If there’s no money in streaming, why is the music industry growing at a rate not seen since 1998? Turns out there is money in streaming. Let’s go long on it.
Two Pieces of Bad News:
- Bands and labels that weren’t capable of selling music for a living before the advent of streaming probably are not going to start making a living now. That’s not Spotify’s fault. We can’t all find success in music (or any industry).
- Bands that sign bad deals with record labels will never see the money they think they deserve. Spotify isn't to blame. In many cases, the team is the culprit: band members, managers, lawyers, anyone who’s responsible for making decisions. And sometimes bands just lack leverage when signing a record deal in the first place, which can set their future selves up for failure. But that doesn’t mean money isn’t being made from those services.
Five Pieces of Good News:
- Growth-wise, record labels and artists are in the best shape of any type of media that was formed before the Internet Revolution (think: TV networks, movie studios, newspapers).
- If a band signs a fair record deal, has realistic expenses (a manageable budget, no extravagant music videos, etc), and has releases on Spotify with a few hundred thousand plays, money will come their way.
- If a label or artist was successful with a strong catalog before streaming came along, they are reaping the rewards of their past success now like they could not have dreamed about in 2009, when things were bad for the industry. Having a catalog matters.
- The typical Spotify or Apple Music user is paying over $100/year for the service of their choice. Compared to the very recent days of illegal file-sharing, that's a sizable chunk of money for the average consumer to spend on music, especially since it doesn't factor in money spent on show tickets or merch. It's hard to ask for more than that.
- Spotify and Apple music take what was great about radio and expand upon it by making it accessible to all artists and creating a social network out of it.
A little more on Good News #3: Record labels and previously successful artists are very lucky in today’s age. The industry went from vinyl to cassette to CD to digital -- and now with streaming, established artists/labels have yet another source of revenue on which to capitalize. Yes, there are few like Bruce Springsteen who made money from them all -- but think about artists like Brand New or Circa Survive or The Dangerous Summer or Modern Baseball (and their respective labels). None of those bands were likely selling too many copies of even their most noteworthy albums per year, regardless of whether they came out before or after the rise of Spotify in the United States*. But they have amassed a significant number of plays worldwide:
- Brand New - Your Favorite Weapon - 2001, Triple Crown Records: 44,500,000
- Circa Survive - Juturna - 2005, Equal Vision Records: 22,000,000
- The Dangerous Summer - Reach For the Sun - 2009, Hopeless Records: 9,746,000
- Modern Baseball - Sports - 2012, Lame-O Records: 29,124,000
*Spotify soft launched in the US in July 2011.
All of those play counts are really good and should provide healthy royalties for all involved -- and the numbers above don’t include Apple Music streams or any digital or physical purchases. I use these bands and albums as examples because they are different in age, size, and relevance, but all demonstrate a positive picture that shows both the exposure (and thus, revenue) that Spotify streaming can provide.Yes, not every band is this popular, but even a band that has an album with a few hundred thousand streams will see several hundred dollars a month in royalties.
Again -- if you were not “raking it in” before Spotify, that doesn’t mean Spotify alone is going to push you into riches now. Artists cannot necessarily count on streaming to be their only source of income, but like a well-balanced diet, it can and should be a crucial piece of a greater plan that includes merchandise and ticket sales. I work with bands every day who are able to make better decisions for their livelihood and business because they’ve embraced and not vilified streaming. It’s a blessing, not a curse, and I hope more people can come to see that.