Earlier today, David Macias, owner of Nashville-based label Thirty Tigers, wrote a detailed blog post (well worth the read in its entirety) responding to a Pitchfork article by Damon Krukowski claiming artists only receive .005 cents per stream. As Macias explains, however, based on Krukowski’s math, artists actually receive .005 dollars per stream.
Macias goes on to share some numbers that paint Spotify in an artist friendly light–at least compared to iTunes and traditional physical releases. While iTunes does offer a favorable 70 cents per song sold, Macias notes:
“Once that sale takes place, the transaction between artist and consumer is complete. But if you are a fan of an artist or a song, and you choose to listen on Spotify, then EVERY LISTEN earns an additional half a cent.”
He goes on to further explore some surprisingly favorable math in regards to Spotify’s revenue sharing with artists:
“It’s also important that you understand how Spotify splits out the money that they bring in. Of the $10 that I spend monthly for Spotify, $6 goes to the owner of the recordings, $1 goes to the owner of the publishing copyright, and Spotify keeps $3. That is exactly the same proportion by which revenues are shared in the iTunes model, and that 70% which is shared by the owners of the recording and publishing copyrights is a higher percentage than they share for goods sold at physical music retailers.”
The article continues, making some compelling points about the earning possibilities inherent in streaming, provided a level-headed argument for the centrality of streaming not only to the future of music delivery, but also to the future of profit in the record business.
As usual, industry guru and sharp (though often curmudgeonly) critic Bob Lefsetz also has some thoughts on the situation in his latest blog post, impugning Spotify’s current strategy (to an extent) while corroborating Macias’ take on the importance of streaming:
“And Spotify’s inability to engage the artist community, to get them to testify about the service like they once did for MTV, means that it might get killed by MOG, which is revamping its service in a matter of days. Do you really expect Jimmy Iovine not to bend the arms of his acts to promote MOG? If Jimmy can make a mediocre headphone line the industry leader by utilizing stars and design, do you really think he can’t put a stake in the heart of Spotify?
So while you’re railing at Spotify and its payments, you fail to realize that the streaming train has left the station and it’s only a matter of who is Cornelius Vanderbilt, who eventually triumphs.”
Ultimately, for artists looking to legitimize their craft and make some sort of money from recordings, it appears each passing year makes it less logical to release an album through traditional channels (unless the artist in question is servicing a special interest group, as in the example of labels like Stones Throw that offer vinyl and collectors items for DJs and rabid fans who demand more than simply music), and that streaming even threatens to quickly make iTunes obsolete. While this vision of the future might come across as frightening for traditionalists and fans of older methods, it lends further credence to the notion that this era is one of the most exciting and potential-filled for artists across the spectrum. A volatile era, certainly, but one that will favor and, ultimately, reward artists who place their faith in changing technologies and adapt quickly to listener habits.