Jim Carroll

Music, Life and everything else

Making cents from streaming

Earlier this month, I wrote about how the upswing in popularity of streaming might impact on record label coffers, a post came on the back on Spotify’s 15 minutes in the media sun (now stretching towards an hour). I did …

Tue, Apr 28, 2009, 08:46

   

Earlier this month, I wrote about how the upswing in popularity of streaming might impact on record label coffers, a post came on the back on Spotify’s 15 minutes in the media sun (now stretching towards an hour). I did some back-of-an-envelope sums and wondered would money from streaming be enough to offset losses in digital sales.

It turns out that I wasn’t the only one trying to do those kind of sums and there have been a couple of interesting posts out there addressing similar issues. Niall Smart from Echodio pointed me towards the Pansentient League and that blog’s excellent post about how labels make cash from Spotify. Their graphs clearly show just why the labels are behind Spotify – if they can wean people off illegal file-sharing sites and onto Spotify, they can start to make cash. You might think that 0.1 cent is not much of a return per stream (the blog says this is a guesstimate, but some informal research over the last week would indicate they’re on the money with that figure), yet see that tune rack up 100,000 streams and the revenue begins to rise. Let’s hope Spotify have done their sums in that regard and that they don’t start to feel the pinch like other streaming start-ups.

Streaming maths, though, don’t just apply to Spotify. Eliot Van Buskirk had a excellent post last week on Wired which pointed out that Susan Boyle’s Britain’s Got Talent video, the one on the way to becoming the biggest hit in YouTube history, was amassing a load of dough from streaming royalties, but no-one was collecting it. Van Buskirk calculated a $500,000 pay-day based on 0.5 cent per play royalty given Sony-BMG’s deal with YouTube, not to mention the potential cash from ad revenue around the exposure. Not great news, then, for ITV, Simon Cowell or Sony-BMG – Boyle’s contract with the show is probably the mother of all rights grabs so she won’t be seeing any of that cash. Of course, you could also ask just why a great novelty record man like Cowell hasn’t also tapped into the Boyle effect by rush-releasing a single, but that’s a post for another day.

What both of these stories do point up is the potential honey-pot to be made from streams. Naturally, it all comes down to the deal which the label or act have negotiated with the service provider – I’m sure there are many acts whose videos are accumulating thousands of plays on YouTube who are not even seeing 0.1 cent per play. This again is where labels with their business and legal affairs muscle (and their deep catalogues which YouTube probably would like to maintain access to) come into their own. As we’ve become blue in the face from repeating, it’s yet another new business model which does not necessarily hold out the promise of a lot of cash for new acts.

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