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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.
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November 17, 2015
Spotify Per-Stream Payments for July 2015by David Harrell
As the music-streaming service takes pains to point out, Spotify doesn't pay a set per-stream amount to labels and artists, as its business model is based on a revenue share, not a set streaming royalty. Yet that revenue share does, on a monthly basis, convert to a number for each stream. (And it appears that Spotify might have a fixed minimum rate in some countries.)
The following numbers are culled from reports from CD Baby, my digital distributor, and have been adjusted to account for the 9% commission it charges. I received the following per-stream amounts for plays of my self-released music in the Spotify catalog during the month of July:
US: .68 cents, .67875 cents, .17 centsFor the US, it seems obvious that the two larger amounts represent streams from premium subscribers, while the smaller number is from subscribers to the free ad-supported service. The difference between the two numbers is small enough that I attribute it to rounding/truncation of very small numbers in the CD Baby report, but I opted not to average these numbers and am including both for sake of completeness. Ditto for the two different numbers for streams in Sweden.
France: .78 cents
Italy: .67 cents
Spain: .515 cents
Sweden: .772 cents, .77 cents
Weighted average for all July 2015 streams: .5867 cents
To put the above numbers in context, the average amount I've received for all Spotify streams since August 2009 (from all countries and subscriptions levels) is .4301 cents per stream. It's also worth noting that the major label groups have ownership stakes in Spotify and may well have negotiated different (i.e. better) revenue share arrangments for their catalogs. Finally, these numbers don't include the smaller payments from Spotify to publishers/composers via performance rights organizations such as BMI and ASCAP.
Labels: Spotify, streaming royalties
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March 16, 2015
Beats Music Beats Spotifyby David Harrell
In terms of subscribers and market share, Beats Music (acquired by Apple as part of its purchase of Beats in May of last year) is way behind Spotify. But there's one area where Beats Music appears to be ahead -- the per-stream payout to artists/labels.
The first payouts from Beats Music just appeared in my CD Baby account. After adjusting for CD Baby's commission, for December 2014, we received 1.801 cents per stream. For comparison, our per-stream payout from Spotify averages out to 0.428 cents for the past few years:
On its support site, Beats states that its payout rate will higher than that of other streaming services as, unlike Spotify, it has no free option:
We pay higher royalties than the other services because we are a paid subscription-only service (in other words, we have no free version of our service that we have to subsidize).The payouts we've received from Spotify have varied greatly, as some are coming from premium subscribers and some from free subscribers. For the latter, the payout amount is based on a share of advertising revenue and is very small. However, our initial payout from Beats included two rates -- approximately 1.926 cents for some streams and 1.300 cents for others.
My only guess here is that the higher rate is for listens by monthly subscribers who pay $9.99 a month (or $119.88 a year) and the lower rate for listens from annual subscribers who pay $99.99 a year, though the payout difference is greater than the pricing differential for the two plans.
Labels: Apple, Beats Music, Spotify, streaming royalties
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March 04, 2014
More Thoughts on iTunes Radio and Music Salesby David Harrell
After an e-mail discussion with my bandmate Porter about last week's iTunes Radio post, I'm wondering if there are two factors in play here:
1. It's certainly possible that iTunes Radio listeners are buying more music than they would have otherwise purchased.
2. But music purchasers might be a shrinking group. That is, as more people use Spotify and other "on demand" streaming services, the total number of music fans who feel the need to own any specific song is getting smaller.
Hence, iTunes Radio could be increasing music purchases among its listeners, but any such gains aren't enough to offset the overall trend of decreasing download sales. (This is all conjecture on my part, but it reconciles the intuitive idea that iTunes Radio listeners would be more likely to purchase downloads with the continued decline in music download sales since its introduction.)
Labels: Apple, iTunes Radio, music sales, Spotify
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March 05, 2013
Tuesday Odds and Ends: A YouTube Music Streaming Serviceby David Harrell
YouTube is already the largest music-streaming platform, but it looks like it will launch a dedicated Spotify-style streaming service.
Felix Salmon on Amanda Palmer's TED Talk and content economics:
There are basically three ways to go about this. You can put up a paywall; you can ask for donations; or you can sell non-digital things to your digital audience.Nicholas Carr highlights another study showing that students prefer paper textbooks to digital versions, despite the seeming advantages of the latter format (portability, interactivity, etc.):
On its face, Palmer's talk is about the second strategy, but in fact it's about all three. (And yes, I’m the "financial blogger" referred to in the talk.) For instance, when it comes to online publishing, why are paywalls more common than tip jars, despite the fact that they're much more difficult to implement? Palmer does a great job of walking us through the answer to that question: there's something shameful, there's a whiff of the panhandler, in asking strangers for money.
