It was just wishful thinking, I am aware that apple will never switch on radio on the chip, it's all about the money.
Got a tip for us?
Let us know
Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.
Spotify Approaching 10M Paying Users, Revenue May Soon Surpass iTunes in Europe
- Thread starter MacRumors
- Start date
- Sort by reaction score
It was just wishful thinking, I am aware that apple will never switch on radio on the chip, it's all about the money.
Agreed. Each Tuesday, I find myself checking out a new release from an artist I probably would not have listened to otherwise. Because I can.
I pay for Spotify Premium and iTunes Match. In my opinion, for radio at least, they compliment each other. If, for each service, I create a radio station based on Joy Division (for example), I'll get a different mix of songs on each service. And I'm cool with that.
The big difference between the services occurs when an artist I've never heard before is played on a radio station and I want to hear more from that artist right then. iTunes radio fails me at that point, and it's Spotify all the way.
As a part time / hobbyist DJ I use spotify to help with music research. I listen to music elsewhere, my favourite place being Digitally Imported.
I make notes of tunes that I like and then go to spotify to re-listen to those tunes and work out which I might want. At this point I usually find more that I like. I then buy my chosen music from either iTunes or beatport.
Spotify is a great tool but for me it's only part of the picture. Music on iTunes is cheaper than beatport, but not everything is released on iTunes sadly.
I make notes of tunes that I like and then go to spotify to re-listen to those tunes and work out which I might want. At this point I usually find more that I like. I then buy my chosen music from either iTunes or beatport.
Spotify is a great tool but for me it's only part of the picture. Music on iTunes is cheaper than beatport, but not everything is released on iTunes sadly.
Yes. Spotify pays out artist royalties based on plays, not album purchases. And while they claim they pay out 70% of their revenue to artists it's heavily skewed toward the bigger artists.
"A bit of a hit" is quite the understatement. Spotify pays (on average) $0.007 per song play. Let's do some simple math. Imagine you are an independent artist and self-release your album online. Now imagine you have 1,000 fans, and let's break down two scenarios.
- In scenario 1 your 1,000 fans buy your album on iTunes for $9.99. Apple keeps 30% of that, leaving you with $6,993.
(Of course there are other costs associated with releasing an album digitally, but we're keeping it simple for argument's sake.)
In scenario 2 your 1,000 fans decide to listen to your album on Spotify. Since Spotify pays artists based on the number of streams you get paid more the more your fans listen to your album. So, say the album is pretty good and each of your 1,000 fans listen to it 10 times. That's 10,000 plays. Now let's apply Spotify's payout of $0.007 per song. 10,000 x $0.007 = $70.
In scenario 1 you've managed to make nearly $7,000. In scenario 2 you've garnered a measly $70. Barely enough to cover the costs of distributing an album digitally.
Good news! Spotify is a great way to find new music, do research and just listen to music. Also their customer support is great, which is a big plus to me.
Still, Spotify has huge expenses because of royalty fees, so they need all the subcribers they can get...
Still, Spotify has huge expenses because of royalty fees, so they need all the subcribers they can get...
Spotify pays about $0.007 per stream.
100,000,000 streams x $0.007 = $700,000 in royalties.
226,259,799 streams x $0.007 = $1,583,818 in royalties for the song Wake Me Up.
