Streaming for Pieces of Percentages of Pennies
In an article for Pitchfork, musician and songwriter Damon Krukowski of Galaxie 500 and Damon & Naomi talks about the business model behind streaming services including Pandora and Spotify. And its not a pretty picture.
To put this into perspective: Since we own our own recordings, by my calculation it would take songwriting royalties for roughly 312,000 plays on Pandora to earn us the profit of one-- one-- LP sale. (On Spotify, one LP is equivalent to 47,680 plays.)
Damon talks about how much his band makes from plays on streaming services and how there's nearly literally no money to be made for these plays by anyone except the executives/shareholders who work for the streaming companies.
But here's the rub: Pandora and Spotify are not earning any income from their services, either. In the first quarter of 2012, Pandora-- the same company that paid Galaxie 500 a total of $1.21 for their use of "Tugboat"-- reported a net loss of more than $20 million dollars. As for Spotify, their latest annual report revealed a loss in 2011 of $56 million.If you want a better understanding of streaming services from a musicians perspective, I highly recommend checking out Making Cents.
...These aren't record companies-- they don't make records, or anything else; apparently not even income. They exist to attract speculative capital. And for those who have a claim to ownership of that capital, they are earning millions-- in 2012, Pandora's executives sold $63 million of personal stock in the company. Or as Spotify's CEO Daniel Ek has put it, "The question of when we'll be profitable actually feels irrelevant. Our focus is all on growth. That is priority one, two, three, four and five."