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Who killed the music industry

Interesting discussion of the digital music industry, including this breakdown of what the artist gets from three of the largest digital options, iTunes, Pandora, and Spotify. Selling a single on iTunes is much, much more lucrative to the artist than streaming.

 iTunes Cover Project #4
iTunes Cover Project #4

Interesting discussion of the digital music industry, including this breakdown of what the artist gets from three of the largest digital options, iTunes, Pandora, and Spotify. Selling a single on iTunes is much, much more lucrative to the artist than streaming. 

Here’s where we stand with iTunes, Pandora and Spotify royalties (because the numbers are dependent on individual contracts and licensing deals, these are estimations):

Per track, iTunes pays $0.105 in performance royalties (15 percent of what the record label keeps) and $0.09 in songwriter royalties, totalling $0.19 per download.

Pandora pays $0.0011 per play in performance royalties, of which approximately 45 percent goes to the artist, resulting in $0.000495 per play. The songwriter royalties are harder to estimate, but if we go by Lowery’s statement, it’s $42.25 for 1 million plays, or $0.000042 per play, resulting in a total of $0.000537 per play. A song would have to be streamed about 350 times to catch up to iTunes 19 cent per download rate.

Spotify’s negotiations are more opaque and variable so we’ll have to go with the best estimates we have. For paid listeners, the average is about $0.006 per stream. Let’s say half of that goes to the artist (that’s how Lowery says his contract works), which would amount to $0.003 per play. But only 6 million of its 24 million users pay for the service. For streams from non-paying users, the rate is estimated to be only one-tenth of that, or $0.0003 per play, which is actually worse than Pandora’s rate. That’d be over 600 plays to catch up to iTunes.

That’s why artists like Thom Yorke have removed their music from the platform. Yorke tweeted, “Make no mistake new artists you discover on #Spotify will no[t] get paid. Meanwhile shareholders will shortly [be] rolling in it. Simples.”

(click here to continue reading Who killed the music industry? An interactive explainer | PandoDaily.)

Tickets Available
Tickets Available

The whole discussion is worth reading if you are curious what happened to the heyday of musicians being able to fly in private jets. Hint, it wasn’t Napster’s fault…

Since 2000, the amount of revenue created from selling or streaming music in America has been cut in half, from $14.3 billion to $7 billion, according to that most despised trade organization, the Recording Industry Association of America, or RIAA. And yet listeners have more access to music than ever, and there’s nothing to suggest that demand for music is down. 

So what or who is to blame?

Is it Apple’s fault for launching iTunes and forever severing songs from albums? Is it the record executives’ fault who, facing this shift from $17 albums to $0.99 singles, continued to rely on old, byzantine licensing and sales models, even as their industry hemorrhaged money before their eyes? Is Internet piracy to blame, with Napster forever changing the way we find and consume music, and BitTorrent bringing about the record industry’s worst nightmare? What about Internet radio stations? Are the rock-bottom royalty payments the result of corporate greed or government meddling? Do we blame Spotify and other music streaming services for striking opaque, unsustainable deals with record labels? And what about the unchecked proliferation of copyrighted material on YouTube and other platforms?

For this explainer, we looked to identify and unravel the complex network of industry stakeholders — the rightsholders, including performers, songwriters, record labels, publishers, and licensing agencies, all of whom play a part in the process of making music, and all of whom expect a cut of the proceeds. There are the digital music sellers like iTunes and Amazon, which have supplanted brick-and-mortar stores and play by a different set of rules. And finally, the webcasters and streaming services, which struggle to achieve profitability even though they only pay artists fractions of pennies per song per play.

Follow us on a trip through recent music history as we try and figure out how we got here, where we’re headed, and whether today’s industry slump is a disruptive dip or the new normal.

 

(click here to continue reading Who killed the music industry? An interactive explainer | PandoDaily.)

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