Warner Music Earned More Revenue From Streaming Services Than Downloads in Q2 2015

[SeaFox]

You pay for radio with your ears. It's horrible.

I was just telling my mom the other day that I don't listen to the radio anymore because with all the advertisements it's "not worth the money". She managed to misunderstand that and I had to clarify I meant that it's wasn't worth listening to even for free.

 

[thekeyring]

I never said I don't want streaming to exist, or that people shouldn't be allowed to have it. Get a grip man. I'm saying it's not the holy-grail that will save the music industry, that many folks are making it out to be.

I agree - which is why I made my comment.
People feel like streaming will replace their local music collection and don't like it. I don't see it like that - I see it as on demand radio, especially with curated playlists.

 

[Benjamin Frost]

I just have to ask, didn't you just contradict yourself there? No good music these days. History tells us all music of any era is sub par. Therefore....now is no different than any other time? -mind boggles-
Actually, I do agree with you and history. But this "no good music today" trope is so bogus. The reason older music may sound more appealing is that only the best hangs around to be compared to. There are plenty of dog songs from any era. I give you MacArthur Park and Me and Bobby McGee (Janis Joplin version).
There is a lot of great music out there (e.g.Fitz and the Tantrums. And I am not even in their age demographic.) Just got to look for it and appreciate it. There is no golden age.

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I think most of subjonas's list is debatable. I disagree with a lot of it. But I do agree with you here. It's not the money. It's the time. Podcasts eat up most of my listening time. Yet -another- monthly payment for music just doesn't make sense to me. It is for this reason that I really like Apple radio. I won't be subscribing to a subscription sevrice if they do away with it.

You make a good point about looking back with rose-tinted spectacles. Yes, we remember the best music. Nevertheless, my main argument is that the music of the past 25 years is unusually poor and will be seen as a black moment in music history.

 

[Freeks]

I have been Spotify Premium user since day one. I love it.

I'm also artist and i receive pennies from Spotify plays. The way how Spotify splits the incoming money is unfair, but i doubt that Apple's system is any different. All streaming services are made to serve major labels interests.

For me streaming is exactly how i want to consume music most of the time. Rest of the time it's playing vinyls. I have loads of CD's that i should box as i don't own CD player anymore.

I do buy cd's on some gigs if i want to support the band.

Reason why Warner makes good money on streaming is their huge back catalog. Ppl might not want to buy they old records, but as they are "free" in the streaming system then why not. Streaming is perfect for companies with huge back catalogues.

 

[Lictor]

Spotify has 60 million active users and 15 million paying subscribers.
It doesn't look like streaming is a big as everyone makes it out to be.

Or the awful truth is that most people actually do not care at all about music. I have plenty of colleagues and friends who have not subscribed to a streaming service. But they don't buy music either. They just listen to whatever crap is on the radio and that's plenty enough music for them...

 

[mazz0]

Why would that make it the perfect time for Apple? If they'd entered earlier they'd still benefit from the increased revenues now.

 

[ArtOfWarfare]

Look even further back and you'll find that the founder/owner of Spotify, Daniel Elk, was also the founder of a piracy site, so in effect he helped create the situation of the devaluing of music through piracy and then had the audacity to launch a pay site to help "save" the music industry. He has become very wealthy through both of those ventures.

See the contrast...

Here's an example of an extremely successful independent artist - Zoe Keating.
In 9 months on Spotify, she had 444,202 streams and was paid $1916
.
http://www.digitalmusicnews.com/permalink/2014/12/05/successful-indie-artist-actually-makes-spotify
.
She would only have to sell around 275 albums worldwide in the same period to make the same money that Spotify paid her for all those streams.
.
What artists are saying is that Spotify's entire monetary system is not good enough (also the free tier should be removed) and the real winners are Spotify's owners.
.
http://www.dailymail.co.uk/sciencetech/article-2135424/Spotify-music-guru-earns-190MILLION-age-29--company-just-years-old.html

Here's the problem with trying to compare these numbers. One is an upfront fee. The artist gets the same amount of money no matter how many times you listen to their album. You could buy it and never listen to it and the artist still gets $7 for it.

The other one will reward the artist over time if it ends up being an album worth listening to. If you're a paid listener and you listen to each track 60 times (say, once a month for five years, or once a week for just over a year, or twice a day for a month), then the artist will be paid more than $7.