1. Avicii - Wake Me Up 226,259,799 plays
2. Imagine Dragons - Radioactive 204,942,630 plays
3. Macklemore & Ryan Lewis f/ Ray Dalton - Can't Hold Us 194,262,379 plays
4. Macklemore & Ryan Lewis f/Wanz - Thrift Shop 183,314,171 plays
5. Passenger - Let Her Go 179,868,529 plays
6. Robin Thicke f/ Pharrell Williams & T.I. - Blurred Lines 153,715,425 plays
7. Gotye f/ Kimbra - Somebody That I Used To Know 150,022,213 plays
8. Pitbull f/ Ke$ha - Timber 149,038,904 plays
9. Lorde - Royals 148,967,658 plays
10. OneRepublic - Counting Stars 147,530,905 plays
11. Swedish House Mafia f/ John Martin - Don't You Worry Child 137,913,435 plays
12. David Guetta f/ Sia - Titanium 134,714,422 plays
13. Carly Rae Jepsen - Call Me Maybe 134,353,380 plays
14. Bastille - Pompeii 132,473,258 plays
15. The Lumineers - Ho Hey 131,689,759 plays
16. Rihanna - Diamonds 131,149,394 plays
17. Eminem f/ Rihanna - The Monster 128,472,662 plays
18. Daft Punk f/ Pharrell Williams - Get Lucky 127,833,897 plays
19. Avicii - Hey Brother 124,726,840 plays
20. Rihanna f/ Calvin Harris - We Found Love 123,857,524 plays
21. The Script f/ will.i.am - Hall of Fame 123,400,328 plays
22. AWOLNATION - Sail 122,005,550 plays
23. Fun. f/ Janelle Monae - We Are Young 121,819,458 plays
24. Imagine Dragons - Demons 118,946,146 plays
25. Pharrell Williams - Happy 118,419,126 plays
26. will.i.am f/ Britney Spears - Scream & Shout 114,875,044 plays
27. Katy Perry - Roar 114,305,868 plays
28. P!nk f/ Nate Ruess - Just Give Me A Reason 112,260,714 plays
29. Bruno Mars - Locked Out of Heaven 112,171,913 plays
30. Calvin Harris f/ Ellie Goulding - I Need Your Love 111,450,576 plays
31. Miley Cyrus - Wrecking Ball 110,230,073 plays
32. Eminem f/ Rihanna - Love The Way You Lie 109,235,859 plays
33. Ellie Goulding - Burn 108,795,893 plays
34. Katy Perry f/ Juicy J - Dark Horse 108,254,737 plays
35. Flo Rida - Whistle 106,347,634 plays
36. ADELE - Rolling in the Deep 105,287,026 plays
37. Of Monsters And Men - Little Talks 103,872,370 plays
38. Jason DeRulo f/ 2 Chainz - Talk Dirty 101,784,023 plays
39. Fun. - Some Nights 100,456,546 plays
40. PSY - Gangnam Style 100,286,071 plays
About 110-120 streams = 1 purchase
Spotify has about 40-45% market share in on-demand music streaming.
Spotify pays about 70% of its revenue as royalties.
10 million subscribers at $100 a year = $1 billion in revenue
x 70% royalties
= $700 million in royalties a year
100,000,000 streams x $0.007 = $700,000 in royalties.
226,259,799 streams x $0.007 = $1,583,818 in royalties for the song Wake Me Up.
1. Avicii - Wake Me Up 226,259,799 plays
2. Imagine Dragons - Radioactive 204,942,630 plays
3. Macklemore & Ryan Lewis f/ Ray Dalton - Can't Hold Us 194,262,379 plays
4. Macklemore & Ryan Lewis f/Wanz - Thrift Shop 183,314,171 plays
5. Passenger - Let Her Go 179,868,529 plays
6. Robin Thicke f/ Pharrell Williams & T.I. - Blurred Lines 153,715,425 plays
7. Gotye f/ Kimbra - Somebody That I Used To Know 150,022,213 plays
8. Pitbull f/ Ke$ha - Timber 149,038,904 plays
9. Lorde - Royals 148,967,658 plays
10. OneRepublic - Counting Stars 147,530,905 plays
11. Swedish House Mafia f/ John Martin - Don't You Worry Child 137,913,435 plays
12. David Guetta f/ Sia - Titanium 134,714,422 plays
13. Carly Rae Jepsen - Call Me Maybe 134,353,380 plays
14. Bastille - Pompeii 132,473,258 plays
15. The Lumineers - Ho Hey 131,689,759 plays
16. Rihanna - Diamonds 131,149,394 plays
17. Eminem f/ Rihanna - The Monster 128,472,662 plays
18. Daft Punk f/ Pharrell Williams - Get Lucky 127,833,897 plays
19. Avicii - Hey Brother 124,726,840 plays
