So for those of you not in the know there is a big debate that has been raging across the music industry about the merits and pitfalls of streaming services like Spotify, Google Play, etc. When I was checking this out the #1 thing I noticed was that this is a very charged debate – holy shit, some of the comments sections… I mean a comments section is usually where the dregs of the internet come to convene, but even so… anyways, the point being there is a lot of emotion surrounding this topic in a turbulent industry where it is becoming more and more difficult to make a living as an artist – so there’s a lot of misinformation and misunderstanding out there because there is a lot of anger and frustration. So before I get into my own perspective and conclusions I just want to direct you to a series of articles I found both helpful and dispassionate when I was sorting through this issue. All these articles and a couple more were referenced in a fantastic article in The Guardian written by Stuart Dredge in 2013.
If you care about music, should you ditch Spotify?
How You Turn Music Into Money in 2012 (Spoiler: Mostly iTunes)
Spotify versus iTunes, when are streams-over-time worth as much as a sale today?
How Much Streaming is Really Worth to Artists: a Consumption Analysis
Making Dollars: Clearing Up Spotify Payment Confusion
Spotify’s D.A. Wallach Explains How Spotify Pays Artists
Why Spotify is NOT the Enemy of Artists, and Who is…
So for those of you who dug through that long list of articles – congrats – for the rest of you here’s basically how streaming works for artists like us. For this article I’m going to focus on Spotify just for simplicity. The numbers will be slightly different for other companies but the general arguments will still apply. Spotify pays 70% of it’s revenue back to rights holders (the people who own the rights to the recording – in many label deals this may not be the artists themselves, but that particular point is not really Spotify’s problem). Every right’s holder gets paid a portion of this 70% based on the percentage of plays it gets of the total plays on Spotify. So if an artist gets 1% of the total number of plays on Spotify, they’ll get 1% of the 70% revenue that Spotify doles out. At the moment this works out roughly to $0.0084 per play, but that’s subject to change based on the number of total plays on Spotify and the amount of revenue they get.
So right now the payout is not good. 1 million plays equals just over $8000 in royalties – that’s not great. It’s not quite as bad when you consider that you are judging immediate income with income derived over time (and I would check out this article for that full breakdown), but the reality at the moment is the only people making any appreciable amount of money are already making a great deal from album sales. There is also definitely an argument to be made that immediate money is particularly more important for up and coming artists because they are likely to be the ones who can afford to wait for a payoff the least.
That being said, any young indie band or artist who thought they were going to make any significant percentage of their income from streaming or album sales – let alone recoup the costs of making the album in the first place – are fools. That’s hard enough to do WITH a significant following. Nowadays many artists consider an album more as a promotional tool rather than a serious source of income – it’s another barrier of entry and it shows you’re serious about your craft and should be booked, hired, whatever. I don’t particularly view that trend as a positive development in the industry but it is a necessary adaptation for just about everyone who isn’t a top 40 artist.
So I look at Spotify like that – as a promotional tool, not a source of income. Our ability to have a sustainable career is tied largely with growing a fanbase, so we want to be as easy to find as possible in the hopes that that visibility will help contribute to more album sales and more people at shows.
So to answer the question of whether you will be able to stream our upcoming album: yes. Streaming ultimately looks like it will be a good thing for the industry. I don’t say that with any enthusiasm because the current payout rates are incredibly low and unlikely to give us more than a few bucks here and there – but it’s still new technology. It’s still growing and being developed and I hope that it will change in a way that makes it more sustainable for artists. Though another positive thing to note – it looks like streaming services are reducing the amount of piracy and thus creating revenue where there wouldn’t otherwise have been any. That is a great thing and should definitely be celebrated. So while they don’t currently offer a great deal in terms of royalties, I’m optimistic for the future development of this technology and we’ll definitely be a part of it. In the mean time, if you want to support indie artists that you love, the best way to do that is still to buy their album online or even better – physical copies at shows.
As for us, we’re right in the middle of mixing our upcoming album and things are sounding DOPE!