You can't compare the income made from each model within the first few days. You need to look at the income made over the years. Most albums generate next to no income after the first month. Spotify, on the other hand, will just keep on giving you money.

Putting stuff on Spotify prepares you for retirement. What you already did will keep finding your life forever. It's an investment.

Sales are like winning the lottery. You get a lump sum now. You won't get more later.

If you need more money now, sale merchandise and concert tickets (streaming in no way inhibits that.) lots of artists say they constantly tour anyways just because album sales don't generate enough money to make a living.

I should add that I like that this adds a meritocracy system. The better artists (as determined by the ones you choose to listen to again and again over the years) get paid more while the flash bang that you listen to 20 times in a week then never again get paid less.

 

[venomgt95]

What the hell is wrong with people these days? I guess nobody likes owning things anymore.

 

[lowendlinux]

You make a good point about looking back with rose-tinted spectacles. Yes, we remember the best music. Nevertheless, my main argument is that the music of the past 25 years is unusually poor and will be seen as a black moment in music history.

Not as bad as the tasteless, whiney, or self important stuff of the 60's, then we moved to the disco era. There was some good blues and soul in the 60's and 70's but that's really about it for good music of the era. The 80's had some tasteless and whiney stuff and OK stuff. The 90's things got better in general with some spectacular exceptions. Like all art music is subjective, you couldn't pay me to listen to the Beatles or Pink Floyd.

 

[AdonisSMU]

I think maybe its that Warner has struggled to generate hits. Therefore they can't make a sale. New music sells. Catalog music no longer sells what it used to. Naturally people who want to listen to the older records go to streaming services where you can get all of them for a monthly fee as many artists generally wait until after the initial launch period to make records available to streaming services.

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Not as bad as the tasteless, whiney, or self important stuff of the 60's, then we moved to the disco era. There was some good blues and soul in the 60's and 70's but that's really about it for good music of the era. The 80's had some tasteless and whiney stuff and OK stuff. The 90's things got better in general with some spectacular exceptions. Like all art music is subjective, you couldn't pay me to listen to the Beatles, Pink Floyd.

I have to agree. I couldn't care less about the Beatles. They cant sing at all. I guess they are good if you need a back up band but past that they might as well be dead to me.

 

[jayducharme]

I should add that I like that this adds a meritocracy system. The better artists (as determined by the ones you choose to listen to again and again over the years) get paid more while the flash bang that you listen to 20 times in a week then never again get paid less.

I would disagree with this. It's not necessarily the "better" artists who are listened to again and again; it's the more popular ones. Popular does not always mean better.

 

[sinfonye]

I am one of the folks who likes to listen - mostly - to my own collection.
What I would like is a selection mechanism - similar to iTunes Radio - but that worked from the collection on my iPhone (or Mac, when I'm at home).

Can't you just create a new smart playlist on the Mac and Shuffle all your
songs on the iPhone?

 

[Lictor]

The other one will reward the artist over time if it ends up being an album worth listening to. If you're a paid listener and you listen to each track 60 times (say, once a month for five years, or once a week for just over a year, or twice a day for a month), then the artist will be paid more than $7.

Actually, no, it doesn't. Based on the numbers above, listening to each track 60 times will earn him $2.5 (assuming ten tracks per album). Streaming redistribute very little, most of the money go to the majors, then the streaming companies and some leftovers spill to the artists.

Most albums generate next to no income after the first month. Spotify, on the other hand, will just keep on giving you money.

The Rolling Stones and the like still sell albums they wrote 30 years ago... And when the album doesn't sell anymore, compilations do.
On the other hand, we can be almost certain Spotify won't exist in 30 years...

 

[smokestack]

I'm also artist and i receive pennies from Spotify plays. The way how Spotify splits the incoming money is unfair, but i doubt that Apple's system is any different. All streaming services are made to serve major labels interests.

But as an artist do you feel properly paid for your work?
As a part time musician I am happy to make cash on the side from my main job, but for an artist whose sole income is selling music/performing there should be some entitlement to fair compensation.
Here's an old (2011) article on how payment for music sales breaks down: http://www.rollingstone.com/music/news/the-new-economics-of-the-music-industry-20111025?page=5

Rest of the time it's playing vinyls.

Ah, you're a young one... you play records.

 

[Picapau21]

This is a really interesting debate!

I can't comment on artist renumeration as I have no knowledge in this topic.

