Music News

Published on August 5th, 2018 | by Alan Cross

8

One more time: You cannot equate money made from STREAMS with money that came from SALES. Here’s why.

David Crosby is mad about the money he’s making from streaming.

Peter Frampton is upset, too.

*Sigh*  Neither one of them gets it. A million streams is NOTHING. Neither is 55 million streams.
Let’s look at it this way for the benefit of Mr. Crosby.
A song gets played ten times on the radio in ten different cities across the continent. Let’s say that with each play, the song is exposed to 100,000. In other words, ten plays of the song reaches a million listeners. A million listens, in other words.
The payout for this? Pennies. Literally pennies.
But over weeks and months, those pennies add up, especially if you have several songs that make it on the radio. The results are nice cheques from SOCAN, ASCAP, BMI, SESAC and other performing rights organizations.
Now let’s switch to streaming.
A song gets streamed a million times (i.e. is heard by the same number of people as in the example above) EXCEPT that we’re dealing with a million individual listens instead of a million group listens.
Payout? A few bucks, which, in many territories can HIGHER than radio airplay while delivering the same number of ears.
Crosby is conflating streams with sales. Apples and oranges. Streaming is essentially ultra-individual radio and not the same as selling records, CDs and digital downloads.
And if Crosby and Frampton have issues with the royalty rates being paid for streaming, they need to take it up with their record labels. Spotify, Apple Music, YouTube Music, Deezer, and all the rest of them pay out what’s demanded by the labels. They get the cheques from the streamers and then distribute fees to the artists.
The labels, then, act as middlemen, proprietors of a big, black box where the money gets dumped on the way from the streaming companies to the artists. How much money goes to the artist is determined by the terms of their deals, not at the discretion of Spotify or whoever.
And yes, those payouts can be pitifully small–extra small if you’re under the impression that streaming should pay as much as record sales.
Once again, streams are not the same as sales and will never will be. Got a problem with those Spotify cheques? Talk to your label which is probably taking at least 50% of that streaming revenue before it passes anything on to you.
Another look at the situation is available here.

Tags: , ,


About the Author

is an internationally known broadcaster, interviewer, writer, consultant, blogger and speaker. In his 30+ years in the music business, Alan has interviewed the biggest names in rock, from David Bowie and U2 to Pearl Jam and the Foo Fighters. He’s also known as a musicologist and documentarian through programs like The Ongoing History of New Music.


Related Posts


8 Responses to One more time: You cannot equate money made from STREAMS with money that came from SALES. Here’s why.

  1. David Houldcroft says:

    I’m a big music fan and cannot get a handle on payout for artists and songwriters. I’ve read several books and it seems they have been ripped off for years on sales. They always made their money on performing. What is best way to support artists and songwriters? I’ve been picking up vinyl at shows for past few years… I go to at least 12 club/small theatre shows a year. I subscribe to Apple Music. How does one become a modern patron of musical art?

    • Alan Cross says:

      Physical product. That’s what yields the highest margins for artists.

      • Dave says:

        So yeah, buy a dying format in CD’s or pay through the nose for a single vinyl album that would cover 2 or 3 months of a spotify membership where you get access to almost all of the music in the world…except Tool. Be a fan, buy the T-Shirt, go to a show, stream their music and don’t let them tell you that you’re the problem.

  2. Max says:

    Streams cannot be compared to radio, either – because radio consists of predominantly random listens (I tune into a station because I generally like them, not because I know that at 3PM they will play song XYZ from my favorite band), whereas with streams it’s a series of individual and conscious choices, which should pay more than just being exposed to a more or less random selection.
    The point is that everything is done with the “consumer” front and center, and this consumer wants everything and at a low price point – not just music, mind you. But the end result is/will be, as in many other sectors, a big decline in quality, with everyone just focusing on saving and cutting corners because payout will be very small anyway. You already see it in the larger share of music being programmed instead of being played, and the predominance of solo artists vs. bands, simply because that way you don’t have to share the rewards.
    Is this what we want? If so, let’s just go ahead.

    • Alan Cross says:

      You’re correct about the on-demand advantage of streaming. But that attribute was factored into the negotiations of fees between the streamers and rightsholders (i.e. the record labels). Streaming is still much closer to radio than it will ever be to sales.

      Bottom line is that we’re not going back to the old ways. The labels are making too much money from streaming (and saving too much money by not having to manufacture physical product) to change anything. Artists need to band together to demand more money. Will consumers pay more? We’ll see.

  3. skr213 says:

    Totally disagree with your take on this. Streaming has taken the place of CD sales for music consumers. As such, you HAVE to equate streams to physical sales because THAT’S WHAT IT HAS REPLACED. Your attempt to just equate streams to radio listens is intellectually dishonest and totally misrepresents streaming’s place for music consumers.

    • Alan Cross says:

      No, it’s what it has DISRUPTED. Just because streaming is displacing the CD doesn’t mean the value of the stream is the same as a CD.

      Streams are accessed on a one-listen-at-a-time basis, which means a micropayment every time you listen. You do not own anything with a stream. Stop paying and you lose all your music. CDs and vinyl are a buy-out proposition meaning that you have access to that material anytime you want, in private in perpetuity. You own the music. Apples and oranges.

      Music consumption is has moved away from being a retail event with large margins that come with physical product. At its core, streaming is just another form of radio.

  4. Hugh Doolan says:

    based on what I earn per play (~$.003), on Spotify at least (I self publish) Frampton should have earned ~ $217,284.00 – perhaps he needs to sit down with his label/publishers OR you get paid less the more you’re streamed??

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Back to Top ↑