Daniel Ek On Streaming Royalties

Posted on August 2, 2020 by

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By, Bob Lefsetz

“There is a narrative fallacy here, combined with the fact that, obviously, some artists that used to do well in the past may not do well in this future landscape, where you can’t record music once every three to four years and think that’s going to be enough. The artists today that are making it realise that it’s about creating a continuous engagement with their fans. It is about putting the work in, about the storytelling around the album, and about keeping a continuous dialogue with your fans… I feel, really, that the ones that aren’t doing well in streaming are predominantly people who want to release music the way it used to be released.”

https://bit.ly/2XdO02h

Bingo!

I thought this case was closed, but never underestimate oldsters in control of old media perpetuating the canard that streaming is the devil and if Spotify were just somehow equitable, they’d be rolling in dough.

“What tends to be reported are the people that are unhappy, but we very rarely see anyone who’s talking about… In the entire existence (of Spotify) I don’t think I’ve ever seen a single artist saying ‘I’m happy with all the money I’m getting from streaming.’ Stating that publicly. In private they have done that many times, but in public they have no incentive to do it. But unequivocally, from the data, there are more and more artists that are able to live off streaming income in itself.”

I was watching “The Real Housewives of Beverly Hills” and one woman asked a newbie how she got so wealthy. This new woman didn’t want to tell, she said she’d grown up in the south, all she’d reveal was her first husband was rich.

In a country where the president doesn’t want to reveal his income/taxes, do you think musicians want to either?

According to HitsDailyDouble’s Song Revenue Chart: https://bit.ly/30bt7qylast week’s #1, DJ Khaled’s cut “Popstar,” featuring Drake, was streamed 25,705,000 times, or for the math challenged, in excess of 25 million times, and generated $172,352.

25 million streams might sound like a lot, but the biggest Spotify streaming track of all time is Ed Sheeran’s “Shape of You,” and it has 2,555,000,000 streams (in excess of 2.5 billion to the math-challenged), AND THAT’S JUST ON SPOTIFY!

Let’s extrapolate. Using the metric re DJ Khaled, Ed Sheeran would have earned approximately $17,235,200 (once again, that’s $17 million) FOR ONE TRACK! That’s beaucoup bucks! And Ed Sheeran also has the #8 all time Spotify track, with 1,574,000 streams, and he has #12 and #16…as the Violent Femmes once sang…ADD IT UP!

Now those numbers re Sheeran’s “Shape of You” are fallacious. Because as Spotify subscription numbers increase, so do payments. So, what DJ Khaled gets for a stream today is more than what Ed Sheeran got in the past (approximately, Queen Jane, as Dylan would say, there are other factors, but generally speaking this is true). HOWEVER, we are only talking SPOTIFY numbers, not Apple, Amazon, Deezer, Tidal, even YouTube, which would increase the payment.

As for the most-streamed Spotify tracks of all time: https://bit.ly/317rIQS #100, “Youngblood” by 5 Seconds of Summer, has 992 million streams, so when you have a few million and believe you should be making millions, you’re wrong.

So, first and foremost, you’re probably not as big as you think you are.

Second, the metrics of old don’t apply today. In the old days it was about sales, today it’s about streams. You get paid for consumption until the end of copyright, which never seems to end in the U.S. anyway. As for talking about that royalty from physical…chances are, you weren’t even in royalties, you owed the label money, unless you were in the equivalent of the Spotify Top 100 of all time. Yes, you got advances from the label, but there’s a good chance that’s all you got. You went on the road and lost money, the label supported you. Sure, eventually you might make some money on the road, and that’s good, but there were fewer avenues of additional cash. You may or may not want to have sponsors, do endorsements, sell merch and perfume and… But all those opportunities now exist. You can monetize in so many ways.

Also, streaming tells the truth, just like Soundscan in the physical era. I mean how big are you really, forget the hype, are people really listening to your music? That’s what Spotify and the rest of the streaming giants tell you. So, you got ink in all the major newspapers and magazines, well, that doesn’t mean people care. As for radio…you’re still getting paid on that. And in the internet radio world, you’re getting paid on both the song and the record, same deal on satellite, whereas in the U.S. previously these were nonstarters generating no cash.

But you made more money in the past!