What I can say is that, in my opinion, streaming is the future and I give credit to Spotify (and various other companies) for leading the way in this.

I have always listened to a lot of music and used to buy a lot of tapes, then CD's, then MP3's. But it was a bit hit and miss. For artists that I knew and loved I would buy their latest album (or singles) without hesitation. But I would rarely venture outside of my comfort zone...after all, who's want to spend £10-15 on an album that you listen to only once or twice.

This is the point some people seem to be missing...using Spotify has allowed me to listen to tracks from artists who I would never have listened to or even heard off, and in that process they have been paid a small royalty. i would never have bought their album or single and they would normally not have received any money from me. As I said I can not comment on whether the amount of money the artist gets from my Spotify subscription is right or wrong. That is for others to debate.

Also, does someone have figures on music piracy...I suspect that before the days of Spotify et al, music piracy of MP3's was rife and that as an overall percentage it must be lower these days.

PS. as an off point..I have used for extended periods, Spotify, Google Music, Xbox Music, Tidal, Pandora and have eventually come back to Spotify, which I believe is head and shoulders above the rest in general use.

 

[dnn]

Here's the problem with trying to compare these numbers. One is an upfront fee. The artist gets the same amount of money no matter how many times you listen to their album. You could buy it and never listen to it and the artist still gets $7 for it.

The other one will reward the artist over time if it ends up being an album worth listening to. If you're a paid listener and you listen to each track 60 times (say, once a month for five years, or once a week for just over a year, or twice a day for a month), then the artist will be paid more than $7.

You can't compare the income made from each model within the first few days. You need to look at the income made over the years. Most albums generate next to no income after the first month. Spotify, on the other hand, will just keep on giving you money.

Putting stuff on Spotify prepares you for retirement. What you already did will keep finding your life forever. It's an investment.

Sales are like winning the lottery. You get a lump sum now. You won't get more later.

If you need more money now, sale merchandise and concert tickets (streaming in no way inhibits that.) lots of artists say they constantly tour anyways just because album sales don't generate enough money to make a living.

I should add that I like that this adds a meritocracy system. The better artists (as determined by the ones you choose to listen to again and again over the years) get paid more while the flash bang that you listen to 20 times in a week then never again get paid less.

Nice theory, but in reality there are issues...
First of all your numbers are way off. Assuming that the album we're talking about has 10 tracks, you say 60 times per song will bring in $7?.

60 plays times 10 tracks = 600 x $0.0043 = $2.58 (Spotifys rate that they directly paid Zoe Keating, your average extremely successful indie artist)

Every track would actually have to be played 163 times to make the same payment of $7 to the artist. That begs the question, how many times does the average person play the albums they like? My absolute favourite album ever, Aja by Steely Dan, I probably would have played maybe 80-100 times. I doubt there's any album I own that I've played more than that. Probably on AVERAGE, I'd estimate that each album I own has been played 30-40 times (or the equivalent number of tracks, if I don't generally listen to all the songs on a particular album). A new album I purchase might get played 10-20 times in the first few weeks and then once in a while after that, unless it becomes a favourite.

So sales are not like the lottery, they are actually like having a normal job and getting paid for it. The Spotify model promises the earth, but in reality is unfeasible for artists even in the long term, unless their per stream rate goes way up.

Merchandise and concert tickets can help the artists, but the industry of recording arts is made up of far more people than the artists, who don't tour with the artists.

The other BIG issue with Spotify is that they group all the streams, free and paid subscriber, into one. Then they pay the artists based on the total number of plays. This favours the superstar pop artists who's fan bases are less likely to be a paid subscriber. It means the income from the paid subscribers are being redistributed to the artists with non paying fans.

You could be a paid Spotify subscriber and listen to your favourite indie artist all month, 100% of the time, yet most of your $9.99 subscriber fee will not go to your favourite artist, it will go to Beyonce and co. This sucks big time.

 

[RenoG]

I'm not going to switch from Spotify to Beats Streaming and let Apple dominate the streaming market in the same way they dominated the download market. Apple has used their monopoly in downloads to stifle innovation, drive out competitors and keep prices artificially high.

Isn't this the unspoken end goal of every corporation in every industry known to man.

 

[RenoG]

Merchandise and concert tickets can help the artists, but the industry of recording arts is made up of far more people than the artists, who don't tour with the artists.


You could be a paid Spotify subscriber and listen to your favourite indie artist all month, 100% of the time, yet most of your $9.99 subscriber fee will not go to your favourite artist, it will go to Beyonce and co. This sucks big time.

