Thursday, October 25, 2012

Where can artists make money today?

The changes in the music industry over the last few years have certainly caused some debate. Take Taylor Swift. I don't know if Drew Olanoff is never ever ever going to listen to her again, but he's clearly not happy that Swift's most recent album is unavailable for streaming on Spotify. Olanoff focuses on the benefits of Spotify and other streaming services as promotionsl tools:

Seriously though, since the album is so good, it makes me want to share it, and maybe, just maybe, catch one of her upcoming shows. It’s that good. But not now. Why would I shell out a bunch of bucks to see an artist that doesn’t want to connect with me and her other would-be fans? Does she have enough fans? Nobody ever has enough fans, since we’ve all seen the rise and fall of many artists.

Olanoff also shares an infographic that points out, among other things, that interactive streaming services such as Spotify are projected to return $588 million to copyright holders in 2012. Compare that to traditional radio stations, where Swift's latest hit is widely available. How much revenue are the copyright holders getting from terrestrial radio? $0.

Olanoff's post elicited a number of comments, but one comment from Ketan Anjara caught my eye. Anjara shared a link to a November 2011 post from Henry "Hollywood" Cedeno. This post paints a different picture.

Based upon the U.S. Federal minimum wage, which translates to a monthly income of $1,160, Cedeno calculated how many units would have to be sold via various music distribution media to earn that monthly minimum wage.

If you take an artist with a major label deal but with, “low royalty points,” meaning they are a new artist and have signed an agreement entitling them to a low royalty profit on their CD sale (possibly due to not having leverage during the negotiation process) It would take the sale of 3871 units to equal a minimum wage salary.

Now, let’s look at a self-pressed CD. It would take 145 units (the info-graphic says 143, but that is incorrect) to equal the same $1,160 minimum wage salary for the month (145 units x $8 profit = $1,160), A profit ratio of 27:1 in favor of the indie artist....

Again, using $1,160 minimum wage as a benchmark for artist revenue, let’s analyze how many streams it would take an artist just to make a minimum wage salary.

Rhapsody 849,817 streams

Last.FM 1,546,667 streams

Spotify 4,053,110 streams

A whopping four million plays for an artist to see $1,160 in revenue!

Granted that this doesn't paint a full picture either - it ignores the fact that Swift is never ever ever going to get a penny from terrestrial radio, and it doesn't really address the promotional effects of the various services - but it's certainly something to be considered.

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