20. Rihanna f/ Calvin Harris - We Found Love 123,857,524 plays
21. The Script f/ will.i.am - Hall of Fame 123,400,328 plays
22. AWOLNATION - Sail 122,005,550 plays
23. Fun. f/ Janelle Monae - We Are Young 121,819,458 plays
24. Imagine Dragons - Demons 118,946,146 plays
25. Pharrell Williams - Happy 118,419,126 plays
26. will.i.am f/ Britney Spears - Scream & Shout 114,875,044 plays
27. Katy Perry - Roar 114,305,868 plays
28. P!nk f/ Nate Ruess - Just Give Me A Reason 112,260,714 plays
29. Bruno Mars - Locked Out of Heaven 112,171,913 plays
30. Calvin Harris f/ Ellie Goulding - I Need Your Love 111,450,576 plays
31. Miley Cyrus - Wrecking Ball 110,230,073 plays
32. Eminem f/ Rihanna - Love The Way You Lie 109,235,859 plays
33. Ellie Goulding - Burn 108,795,893 plays
34. Katy Perry f/ Juicy J - Dark Horse 108,254,737 plays
35. Flo Rida - Whistle 106,347,634 plays
36. ADELE - Rolling in the Deep 105,287,026 plays
37. Of Monsters And Men - Little Talks 103,872,370 plays
38. Jason DeRulo f/ 2 Chainz - Talk Dirty 101,784,023 plays
39. Fun. - Some Nights 100,456,546 plays
40. PSY - Gangnam Style 100,286,071 plays
About 110-120 streams = 1 purchase
Spotify has about 40-45% market share in on-demand music streaming.
Spotify pays about 70% of its revenue as royalties.
10 million subscribers at $100 a year = $1 billion in revenue
x 70% royalties
= $700 million in royalties a year
Please get the math right even with your "biased" example.
1,000 fans listening to the album with 12 songs 10 times
1,000 x 12 songs x 10 times = 120,000 plays
120,000 plays x $0.007 = $840 not $70.
But what if this is the more likely scenario:
These 1,000 hardcore fans on average listen to the album 40 times over their lifetime. About 1 time a year for 40 years on average.
1,000 fans x 40 x 12 songs x $0.007 = $3360
And because the music is free (with ads), none-hardcore fans / music listeners will "sample" this album on Spotify.
25,000 casual music listeners x 2 times on average in the next 40 years x 12 songs x $0.007 =$4200.
$3360 from the "hardcore" fans + $4200 from the "let's check it out, it's free" casual music listener = $7560
Here's another stats:
The average Itunes user purchase about $40 worth of music a year.
The average Spotify Premium subscribers pays $110 to subscribe to Spotify.
Spotify hasn't scaled yet. It has about 9 million subscribers right now.
And Spotify has just 32% of the market share for on-demand subscription music. The second biggest is Deezer with more than 6 million paying subscribers.
http://www.ifpi.org/news/music-subscription-revenues-help-drive-growth-in-most-major-markets
2010: 8 million paying subscribers
2012: 20 million paying subscribers
2013: 28 million paying subscribers (1/3 of that is Spotify)
Here's the revenue with 50 million paying subscribers:
50 million x $100 a year = $5 billion USD in revenue.
Last edited:
2011 USA streaming revenue: $650 million USD
2012 USA streaming revenue: $1,033 million USD
2013 USA streaming revenue: $1,439 million USD
Source: RIAA year-end report
there is a chance that it could surpass $2 billion USD this year.
For some music labels, streaming revenue has surpassed downloads/Itunes revenue in 2014.
http://routenote.com/blog/grow-of-m...-2014-streaming-will-be-major-royalty-stream/
These graphs are very basic examples of the royalty share from RouteNote artists. This share has been split out between Download based royalties and royalties from Music Streaming Services. We simply wanted to show that Music Streaming Services are really growing and as of 2014 will make up the majority of royalties for RouteNote artists.
