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Music streaming: How many listeners you need to earn 100 euros
Facts & Figures The dispute between Taylor Swift and Spotify begs the question: What do streaming services mean for the music market? A look at the data.
The news caused a stir: The currently most successful musician in the world, Taylor Swift, pulled all of her music from the world's most successful music streaming service, Spotify, last week. The US singer had previously topped the Swedish online platform's hit list with her pop song "Shake it off", and after the release of her album "1989" she had all songs blocked.
She does not want to leave her works to an experiment in which artists are not paid fairly, she explained in an interview. Swift is not the first artist who does not trust Spotify: Last year, for example, Thom Yorke, frontman of Radiohead, withdrew his solo songs and the songs of his band "Atoms for Peace" from the streaming service. The "Black Keys" cannot be heard on Spotify either. The main argument of the critics: With tariffs like 0.6 US cents per song request, musicians could not survive.
Music shouldn't be free, argued Swift, whose new album sold over a million copies in the first week, in the Wall Street Journal. "Taylor Swift is absolutely right," agreed her Spotify boss Daniel Ek in a broadcast. His company has transferred two billion dollars to the music industry since it was founded. And he showed Swift what she's missing out on: Artists of her format are set to receive more than $ 6 million from the service in the coming year.
Taylor Swift's Big Machine label made this statement go uncommented. In the past twelve months, Swift earned only $ 500,000 through Spotify - that corresponds to the proceeds from 50,000 album sales, according to managing director Scott Borchetta.
What do streaming services like Spotify really mean for the music industry? A look at the data.
Spotify: From start-up to millionaire service
Spotify was founded as a start-up in Sweden in 2008. With the streaming service you can listen to music on your computer or on mobile devices - however, you don't download the songs by downloading them, but transmit them via stream in real time from the Internet. Paying customers can also save tracks on their end devices and listen to them offline - but they don't "own" the music.
Today the company counts according to its own statements 50 million - including 12.5 million paying - users. If you don't want to pay ten euros per month for the service, you can put in advertising. According to Spotify, each user is worth an average of $ 41. What does the music industry get out of it?
Spotify - the business model
How much money an artist makes with his music on Spotify depends on how often he is listened to. The entire turnover that Spotify makes monthly is divided proportionally between the artists, with Spotify keeping 30 percent itself. What actually remains for the artist, of course, depends on his respective contracts with the record company - for the sake of simplicity, the figures are always given here that are distributed to the music industry as a whole.
How much a stream brings the artist depends on the advertising revenue, the number of paying users and the popularity of the competition. Spotify states that prices have been so lately between 0.6 and 0.84 cents per stream revealed.
Streaming services: How many listeners do you get 100 euros for?
The website "The Trichordist", which advocates fair payment for musicians, compared the streaming revenues from different providers in February, according to which Spotify only paid 0.5 cents per stream - and was thus far in comparison with other streaming services back. Google Play, for example, paid just under five cents per stream, according to the website.
How often does a song have to be listened to on the respective streaming service for it to pay out 100 euros (= 125 US dollars)?
A song has to be heard around 24,000 times on Spotify to earn 100 euros. This is not enough for critics of the service, they could make a lot more money selling their music. To compare: iTunes keeps (according to various sources) 30 percent of the download revenues. Taylor Swift would barely have to earn 100 euros Sell 14 albums on iTunes. Which of course can then be listened to as often as desired by their owners.
How streaming is turning the music market upside down
Is streaming now synonymous with the demise of the music industry, is free culture killing art, as Taylor Swift says? Not necessarily if the Recording Industry Association of America has its way. The strong growth in streaming sales has helped the US music industry to be stable in recent years, according to a publication.
YouTube also testifies that growth in the streaming market is unlikely to stagnate anytime soon: The Google subsidiary only announced on Wednesday that it would be expanding its video platform to include a pure music subscription service: "Youtube Music Key".
In 2013, 15 billion dollars were turned over in the global music market, 5.9 billion of which (39 percent) were digital. In 2014, the majority of sales will likely come from the digital market for the first time. Streaming is becoming increasingly important: in 2013, 27 percent of digital sales were made with streaming. In 2008 it was 9 percent.
More and more people are using online streaming offers:
In Sweden in particular, where Spotify was founded, far more Internet users now use streaming services than download platforms.
No such comparative figures were collected for Austria. However, the Association of the Austrian Music Industry announced that the share of streaming sales in the entire Austrian online music market rose to more than 25 percent in the first half of 2014 - compared to 20 percent in the previous year. Around 30 services are available in this country and 30 million titles can be accessed.
Will streaming stop the pirates?
While Taylor Swift and colleagues accuse Spotify of cannibalizing the music market, Daniel Ek countered above all with one argument: While Spotify pays the artists (albeit sparingly), not a cent comes in through piracy. If there were no streaming services, their users would simply download music illegally.
IFPI, the world association of the phono industry, also confirms that streaming services should curb piracy. He suspects that some subscription users have previously used illegal services. This is also indicated by a study by the market research institute GfK: According to this, nine out of ten paying Spotify users and seven out of ten free users "less frequently" use illegal services.
Little use for little artists
For less famous musicians, streaming services with their microscopic per-stream rates should not (yet) be the major source of income. The US cellist Zoë Keating, who regularly discloses her earnings, said last year that her streaming revenues were negligible.
But that is not a problem for her: She sees Spotify as a discovery tool, not as a source of income, she explained in the Guardian.
In any case, music sales, online or offline, make up only a fraction of their income for "little musicians", as a study by Peter DiCola of the Northwestern University School of Law shows. He asked around 5000 musicians about their sources of income. Highly popular: live performances, lessons, income as an orchestra or studio musician. The artists only earn six percent of sales.
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