
Spotify, Pandora, Streaming Music Make Up 25 Percent of Warner Digital Revenue - ttunguz
http://allthingsd.com/20120809/the-spotify-effect-shows-up-streaming-music-boosts-warners-bottom-line/
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jeremymims
It's very important to keep in mind that Spotify and Pandora keep very little
of their revenue.

Based on calculations I did back in April, Spotify has about 3 million paid
users and 10 million unpaid users. Spotify said they were on track to do close
to $900 million in revenue this year. About $662 million was set to go to the
record labels. After all of Spotify's considerable costs, they'll run a loss.

When Pandora went public last year, they did it on $75 million in revenue and
$74.25 million in expenses in that quarter (a 1% margin).

The more successful Spotify and Pandora get, the more likely the record labels
are to ask for more money in contract negotiations.

These are great companies that make great products. They will unfortunately be
sharecropping on the music labels' land.

Just as many of us consider it unwise to build on Facebook or Twitter's
platforms, we should be just as wary about building a business on top of the
music or movie business (Netflix is in the same boat).

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powerslave12r
It will be awesome when Spotify (or others) starts signing up bands as a
"record label" itself, similar to Netflix produced shows. (Maybe they already
do this?)

Maybe that will attract more bands to directly do business with them.

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w0ts0n
What you have to remember is the record labels ALSO own a chunk of Spotify.

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powerslave12r
I would think that should be highly irrelevant.

If they have invested in Spotify, then they are just securing their place in
case Spotify (or Spotify-like services) displace the old model. It doesn't
mean that is going to make any difference in the change of business model when
it happens.

If they have too much control in Spotify, someone else will start a new
service/label. OR bands will just self produce.

I love the digital age.

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Dystopian
Yet, artists are only receiving .00001 or some ridiculous amount per play per
song.

Sounds like it isn't these "evil services" that are cutting them off a the
knees, but the predatory contracts the labels set up with artists.

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evertonfuller
It's not the artists receiving that, but the actual label themselves. Perhaps
get a bit more clued up rather than attacking labels. They are a business
after all. Artists do not need to sign with them.

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windsurfer
> Artists do not need to sign with them.

Anymore.

People resent record labels for the past, when signing with them was
practically the only option, and the terms of the contract were cryptic and
frequently misunderstood by signers. When artists were promised 15% royalties,
cryptic "breakage" fees and other deductions brought that number closer to 5%,
and forced the artist to incur costs such as tours, concerts and marketing,
leaving the record labels only responsible to print records.

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evertonfuller
Who's problem is that though? The artists should have had better legal
representation then and made sure they thoroughly understood what they were
signing. Not go and complain afterwards.

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duaneb
Sure, doesn't mean the record labels are any less evil for it. They could have
made profits without screwing over people who didn't know any better.

