Spotiwhy? : Are Subscription Music Services a Sustainable Business Model? Subscription music services have been dominating the news recently with the U.S. launch of Spotify and the new IHeartRadio, plus free offerings from MOG and RDIO, and the recent purchase of Napster by Rhapsody. There is a sea change occurring in all content industries moving towards streaming and subscription rather than ownership, and this transition has been causing a lot of debate and disagreement about the potential and the fairness of this new model of consumption.
Spotify has been both the most visible and the most vilified of the new companies. First there was the public removal of certain labels’ catalogs from the service. Since then, there has been a rash of artists making their royalty statements public in an effort to show that Spotify is not a viable business partner for a small label or an indie musician. Because these numbers exist in a vacuum there is no way to gauge if these are isolated instances or a pervasive injustice. 2) What are the most likely rates per stream? Spotify Royalties. I have published a series of articles on payments by Spotify to artists in my blog. You probably don’t have the time to read all these individuals posts so let me give you a roundup here. Ever since the story about Lady Gaga receiving $162 for 1 million streams, the Spotify payments have become a hot issue.
The Gaga payment turned in to a kind of urban legend that keeps popping up in about every article on the subject of Spotify payments. But how reliable is this story? To find out the truth I contacted labels, artists, collecting societies and Spotify. The current payment per stream is $ 0.005 (€ 0.004) Need proof? That clears up a lot don’t you think? Note the different rates for plays of the same song? If you want to take a closer look a real CDbaby Royalty statement, Zoe Keating has put her latest statement online.
Scott Busecemi was kind enough to send met the statement of his client HoneBoy Dupree. Here is a spreadsheet with the raw data so you can dive into it. The big labels. Spotify: Are music owners happy with the economics of Spotify so far. Why Spotify can never be profitable: The secret demands of record labels. Imagine a new hot-dog selling venture. Let’s also say there’s only one supplier to purchase hot dogs from. Instead of simply charging a fixed price for hot dogs, that supplier demands the HIGHER of the following: $1 per hot dog sold OR $2 for every customer served OR 50 percent of all revenues for anything sold in the store.In addition, the supplier requires a two-year minimum order of 300 hot dogs per day, payable all in advance. If fewer hot dogs are sold, there is no refund.
If more than 300 hot dogs are sold each day, payments to the supplier are generated by calculating $2 per customer or 50 percent of total revenues, so an additional payment is due to the supplier. After the first two years, the supplier can unilaterally adjust any of the pricing terms and the shop can never switch suppliers. Would this imaginary hot dog establishment be able to generate a profit? For the first time, people are talking, and these previously secret demands are being made public. Fidel.ru — всё / Блог компании Tracks Flow. Пришло время закрывать проект. Он проработал без малого 6 лет. Шесть лет — это невероятный срок для рынка цифровой дистрибуции, тем более в России. За это время удалось сделать очень многое. Кроме, пожалуй, главного. Fidel.ru первый в СНГ подписал контракт с Universal Music, а в дальнейшем и со всеми остальнымимейджорами, и с огромным количеством инди лейблов.
Каталог На самом деле, главное, что нужно пользователю — это каталог. Правообладателей огромное количество и, даже если у вас в компании сидит огромный штат менеджеров, вряд ли удастся заполучить права на всё. А еще есть мейджеры. Ну и еще есть эксклюзивы. Финансы Давайте прикинем экономику. Правообладатель хочет как минимум 50% от выручки сервиса за смежные права плюс еще 10-12% от выручки сервиса за авторские права. Также, у правообладателей существует такое понятие как Minimum Guarantee. На остальное нужно примерно столько же. А какие, собственно, предложения? Сейчас происходит очень странно, с точностью до наоборот. Spotify Is Having A Good 2012: Revenues Could Reach $500M As It Expands The Digital Music Market. Spotify, the streaming music startup, was having serious trouble paying its bills, if you believed reports from earlier this year. Its 2011 financials showed a loss of nearly $60 million on revenues of $244 million.
But this information is out of date, because the company has had a relatively strong 2012. It made $200 million in total revenue over the first six months of 2012, and is on an annual run-rate that could put it around $500 million by January, according to confidential financial information leaked to me by industry sources. Despite another net loss this year, Spotify’s business model — free streaming music with ads, $5 for web access with no ads, and $10 a month for ad-free plus mobile access — is going in the right direction. The company didn’t comment on these numbers when we asked. The situation still sounds painful, but it’s not bad at all.
Can it get many more users, particularly paying ones, in 2013? [Image via Gizmodo.] Alert (PrivCo Exclusive): SPOTIFY's Just-Closed Full-Year Financials Obtained By PrivCo Reveal Rapid Revenue Growth, But "Unsustainable" Business Model: Revenues Up 151% to $244M, Yet Cost Of Sales Up 98%, Net Losses Ballooned 60% to -$59M: "Something Mus.
Aerialsounds. Says Worldwide Online Music Revenue from End-User Spending Is on Pace to Total $6.3 Billion in 2011. STAMFORD, Conn., November 8, 2011 View All Press Releases Online Music Subscription Services Will be Main Growth Sector in Evolving Market Worldwide online music revenue from end-user spending is on pace to total $6.3 billion in 2011, up from $5.9 billion in 2010, according to Gartner, Inc. Online music revenue is forecast to reach $6.8 billion in 2012, and grow to $7.7 billion in 2015. By comparison, consumer spending on physical music (CDs and LPs) is expected to slide from approximately $15 billion in 2010 to about $10 billion in 2015. "As consumers opt for connected devices — media tablets, smartphones and connected media players — across world regions, their desire for access to and consumption of music and content is growing as well," said Mike McGuire, research vice president at Gartner.
"The music industry was the first media sector to feel the full impact of two major forces — the Internet and technology-empowered consumers. Table 1. Source: Gartner (October 2011) Mr. Contacts. Apple can pick its moment to re-invent music again. Apple did not announce a subscription iTunes access model – which has been mooted by the Wall Street Journal and New York Times – along with iPhones and iPods on Wednesday.
And that’s just fine. Such a move, when it happens, will redefine the industry forever – but Apple, and music, can afford to wait. Pay TV-like subscription access to unlimited content is the hot new consumer furrow being ploughed by the likes of Netflix, Spotify, Rhapsody and more. Ethan Kaplan, a Warner Music Group technology SVP until 2011, says: “When Apple goes subscription streaming, it won’t be a surprise. Before it goes live, however, two things will likely need to happen: Streaming rivals must prove that there is a meaningful enough business opportunity in subscription to draw Apple out.iTunes Store’s track download business must plateau or begin shrinking, pushing it to discover new pastures.
We’re not there yet As Kaplan says: “Their hand will be forced when this pain is less than the pain of ignoring it. Music streaming industry development. Royalties. Spotify: Why is Spotify so exciting.