Spotify’s Big Lie, Streaming Habits Mirror Purchasing Habits

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From Trichordist:

One of the biggest lies told by Spotify is that streaming will provide more revenue over the life of a record because every play will be monetized. This as opposed to the one time payment earned from a transactional purchase where all the revenue from the purchase of the record is paid at once. There is however, a very big problem with this theory, which is that the consumption curves of streaming match the consumption curves of transactional sales.

So, what about that so called long tail? Well, it doesn’t exist. Not for music consumption. Or we should say, it doesn’t exist any different for streaming than it did has for transactional sales. What do you think is more profitable in generating revenue? Is it the album sales of artists catalogs, or is streams?

Keep in mind, streaming is a fixed cap market. So it does not matter how much the market grows in actual consumption, the revenue is capped by the amount of revenue earned by the hosting provider. If consumption doubles, but revenues stay flat, every stream is worth half of what it was previously.

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We’re already seeing this trend as we noted earlier this year that Spotify per stream rates appear to be dropping steadily by about 8% per year.

Link to the rest at Trichordist

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7 thoughts on “Spotify’s Big Lie, Streaming Habits Mirror Purchasing Habits”

  1. I’m curious about whether the realities of streaming services for music foretell what will happen with subscription services for ebooks. Will subscription services eventually overshadow the buying (licensing) of ebooks, with the result that authors receive mere pennies per read?

    • Personally, I doubt it. People can listen to the same song hundreds of times. Most people will read any given book only once. A pure subscription model for all books would be such a money sink for most authors that I don’t think any such service could ever get all authors to buy into it. Even people who do well in KU generally acknowledge that KU is its own kind of market, separate from the general book-buying market, and only certain specific types of books tend to do well in it.

    • Yes, it’s saving the labels, but the artists are literally getting fractions of a penny per song/album. These articles are equivalent to people saying that Amazon is saving big publishing. Sure, the publishers are staying afloat, but what about the authors? Are they getting more revenue, or is it just one corporation feeding crumbs to another?

      • How the artist is being compensated by their label/contracts has nothing to do with the article in question, which itself is entirely based on a false premise to begin with, (assuming you take the information from the Guardian article at face value, that revenue from flat fee streaming has now eclipsed the past 15 years of direct sales.)

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