- Lost Music

    "Catchy Guided by Voices-like rockers who lay it on sweetly and sincerely, just like Lionel Richie." -- WRUV Radio

    Silence - free mp3 lyrics and song details
    The Long Night - free mp3

    Download from eMusic, Amazon MP3, or iTunes, stream it at Last.fm, Napster, or Rhapsody.



    album cover art from More Than Happy

    "These are songs that you want to take home with you, curl up with, hold them close -- and pray that they are still with you when you wake up." -- The Big Takeover

    Let Me In - free mp3
    Ocean Blue - free mp3

    Download from eMusic, Amazon MP3, or iTunes, stream it at Last.fm, Napster, or Rhapsody.

    More Layaways downloads:

    download the Layaways at eMusic download the Layaways at iTunes

    the layaways website