2013 USA RIAA #:
Streaming Revenue: $1.439 billion USD (up 39.3%)
Singles Download Revenue: $1.569 billion USD (down 3.4%)
Album Download Revenue: $1.234 billion USD (up 2.4%) ----combined downloads is at $2.8 billion
CD (physical): $2.1235 (down 14.6%)
Combined digital album and digital singles downloads is down 12% in the first 3 months of 2014 according to Billboard. Streaming is up 33%.
At the end of 2015 (20 months from now), streaming revenue > combined downloads (both digital album and digital singles) revenue in the USA. Probably SOONER in my opinion because Apple will come out with its own on-demand streaming service which will further spur adoption.
Also, more smartphone penetration in the USA = more potential users of on-demand streaming music.
With offline mode (up to 3,333 songs), a smartphone user can use Spotify without using 1MB of data.
2012 USA streaming revenue: $1,033 million USD
2013 USA streaming revenue: $1,439 million USD
Source: RIAA year-end report
there is a chance that it could surpass $2 billion USD this year.
For some music labels, streaming revenue has surpassed downloads/Itunes revenue in 2014.
http://routenote.com/blog/grow-of-m...-2014-streaming-will-be-major-royalty-stream/
These graphs are very basic examples of the royalty share from RouteNote artists. This share has been split out between Download based royalties and royalties from Music Streaming Services. We simply wanted to show that Music Streaming Services are really growing and as of 2014 will make up the majority of royalties for RouteNote artists.
2013 USA RIAA #:
Streaming Revenue: $1.439 billion USD (up 39.3%)
Singles Download Revenue: $1.569 billion USD (down 3.4%)
Album Download Revenue: $1.234 billion USD (up 2.4%) ----combined downloads is at $2.8 billion
CD (physical): $2.1235 (down 14.6%)
Combined digital album and digital singles downloads is down 12% in the first 3 months of 2014 according to Billboard. Streaming is up 33%.
At the end of 2015 (20 months from now), streaming revenue > combined downloads (both digital album and digital singles) revenue in the USA. Probably SOONER in my opinion because Apple will come out with its own on-demand streaming service which will further spur adoption.
Also, more smartphone penetration in the USA = more potential users of on-demand streaming music.
With offline mode (up to 3,333 songs), a smartphone user can use Spotify without using 1MB of data.
The best service I pay for
Spotify is the best service I pay for. I also pay for iTunes Match, but possibility to listen to virtually any song and ability to listen to it on my Marantz receiver is superior to iTunes.
Spotify is the best service I pay for. I also pay for iTunes Match, but possibility to listen to virtually any song and ability to listen to it on my Marantz receiver is superior to iTunes.
1 billion plays on on-demand streaming services x $0.007 = $7 million in royalties.
Avicii - Wake Me Up 226,259,799 plays on Spotify alone to date.
Spotify has 1/3 market share world-wide from on-demand subscription service. (9 million out of 28 millions paying subscribers).
Could Wake Me Up reach that 1 billion on-demand streams in the next few years?
Avicii - Wake Me Up 226,259,799 plays on Spotify alone to date.
Spotify has 1/3 market share world-wide from on-demand subscription service. (9 million out of 28 millions paying subscribers).
Could Wake Me Up reach that 1 billion on-demand streams in the next few years?
My mistake, I forgot to include the number of tracks on the album in the equation. That doesn't mean my example is "biased" however, I was giving an example of a small independent artist. You've only included figures from the top artists in your examples.
In your example it takes 40 years for the artist to generate (roughly) the same revenue from Spotify as they would from iTunes in one year. Also, I was not accounting for casual listeners because that is not a 1:1 comparison. I was comparing 1,000 listeners on Spotify to 1,000 purchasers on iTunes.
Let's use a real world example from a bigger artist. 30 Seconds To Mars is one of my favorite bands, their last album sold 52,000 copies its first week.
52,000 x $9.99 - Apple's 30% = $363,636
52,000 x 12 songs x 40 plays x $0.007 = $174,720
So, the revenue they'll earn from Spotify over the span of 40 years is less than half of what they'd generate in the first week from iTunes.
