What initially seemed to be a conversation about streaming revenues for artists more or less this week became a conversation … about Taylor Swift.
But it’s the debate behind Apple Music that is somewhat puzzling. Taylor Swift wasn’t the only one focusing concerns on Apple Music’s quarterly free trial. Labels were fixated on the same worry.
The reason this is odd is that it ignores the fact that even when users pay for a subscription, rates are woefully inadequate. Music Business Worldwide reported a study from France that confirms what many had suspected. Majors get a whole lot of the cash from a subscription fee. Most of the money stays in the hands of the labels; artists see as little as 11% of that ten dollar monthly fee. (The one bright spot: they’ll get a bit more if they’re registered as the writer, too – separate fee.) These numbers seem to be typical not only of France and something like Spotify, but other countries and Apple Music, too. (One difference: Europe takes an astonishing bite in the form of tax, which is a bit frustrating in a business that already has razor-thin revenue.)
The most telling stat to me is the one that was least reported from that study. Net income is an stunningly low 5% for the labels. The MBW article is suspicious of that figure, but I could believe it isn’t far off the mark. Essentially, marketing costs are such that labels are very nearly paying to have their music played. And that seems feasible given that a lot of people play music after searching for it – without the marketing budget, that music might not get played at all.
So kudos this round not to Taylor Swift, but to Ohm & Sport, who this week built a tool called Eternify. The Web app finds 30 seconds of your favorite artist and plays it over and over again – running up play counts and revenues. Leave Eternify running, and you can at least get beer money. But the app – whose 30-second loops prove oddly hypnotic if you actually leave your speaker on – just shows the absurdity of the streaming business model.
Eternify figures revenues of half a cent per play. Spotify has estimated fees as high as $0.08, but you still get the idea. And even if Apple Music sets a higher rate, you can do the math. Streaming earns a fraction of what downloads did.
Early analysis says Apple’s payments to indies are an even worse deal. A paltry $0.002 per stream make the whole thing virtually worthless. Europe takes tax out of that, too. And for an insight in why the free trial was so controversial, estimates pegged the per-stream fee there at as little as $0.00047.
This should lead to some other questions, like:
1. If streaming is earning next to nothing, why not simply have your music streaming for free, where you can more easily promote it?
2. If you’re not getting paid by streams, isn’t it more valuable to have a lot of data about listeners? Everything from planning tours to releases can benefit from that information. Will Apple provide that to artists?
3. Why can’t Apple make it easier for apps like Bandcamp to let you purchase your music? Surely this would do more to benefit independent artists than any of the lip service paid the topic in the Apple Music launch.
4. If most of the overhead in digital music is marketing, what can be done to make discovery and sharing easier and lavish marketing budgets less necessary? And, presuming artists made sure they got a share of the expanded proceeds, wouldn’t that do more for expanding revenue than worrying about a free trial?
5. Will Apple, given their control of the store, also encourage people to buy downloads of what they’re streaming?
We’re lucky DJs currently prefer downloads, and we’re lucky for the vinyl resurgence. But this still places recording artists in enormous trouble. Maybe streaming is an inevitable progression; maybe there’s no way to coax bigger subscription rates from listeners. But that means at the very least artists will need to look for other revenue sources to make recording music worthwhile.
Try Eternify for yourself below. I earned about 15 cents for myself in the time it took me to write this, then turned it off. Services like this can get music removed from Spotify rather than genuinely earning money. But as performance art, I think it works.
Just don’t actually expect this to work as a solution, I should clarify – it’s more conceptual protest than actual tool. (As noted in comments, it could get your account shut down as it violates terms of service.)
And for a very different take on digital downloads, don’t miss The Verge covering Vimeo. Sure, this is video and not music, but some of the implications are clear.