How Much Is A “Stream” Worth? Maybe Not “Zero,” But Not Much More Than That

From somewhere on the edge of the Cascade Mountains: 

I've been taken to task on occasion for speculating that the cloud-storage and streaming content paradigm (aka "The Celestial Jukebox) reduces "the remunerative value of recorded to music" to something "approaching zero."

Gaga Now comes the news from Sweden – home of the much-hyped, but still not available in the US streaming music service called Spotify – that Lady Gaga was paid a whopping $167 for more than one million plays of her tune "Poker Face:"

Lady Gaga’s “Poker Face” was one of the most popular tracks for 5 months on Spotify; being played more than 1 million times. But according to reports this weekend, the Swedish Performing Rights Society only paid her $167. If true, it confirms other complaints from other artists like those of Swedish musican Magnus Uggla who pulled his music off Spotify declaring, "I'd prefer to be raped by Pirate Bay than played on Spotify".

I just ran the numbers through the calculator on my iPhone (turn it sideways and it can handle those kinds of numbers) and determined that $167 divided by 1-million = $0.000167. I think that equates to 1.67 10,000ths of a dollar, or 1.67 hundredths of cent per play.

After Hypebot released this initial "$167" story, Spotify came back with a rebuttal asserting that they paid Lady Gaga "more than that," but refusing to specify what exactly they did pay.  The follow up story is worth reading because it does illustrate the complexity of these issues.  But Spotify is going to have to demonstrate that what they paid Lady Gaga amounts to something like 1,000 times the reported figure before the return from a stream approximates anything like the expected return from a 99c download.

And therein lies the problem that faces everybody in the industry as the model shifts from downloads to streaming.  

Admittedly, even 1.67-hundredths-of-a-cent is not quite zero, but it sure is close.  

Anyway you slice it, it's hard to fathom how teensy numbers like that support a viable industry for recorded music.  

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Paul S

  • Since it’s really a different animal, the return from a stream doesn’t belong anywhere close to the return from a download — one is a sale, the other is (or should be) a royalty. The PROs need to get realistic, and set a logical royalty rate. Hypothetically, and I have no idea what the real economics are, let’s say a streaming service is making 0.3 cents on average per play (from subscription and/or advertising fees). Maybe 10-20% of that would be a reasonable royalty, something that allows the business model to work while still paying the artist. In my hypothetical, for 1,000 plays, the artist would earn $3-6. Doesn’t sound like much, but it’s far easier to get someone to stream your work for free, than to pay $10 to download it. One ‘big fan’ listening to your 40-song catalog weekly could be $10/year. Get a few hundred such fans, and it starts to become a significant income stream…