This^^

You really want to put the most money in your favorite indie artist pockets in this day and age? Go to their gigs/shows/concerts.

What to make the label executives of your favorite artist richer? Purchase the songs and streaming services.

Basically it all comes down to that.

 

[ArtOfWarfare]

Nice theory, but in reality there are issues...
First of all your numbers are way off. Assuming that the album we're talking about has 10 tracks, you say 60 times per song will bring in $7?.

60 plays times 10 tracks = 600 x $0.0043 = $2.58 (Spotifys rate that they directly paid Zoe Keating, your average extremely successful indie artist)

The pay rate I last heard was $0.015 per paid stream and $0.005 per ad-supported stream. The ad-supported rate may have gone down a bit, since. It sounds like Zoe's fans are almost entirely ad-supported.

Every track would actually have to be played 163 times to make the same payment of $7 to the artist. That begs the question, how many times does the average person play the albums they like? My absolute favourite album ever, Aja by Steely Dan, I probably would have played maybe 80-100 times. I doubt there's any album I own that I've played more than that. Probably on AVERAGE, I'd estimate that each album I own has been played 30-40 times (or the equivalent number of tracks, if I don't generally listen to all the songs on a particular album). A new album I purchase might get played 10-20 times in the first few weeks and then once in a while after that, unless it becomes a favourite.

At the paid streaming rate, 80-100 times means they get $12-$15 for the album. Had you bought it outright, they would have gotten $7 for it. So they got more money for making a better album.

The other BIG issue with Spotify is that they group all the streams, free and paid subscriber, into one. Then they pay the artists based on the total number of plays. This favours the superstar pop artists who's fan bases are less likely to be a paid subscriber. It means the income from the paid subscribers are being redistributed to the artists with non paying fans.

You could be a paid Spotify subscriber and listen to your favourite indie artist all month, 100% of the time, yet most of your $9.99 subscriber fee will not go to your favourite artist, it will go to Beyonce and co. This sucks big time.

Sources? My understanding is that artists are shown how many paid and ad-supported streams they had, and how much they made from each. I regrettably do not have my own source bookmarked, but there was an artist who blogged about it in 2013 and shared the link to his blog on MacRumors on an article relating to Spotify. It was that blog post I'm recalling the numbers from.

Either way, whether I'm right or you're right, it leads to the same thing: people who get streamed more make more money, and they get the money when someone enjoys the music they've made. If you make an album that 100 M people listen to 10 times, you get paid for 1 B streams. If you make an album that 10 M people listen to 100 times, you get paid for 1 B streams. Your goal is to maximize people who listen to you at all * the number of times they listen to you.

 

[GutteG]

Q2?

You must mean Q1 2015 or is it a prediction?

 

[dnn]

The pay rate I last heard was $0.015 per paid stream and $0.005 per ad-supported stream. The ad-supported rate may have gone down a bit, since. It sounds like Zoe's fans are almost entirely ad-supported.



At the paid streaming rate, 80-100 times means they get $12-$15 for the album. Had you bought it outright, they would have gotten $7 for it. So they got more money for making a better album.



Sources? My understanding is that artists are shown how many paid and ad-supported streams they had, and how much they made from each. I regrettably do not have my own source bookmarked, but there was an artist who blogged about it in 2013 and shared the link to his blog on MacRumors on an article relating to Spotify. It was that blog post I'm recalling the numbers from.

Either way, whether I'm right or you're right, it leads to the same thing: people who get streamed more make more money, and they get the money when someone enjoys the music they've made. If you make an album that 100 M people listen to 10 times, you get paid for 1 B streams. If you make an album that 10 M people listen to 100 times, you get paid for 1 B streams. Your goal is to maximize people who listen to you at all * the number of times they listen to you.

Here's the source for an independent artists revenue with the actual receipt directly from Spotify. Scroll down to the bottom for the average payout per play.
http://www.scribd.com/doc/249282471/Zoe-Keating-9-Months-of-Spotify-Scroll-Down-for-Totals-Spotify

I had a better article for the source about payout method which I can't locate yet, but this has the basics, quoted from a Spotify employee:
http://www.musicthinktank.com/mtt-open/how-does-spotify-pay-artists-an-answer-that-makes-sense.html

 

[Dayv]

Warner Music Group saw a 33 percent increase in its revenue from streaming music services from companies like Spotify and YouTube during the second quarter of 2015, while revenue from digital downloads like those from iTunes grew only seven percent.

