A Broken System?
Driving down the highway, I heard an amazing song. Here’s what happened:
- The radio station played the song: “Tell Me a Tale.”
- I used SoundHound (like Shaazam) to identify the artist: Michael Kiwanuka.
- SoundHound linked to my Spotify account, so it pulled up the artist and I listened to his new EP.
- I can listen to his music all day long!
It’s awesome that technology allows this to happen. And it’s equally awesome that radio is playing this guy. Big kudos to The River/WXRV, because I don’t seem to hear him anywhere else.
Then, as someone who works directly with musicians, I realized that Mr. Kiwanuka isn’t making much money off of me. I’ve easily listened to one of his songs at least 20 times in the last week. What does that do for him? How is his labor, his creation, his product being fairly compensated for?
The answer: I’m not sure it is.
A million spins on Spotify can make you a reasonable amount of money. Ultimately, 1 million spins on Spotify earns an average of $5,000 or 0.004 cents per spin. One could make the argument that Spotify ($9.99/month, all you can listen to), stops fans from buying music. Hell, if I payed a penny for every song I listened to, I’d be spending a lot more than $9.99/month. Let’s further assume that if 1 million people streamed my song, maybe (without Spotify) 2% of those people would’ve instead actually purchased a track for 99 cents. In that case, 2,000 x 99 cents = $1,980. After commissions/distribution fees, the net would be around 70% or $1,386.
- 2,000 tracks sold: $1,386 (Earned 70 cents per sale)
- 1,000,000 streams: $5,000 (Earned 0.004 cents per stream)
- 1 track sold is 175x more profitable than 1 stream.
That doesn’t mean Spotify is bad — far from it. Spotify has allowed me wider access to music that I love as well as artists I’ve never heard of. It’s an incredible consumer tool. Unfortunately, it’s not as great tool for musicians looking to make money.
So what can musicians do? That depends on your goals.
- Are you trying to make a career from selling music?
- Do you perform?
- Do you have a solid fanbase that engages with you and supports your musical endeavors?
- What about overhead — what does it cost to create a performance? A video? A new recording?
- Do you understand how today’s music industry is constructed?
- Are you prepared to step outside your comfort zone in order to create success?
- Do you have a team of people who are motivated to help you achieve your goals?
Need help answering these questions? We’re here to help …