However, researchers often overlook students' personal beliefs about how they learn and study most effectively. Their resistance to replacing paper textbooks with e-textbooks together with an ongoing desire to be able to print electronic content suggests that paper-based information serves students' needs better in the educational context.And if you missed it, this Music Ally story from last month rounds up a slew of reports on artist payments from Spotify (including ones from this blog).
Labels: ebooks, music streaming, Spotify, YouTube
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January 30, 2013
A Few Quick Thoughts on the NY Times Spotify Articleby David Harrell
I know I've promised a long-form post on Spotify, but in the meantime, some quick observations on this week's NY Times article on the economics of music streaming:
1. Mainstream press -- please don't conflate streaming services with personalized Internet radio ("...as listeners begin to move from CDs and downloads to streaming services like Spotify, Pandora and YouTube."). Spotify and Pandora are cousins, not siblings.
2. With all due respect to Sean Parker, the glory days of music sales in 1990s aren't coming back. It was a unique time, when consumers were willing to repurchase music they already owned (on LP and cassette) in a more-expensive format (CD). Even if a magical new format is rolled out, one that makes average consumers want to upgrade, my guess is that many of them would manage to acquire the content without paying for it.
3. To its credit, the article does mention (but doesn't emphasize) what I think is the most important point about the Spotify model -- the coupling of artist/label compensation with listener consumption, as opposed to consumers pre-paying for a lifetime of listening via the purchase of a download or CD:
"Unlike the royalties from a sale, these payments accrue every time a listener clicks on a song, year after year."4. The per-play amounts paid to artists/labels are, as everyone knows, quite small. As noted in the article, self-released artist Zoe Keating reports an average payment of 0.42 cents per play. When you adjust that number for the 9% commission she pays to CD Baby, you end with 0.47 cents, which is almost identical to the most recent numbers I've posted here for Spotify plays of the Layaways.
Should Spotify pay more? In an ideal world it would, but the company is currently paying 70% of its revenue to rights holders and publishers. In addition to the freebie service, it offers two subscription tiers in the U.S. -- $4.99 a month for an ad-free service and $9.99 a month premium service with higher sound quality and a mobile option. Based on a 0.47 cents figure (and assuming that the current mix of free, $4.99, and $9.99 subscribers remained stable) Spotify would need to increase its U.S. subscription prices to $10.62 and $21.26 to accommodate a one cent per-play payout.
That larger number is still less than the $30 that Sam Broe, the 26-year-old music fan quoted at the beginning of the article, used to spend each month on music purchases before becoming a Spotify subscriber. But would he -- and other current/potential Spotify subscribers -- be willing to pay it?
Labels: music streaming, music subscriptions, Spotify
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August 28, 2012
Updated Spotify Artist/Label Per-Stream Paymentsby David Harrell
My 2011 post on Spotify payouts has received a ton of hits from a link in this NY Times piece on the royalties paid by Spotify and Pandora. So I thought it was time for some updated numbers, based on our most recent payouts from CD Baby.
For streams from August, 2009 to June, 2012, we've received an average per-stream payout of $.0046623 or .46623 cents, before CD Baby's 9% commission. The highest per-stream payout we've seen was $.011926 or 1.1926 cents and the lowest payout was $.0000237253 or .00237253 cents. (That's ignoring a handful of early "payouts" that rounded out to 0.0000000000 in CD Baby's accounting system!) My guess is that payout rates vary because of different Spotify plans (free and premium), differences in subscription prices for each region, and currency exchange rates.
Spotify Per-Stream PaymentsKeep in mind that these payouts are for self-released artists (or small labels) with digital distribution via CD Baby. The payout rates for the major label groups, which have an ownership stake in Spotify, may well be different.
August 2009 to June 2012
average: $.0046623
high: $.011926
low: $.0000237253
It's difficult to discern a general trend in the payout rates over time, though, in most cases, the lowest rates were in 2009 and early 2010. The all-time high rate of $.011926 was for streams in November, 2011 and our most-recent payouts, for June, 2012, were $.008246668 per stream.
Labels: music streaming, music subscriptions, Spotify
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June 07, 2012
Match Game 2012: First Artist Payments from iTunes Matchby David Harrell
Compensation for labels and musicians for music sales from Apple's iTunes store is straightforward: Apple takes a 30% cut and passes the remaining 70% to the label or digital distributer. For Apple's iTunes Match service, compensation is a little more complicated. There's the same 70/30 split, as Apple shares 70% of the $24.99 annual subscription fee, but the per-track payout is variable, as explained in the FAQs of digital distributor CD Baby:
iTunes will issue payment for every play that takes place through iTunes Match. The per-play rate varies based on subscription revenue, exchange rates, and total number of plays. Pay rates should look similar to streaming services such as Spotify.Over the past week, our first iTunes Match payouts showed up in our CD Baby account. For November 2011, we received .012767 cents per play (before CD Baby's 9% commission). For December 2011, we received considerably more: .12083 cents per play, before commission. That positive trend continued with per-play payments of .20231 cents for January 2012 and .25946 cents for February. UPDATE 6/8/2012: The above numbers are all for "iTunes Match - Americas." Some payments for iTunes Match - UK were just added to our CD Baby account. For February 2012, we received .13723 cents per play.