Well, thirty five years ago, computers cost $3 grand and were only a fraction as powerful as they are today. The rules of economics should apply everywhere but in the music business?

As for all the money going only to the elite, the most-streamed…

“Gone are the days of Top 40, it’s now the Top 43,000″ – referring to the fact that the streaming service’s ‘top tier’ of artists – those accounting for the top 10% of its streams – now number more than 43,000, compared to 30,000 a year ago.”

Once again, maybe you’re not as big as you used to be.

Would payments be different if everybody’s subscription was allocated to what they actually listened to? Economist Will Page reported that this would not be the case. Meanwhile, Deezer wants to attempt this, but so far the labels haven’t agreed.

The labels…

It’s kind of like Ticketmaster, both the ticketing giant and Spotify get all the heat when the blame lies elsewhere. Ticketmaster just does what the acts tell them to do, and since the big acts take virtually all of the ticket revenue, the fees represent profit for Ticketmaster, which it also has to share with promoters, venues and potentially other entities, sometimes even including the act itself! As for Spotify, it pays in the neighborhood of 58% of revenues for recordings and 6% for mechanicals and 6% for performance. So, the more Spotify makes, the more it has to pay out. Maybe you have a bad royalty deal with the label. Or maybe you’re one of twenty writers on a song and you don’t own any of the publishing and you’re quoting royalties for streaming RADIO, which pays a lesser rate than on demand.

“The artists today that are making it realise that it’s about creating a continuous engagement with their fans. It is about putting the work in, about the storytelling around the album, and about keeping a continuous dialogue with your fans.”

The game changed. Like it did when we went from singles to albums. Once again, why should the music business get to stay in the past when every other business does not, what makes artists so special that they never have to adjust to business change?

“I’m just one or two years and a couple of changes behind you
In my lessons at love’s pain and heartache school”

“Fountain of Sorrow”
Jackson Browne

The history of the past twenty five years is the mainstream trying to adjust to the present, never mind the future. Go back to network news, it’s on YouTube, people laughing about the future of the internet, how it’s never going to happen.

So what you’ve got is aged know-nothings pontificating and getting ink because they mean something to the oldsters controlling big media but nearly nothing to those actually streaming music. Like David Crosby.

And never underestimate the complaining of the wannabes and losers. Come on, just go to your local bar (when it opens after Covid-19), and you’ll hear so many stories of inequities…I was gonna play for the Yankees but I got injured, someone stole my glove and I couldn’t afford a new one, my girlfriend dumped me and I was emotionally troubled…it’s the nature of the world, everybody’s got an excuse, everybody believes they deserve to make it.

But music is close to a lottery.

You’re not entitled to a living in art. Just like you’re not entitled to a living in professional sports. There’s a limited number of qualified people. Who make a lot, while you’re shut out. Be thankful in music that there’s no barrier to entry, that you can play at all.

So, when MTV started, the classic rock artists ruled. But them came Duran Duran and hip-hop and…they were squeezed out.

At the turn of the century, during Napster, the focus was on the past, to a great degree these same classic rock artists, unearthing old gems, rarities.

But today it’s about the present, what people want to listen to TODAY! And the truth is a lot of that is hip-hop. And if you’re a rock fan, listen to the songs on the chart, do they really deserve a wider listenership? And you used to have to buy them to hear them at all, now they’re all included in your streaming package, so if there’s something good, you can check it out.

The Beatles wiped out so many acts. From Perry Como to Fabian to Bobby Rydell… But only in the twenty first century do old acts believe they’re entitled to a large share of the pie of recorded music revenues.

Once again, youngsters are not concerned with this at all. They’ve accepted and bought into the new paradigm. It’s only the old people and the losers who are complaining, AND THEY ALWAYS COMPLAIN!

Ignore the next person who tells you streaming is the enemy. Spotify INCREASED recorded music revenue. And chances are, if there weren’t streaming services, your material would not be able to be heard whatsoever. David Crosby? Do you really think the retail stores of old would have stocked all your new albums? NO!

I’m a fan of David Crosby’s music. I like that he’s pushing the envelope artistically, but that does not mean his opinions are inviolate.

Sometimes you can’t teach an old dog new tricks, but never forget, the world is run by new dogs, accept it.

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