Interestingly, I was on a course this week where we had to look at how the music industry operates. General consensus at the end was that the streaming model currently doesn't work for either the record company or the artist. Just to clear a few things up. On a normal CD sale or album download (averaging out to 10 songs per album), the artist makes anywhere between 30c and 1$ (depending on their bargaining power with the record company. Shania Twain famously negotiated 40% royalties on one of her albums)). The record company makes roughly $1.70 profit on a CD and slightly more than this on a digital download (difficult to be precise as its usually reported as revenues, rather than profit, for this but again, the good guesstimate is in the region of $2).
So, if we take the example of Adele (ok this is an extreme example but it gives you an idea of the numbers involved), in the last two years she has sold 26 million 'albums' (mix of CD and download). That equates to about $25M in royalties for her (indeed she probably received more as she writes her own songs, but we'll keep it simple for now). That equates to roughly $50M profit for the record company. Not bad I hear you say, and I would agree. However, here comes the 'issue' for the record companies and the artists. To receive the same amount of profit in that two year timeframe, the record company would need 25 BILLION streams of Adele songs (or 2.5 billion albums if you want to keep it that way). Its worse for Adele as the artist royalties fall to about a third that the record companies get (rather than the roughly half in the CD and download systems). So Adele would need over 35 billion downloads to get the same profit.
Now, I know, we're talking huge (crazy?!) numbers here for profit, but equate this back to your Indie band, or even another 'successful' artist (Adele had the top-selling album last year at 18M copies, the second placed album was 8M copies), and you'll see that the numbers do drop off quite significantly especially outside the top 10 or 20 albums.
Another famous example is Lady Gaga - 1 million streams of 'poker face' on Spotify and she made about $160. If that had been 1 million downloads she would have made $100,000.
Again, you may not feel any sympathy for these really high earners, but think about the little guys, they just are not getting anything of any note at all from Spotify....
Sorry, very long winded post, but the take home message is that, streaming services need really massive numbers to work.
Oh, and Spotify lost $59 million in 2011 (not sure about 2012).
. Are you serious with what you wrote? Uh, sir, here's the definition of "hate". Double check the meaning of words before you post.