The best explanation I can think of for the increasing payout amounts is that iTunes Match keeps adding new subscribers who are making minimal use of the service to stream their tracks using different devices. That is, if an individual iTunes Match subscriber only listens to music on the device where her music was originally stored, no income is generated for labels and artists, thereby increasing the payout rate for tracks played by other subscribers.
As for the Spotify comparison, keep in mind that Spotify rates also vary, based on the subscriber's plan (free or one of two premium options), prices for different regions, and exchange rates. Last year, I posted that we had received per-play payouts ranging from a low of .02056 cents to a high of 1.1456 cents, with an average of .2865 cents. Since then, our average Spotify payment has increased to .41792 cents per play, so the current trend will have to continue for iTunes Match payouts to approach the average Spotify rate.
In theory, however, payouts from iTunes Match are a truly supplemental income stream, as unlike Spotify, there isn't the possibility of cannibalizing music sales with lower-paying streams. If iTunes Match becomes a popular service, it will provide some sort of an additional income stream to large labels, though how much of that revenue will make its way to the biggest artists is another question, as it is with the payouts from Spotify and other streaming services. But for smaller acts and labels, it's less likely that iTunes Match will be a significant source of new income.
Labels: Apple, iTunes, iTunes Match, Spotify
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February 06, 2012
Buy It, Cherry Pick It, Stream It, or Steal It?by David Harrell
Randall Roberts's review of the new Van Halen album in the L.A. Times does a great job of summing up the choices today's music listeners have:
Now the dilemma isn't just, should you spend money on the CD ($14.99 list price) or a digital copy (also -- frustratingly -- $14.99). It's also, how much are you willing to commit to buying in? Will a few dropped bucks on a handful of the best individual tracks suffice? Or will "A Different Kind of Truth" be the perfect Spotify streaming album, not good enough to pay hard money for but worth a mouse-click when you've got a spare few minutes? Or should you just ask your computery friend to Sendspace you a pirated copy?I'm still working on my in-depth post on Spotify economics, but the above description of Spotify being a "good enough" option for some albums will be a central component.
Labels: cherry picking, music economics, Spotify, Van Halen
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December 30, 2011
The Top 7 Digital Audio Insider Posts of 2011by David Harrell
The seven posts below generated the most page views, comments, and/or e-mails for this site over the past year. Thanks to everyone who read, commented, linked, and e-mailed. Happy New Year!
Spot the Spotify Payment
...the average streaming rate is small enough that it'd take 244 Spotify spins to equal the label cut of a 99-cent iTunes download. But the real question here, in terms of artist/label compensation, is what Spotify activity actually represents. That is, is it simply a new revenue stream, providing income from listeners who don't normally purchase music, or is there also a cannibalization factor, where some listeners opt for streaming over actual purchase? read more
A Few Thoughts On Pandora
Does Pandora's Music Genome-based programming give it a competitive advantage? That is, does it result in a better listener experience than with Internet stations like Last.fm, where "similar" artists are determined by listener overlap (listeners of artist A also like artist B), as opposed to song qualities? read more
The Downside of eMusic's Currency Pricing
Even after last year's subscription changes, average album prices at eMusic are no doubt less than the average prices at iTunes, Amazon MP3, and other digital music stores. Yet I believe that eMusic's switch from a credits system to currency pricing, in combination with Amazon MP3's $5 album deals and daily specials, presents a real challenge to eMusic's subscription-based business model. read more
How Much Does Rhapsody Pay Artists?
Here's how I'm paid for my self-released albums in the Rhapsody catalog:
1. A penny per stream. For albums distributed by CD Baby and TuneCore, I receive one cent per listener stream. CD Baby, which uses a commission business model, takes a 9% cut, resulting in a .91 cent payout per stream. TuneCore, which charges an annual maintenance fee for each album, passes on the full one cent. This one-cent rate has remained steady and unchanged from September 2004 to the present. read more
The Convergence of Owning Music and Renting Music
There are real differences, both logistical and psychological, between owning and renting music. But I'll bet that the preference for ownership will decrease as the listening experience for "owned" and "rented" music converges. read more
The Ethics of Downloading Music You've Already Paid For
An eMusic subscriber loses $200 worth of his downloads and posts this question to eMusic's message board: Is it ethical to download those same tracks from illegal sources (such as P2P sites)?