Would not surprise me if we hear Spotify being acquired by someone like Apple (or even Microsoft!). It's a great service. It works and it's taking the industry by storm. Many years ago, big record labels were very reluctant to this idea. However as each day passes, big record labels have had to bite their tongue and realise that these services are the future. Why would anyone buy music when they can listen to the entire worlds music collection as/when they want for a low monthly subscription.
We shall see over the coming year.
We shall see over the coming year.
The artists have always gotten screwed. The labels get 80% of all profits. It doesn't matter what streaming service the labels get their cut first.
Meanwhile in Germany the clock is going backwards and Deutsche Telekom is lowering data caps on the contracts for smartphones yet again... (new contract models as of late last year)
My tariff (old one) has 1GB and I can boost it to 5GB. (for 10€ more)
Or you can boost it to 2GB (LTE speeds)
It included HSDPA speeds (on LTE) from the get go and roaming requires weekpasses (100MB I think it was per week. softcap, you can buy a new one as soon as you get over 100MB of course)
Weekpasses cost something like 10 or 15€.
My plan is 50€ a month with iPhone 5 (and I did not get my handset for free at all like many Brits do lol... I got it for 350€ I think it was)
Oh and this is the student rebated version of my contract.
Normally it's 10€*more (granted the handset is a little cheaper then)
Smartphone plans in Germany suck if you want a proper network (Deutsche Telekom or Vodafone. O2 and E-Plus (BASE) can't be taken serious)
addition:
The new plans have less data and the old option to go for 5GB HSDPA speed on LTE doesn't exist anymore, too I think.
My plan's equivalent has unlimited talk and text (nation-wide, I have unlimited texts now and 120 minutes, unlimited minutes to landline and T-Mobile) and 750MB, which you can boost to 1.5GB a month at the same 10€. Ridiculous.
Glassed Silver:mac
Last edited:
You should really read my other posts on this topic. There's a big difference between the way streaming services payout vs. non-streaming services.
I'm paying £55 a month for 10gb a month on EE. Where I live its GPRS that's so slow speed test times out because it thinks I'm not even getting a data connection.
That's MORE than my phone bill, gym membership and internet bill in one! Hopefully you got the iPhone free at least?
Assuming you're on a 24 month contract, you're paying 55x24 = £1,320.
On Three, for unlimited 4G + tethering you'd pay 15x24 = £360, plus the iPhone from Apple at £630 for 32GB.
EE: £1,320
Three: £990
That's £330 more, assuming you got a free handset. Plus, via Three, you have no minimum term, an unlocked handset, and the ability to sell your iPhone and buy the new one after X months for £200-300 and continue on your contract.
When you look at life cycle costs, SIM only becomes a really good deal. Friends and family are slowly migrating towards it after doing the calculations/cost vs. benefit.
you used your made-up number against my made-up number. Both of our numbers could be way off.
Here are the actual figures:
114 plays on an on-demand subscription service = 1 Itunes download
70% of the average of $0.99 and $1.29 Itunes purchase = $0.80 royalties.
$0.007 x 114 plays = $0.80 royalties
The average Itunes user purchase $40 worth of music a year.
The average Spotify Premium subscriber purchase $110 worth of music a year.
http://routenote.com/blog/grow-of-m...-2014-streaming-will-be-major-royalty-stream/
These graphs are very basic examples of the royalty share from RouteNote artists. This share has been split out between Download based royalties and royalties from Music Streaming Services. We simply wanted to show that Music Streaming Services are really growing and as of 2014 will make up the majority of royalties for RouteNote artists.
Try listening to internet radio when you're on a long drive in the car and see how bad that is. Fact is I only ever listen to the radio when I'm driving and I'm quite happy with the choice of stations available.
I only ever listen to internet radio if I want to listen to foreign radio stations for a change. If I'm going to listen over the internet I'd rather just log into Spotify and listen to a playlist or album I choose.