I'm sure the artists saw a similar increase in revenue, right?

*crickets chirp*

 

[kyjaotkb]

What the article omits is if overall revenues have declined, are static, or have increased as a total.

Image

So digital revenue was stagnant. Essentially meaning that WMG is canabalizing its own revenue stream with one that is not very profitable. (30% growth vs 7% growth)

It is very much release driven. Some artists still sell a lot in CD, especially album-centric acts (think Ed Sheeran and Coldplay were WMG's big acts in recent months).

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I'm sure the artists saw a similar increase in revenue, right?

*crickets chirp*

No, they saw a higher increase. The royalties % of revenue is, in average, higher on streaming than on downloads. Artist royalties as a % of revenue grew by 13% over the last 5 years, owing to the rise of streaming.

Source: IFPI (look for "Artist Royalties" in the middle of the page).

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Here's the source for an independent artists revenue with the actual receipt directly from Spotify. Scroll down to the bottom for the average payout per play.
http://www.scribd.com/doc/249282471/Zoe-Keating-9-Months-of-Spotify-Scroll-Down-for-Totals-Spotify

I had a better article for the source about payout method which I can't locate yet, but this has the basics, quoted from a Spotify employee:
http://www.musicthinktank.com/mtt-open/how-does-spotify-pay-artists-an-answer-that-makes-sense.html

While this is all quite complicated, Spotify doesn't pay on a per-play basis. In none of their contracts. Source here.
Spotify collects a given sum of money in a given territory in a given month and pays each artist its share of all plays of that money. Great user engagement on the service generates lower per play, while territories where users don't engage much result in higher per plays (but at the risk of losing interest in Spotify altogether, and stop paying).

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You must mean Q1 2015 or is it a prediction?

WMG's fiscal year starts in October - much like Apple's, by the way.

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Reason why Warner makes good money on streaming is their huge back catalog. Ppl might not want to buy they old records, but as they are "free" in the streaming system then why not. Streaming is perfect for companies with huge back catalogues.

You do realise that catalogue artists get their share of those plays? And that as an artist, if your music is still being listened to ten, twenty years down the road, you will still be making money, that you would probably not be making in an ownership-centric model? Agree, the timelines have changes and it's all about the long game now. But ultimately, it rewards great, lasting songs, which is a fairer system in my view.

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The other BIG issue with Spotify is that they group all the streams, free and paid subscriber, into one.

This is incorrect. While Spotify pools all paid streams together, on the one hand, and all ad-supported streams together, on the other hand, they don't mix them together. If an artist has 90% of their streams coming from paid subscribers, their per-stream average will be higher than if they had 90% of streams coming from the ad-supported service.

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I don't subscribe to streaming music for the same reason I don't subscribe to cable TV:
- it's continuous money down the drain with nothing to show for it
- most of the content is junk
- there are free ways to find new good quality content
- if there is something that is good quality, I can buy it once on physical media at the highest quality and never worry about it being unavailable, restricted, or taken away from me.

But that's just me.

These points also perfectly apply to shoplifting at your local supermarket.

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And it's only good when you have a reliable cloud connection.

The No1 touted feature of subscription services is the ability to cache songs/playlists/albums/libraries on your device. I have a fully loaded 64GB iPhone with loads of content from Tidal that I listen to offline, when commuting.

 

[alent1234]

I'm sure the artists saw a similar increase in revenue, right?

*crickets chirp*

they can go back to normal radio where they have to pay the radio stations to play their music

 

[McCool71]

Yup, because Spotify is not the music industry's saving grace.

Spotify has 15 million paying subscribers worldwide, and that is just a fraction of the number of people who used to buy (physical) music 20 years ago.

Expecting a service of that size to contribute more than a small part of what the total market used to be is ludicrous.

Things have changed, young people these days have so much more to spend their money on than they did years ago. Even 'basic stuff' that everyone is expected to have like a cell phone + cell plan probably amounts to way more in a year these days than what most 15-25 year olds used to spend on CD's every year in the 80s and 90s.

Even if the only way of getting music today was by buying CDs the sales would surely have plummeted the last 8-10 years anyways. It is just not the priority (financial wise) that it used to be for a lot of people since a lot of other stuff compete not only for the same wallet, but also for time and attention.