I was somewhat surprised by the responses -- by more than a 3 to 1 ratio, his fellow subscribers voted "no," most of them rather emphatically. Then again, maybe that's not surprising, as eMusic subscribers are a self-selected group of music fans who are willingly paying for digital content that they could probably download elsewhere free. read more
A Funny Spotify Experiment: Why Judas Priest Sounds Just Like Jerry Reed
The fact that the Spotify interface allows you to play tracks stored in your iTunes and Windows Media libraries made me wonder what happens when you use Spotify to "stream" a track you already own. From a performance standpoint, it makes sense for Spotify to pull the file from your hard drive. And doing so would also -- in theory -- relieve Spotify of any obligation to compensate the record company for that play, as the situation would be no different than listening to a track in iTunes. read more
Labels: eMusic, file sharing, Pandora, Rhapsody, Spotify
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July 15, 2011
A Very Quick Spotify Reviewby David Harrell
Spotify is now live in the U.S. While you can sign up today for one of two premium options ($4.99 or $9.99 a month), you'll still need an invite to try the free version. (Thanks to my friend Krista at Passport Delicious for hooking me up!)
My first impression is that Spotify is superior to the three other streaming music services -- MOG, Rhapsody, and Napster -- that I've tried, at least in terms of streaming performance. I'm a current subscriber to MOG, but I'm frustrated by the frequent pauses for buffering, even when using a fast connection. While it's been a while since I tried Napster, it was extremely buggy for me, with even more buffering/freezing problems. I had no such issues with Spotify during my brief test.
Unlike the other three services, which are all browser based, you'll need to download a small application (~5.0 mb) to use Spotify. The Spotify interface also allows you to play tracks stored on your hard drive in your iTunes and Windows Media libraries. One area that seems light in Spotify relative to the other services is editorial -- other than a display of new releases and lists for the top 100 tracks and albums, you're pretty much on your own for music discovery. MOG, for example, has tons of celebrity playlists, Billboard chart playlists, etc. There is a "Feed" section, however, which will list any Spotify music shared by your Facebook friends, and it seems safe to assume more editorial content will be added.
The free version of Spotify is supported by ads, which weren't overly intrusive in the half hour or so I spent listening -- I streamed at least five tracks before I heard the first one. Interestingly, I also heard an advertisement while listening to tracks from my iTunes library! I'm guessing these songs are played directly from my hard drive, and not streamed, so it's not like these plays incur a cost for Spotify. Maybe the ad algorithm doesn't yet distinguish the source of the song. More on Spotify next week!
Labels: music streaming, music subscriptions, Spotify
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July 07, 2011
Spot the Spotify Paymentby David Harrell
Please see this update for more recent Spotify payout numbers.
The U.S. launch of Spotify is imminent. And while I haven't had the same success as this musician (thanks to Glenn for the tip), two of my band's albums have been in the Spotify catalog since August of 2009.
Without any promotion in the regions where Spotify is currently available, our total number of plays is relatively small, though our Spotify activity seems to be increasing each month. The per-spin payouts we receive via CD Baby are quite variable, ranging from around two hundredths of cent to more than one cent for each stream. (We also had a few spins that rounded out to "$0.00000000" after CD Baby's commission.) I'm assuming the payout amount depends on free vs. premium listens, as well the subscription prices in each region and currency exchange rates.
Here's what we've seen so far:
Spotify Per-Stream Payouts August 2009 to March 2011These numbers are all before CD Baby's 9% commission. It's also possible that the major labels have been able to negotiate different rates for their content, and the label/artist payout doesn't include any payments for songwriters and publishers that Spotify makes to performance rights organizations such as BMI and ASCAP. Update II -- Spotify makes direct payments to PROs in Europe, but I think PRO payments are made by labels for music streaming in the U.S. More here. (This post from earlier in the year reports a per-stream rate of 0.22 Euro cents for independent artists.)
Smallest: 0.02056 cents
Largest: 1.1456 cents
Average: 0.2865 cents
Still, the average streaming rate is small enough that it'd take 244 Spotify spins to equal the label cut of a 99-cent iTunes download. But the real question here, in terms of artist/label compensation, is what Spotify activity actually represents. That is, is it simply a new revenue stream, providing income from listeners who don't normally purchase music, or is there also a cannibalization factor, where some listeners opt for streaming over actual purchase? (There's also the "exposure" argument that hearing something via Spotify or another streaming service will entice some listeners to purchase the download.) My best guess is that, given the relatively small percentage of consumers who regularly purchase music, any additional income streams are a net positive.
Please see this update for more recent Spotify payout numbers.
Labels: artist payments, music subscriptions, Spotify, streaming royalties
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THE LAYAWAYS
Out Now -- "Maybe Next Year" -- The New Holiday Album:
"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.
"...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.
"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.
"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:
the layaways website