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Spotify, Pandora, Streaming Music Make Up 25 Percent of Warner Digital Revenue (allthingsd.com)
48 points by ttunguz 1780 days ago | hide | past | web | 15 comments | favorite

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).

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.

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

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.

I thought the radio aspect of Pandora means they get to take advantage of compulsory licensing...

They do.

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.

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.

> Artists do not need to sign with them.


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.

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.

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.

Anyone know what the real number is? I can't seem to find it anywhere.

A fairly popular and modern classical artist recently posted a spreadsheet showing 6 month of digital revenues. They are broken down by service. She averages $0.004 per stream on Spotify. https://docs.google.com/spreadsheet/ccc?key=0AkasqHkVRM1OdEJ...

Any idea what the record company takes per stream?

It mentions in that spreadsheet that the $0.004 the artist gets per stream is minus the 9% that CDBaby takes off the top. So, it's really like CDBaby gets $0.0045 per stream, and they give 90% of that to the artist.

It occurs to me now, though, that I've read in the past that Spotify doesn't actually pay the same amount per stream to every artist or label. Apparently it doesn't even pay the same amount to the same artist each quarter.

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