Streaming music: You need to be superstar to make money – USA TODAY
VENICE BEACH, Calif.âPop superstar Taylor Swift has the right idea: musicians should be better compensated for their online music.
But first, she’s going to have to find folks willing to pay for digital music in the first place. The tift between Apple Music and Swift over royalty rights obscured this hard truth about streaming music: consumers love it, but they don’t want to pay.
Spotify, by the far the largest music subscription service, has 20 million paying global subscribers. You would need five times that number of paid subscribers to make streaming music a decent revenue stream for most musicians, say analysts.
That’s because of the way royalty rates are designed. The digital download pays the highest percentage, followed by premium services like Spotify, and then ad-supported, which pays much less than premium, says Paul Resnikoff, the editor of Digital Music News. Premium is 11 times higher than ad-supported, he said.
The big acts are seeing money from streaming. It’s the up and coming, working and mid-level acts that are seeing very little.
“What people don’t realize is that income equality also applies to music,” says music blogger Bob Lefsetz. “The rich will get richer, but the poor and middle won’t do much better.”
Apple launches its answer to Spotify on June 30th in the form of Apple Music, offering on-demand music and personalized radio for $9.99 monthly. It joins several subscription streaming services like Rdio, Rhapsody and Google Play, all hawking access to music for a monthly fee.
Malibu, Calif., music fan Mike Mann says he’ll try Apple Music out during its three-month free trial, but the odds of paying monthly, “are very low,” he says. “There’s so much free stuff on the Internet.”
Consumers don’t love to pay for streaming music, but they’re also backing away from downloads thanks to the ease of listening on mobile phones.
Some 1.1 billion songs were downloaded in 2014, down from 1.25 billion the year prior, according to Nielsen, while free and paid music streaming rose 54%, to 164 billion songs. These were mostly from free, ad-supported places.
The shift tends to act as a double whammy for musicians, since downloads pay higher royalty rates to musicians than streaming, and most streaming access is free.
The number one place for listening to online music, with over 1 billion listeners monthly, is YouTube. That’s where all the current hits and then some are accessible on demand, for free, with ads. YouTube is followed by Pandora, the top streaming ad-supported radio service, which has 80 million monthly listeners.
Twitter and forums are full of gripes from musicians that they’re getting lots of online exposure, but few dollars.
In the vinyl era, acts strived for gold (500,000 copies) and platinum (1 million.)
Now a band has to shoot for the moon to see serious money. Think 100 million streams, says Ted Cohen, managing director of Tag Strategic, a consultancy.
“That’s when it really starts to pay off,” he said.
Spotify runs a weekly streaming chart, showing the numbers of streams reaped by the top hits. This week Rihanna’s FourFiveSeconds is number one, with just over 15 million streams.
That equates to about $75,000, which has to be split with the music publisher, record label and the artist, says Resnikoff.
For bands to really profit from digital music, there has to be many, many more paying subscribers to paid services. Apple has told record labels it expects to get to 100 million within 12 months, which would dramatically change the equation for so many musicians, says Cohen.
But even if Apple only gets to 60 million, as some analysts think is more likely, add Spotify and the others, and the paid base will get closer to 100 million, and that will make a huge impact, says Resnikoff.
“You’d have a top level solid flow of revenue,” he says.
Musicians hope that day is coming soon.
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