Pennies from YouTube Heaven?

When you listen to and download my music directly on this website, I get paid a better percentage from these direct downloads than from anywhere else on the wonderful wide web. But this website serves only the people who know who I am and how to find me. To get my music out to people in the world who don’t already know me, I rely on iTunes, Spotify, Pandora, YouTube and etc. When people purchase a download from iTunes or other vendors, I get paid pretty nicely (between 60-70% of every dollar).

But when people listen to (stream) my music on Spotify, Pandora, YouTube, etc., I get paid the tiniest amount imaginable. Most people can’t grasp how tiny the payments are, so I’ll give a few examples:

Spotify – $0.00023 per play – for 2,433 people who listened to “Anna” in a month, I get 55 cents.
YouTube – $0.000026 per play – for 5,293 people who listened to “Anna” in a month, I get 14 cents.
Apple – $0.00013 per play – for 3,039 people who listened to “Anna” in a month, I get 38 cents.
Pandora – $0.000069 per play – for 11,280 people who listened to “Anna” in a month, I get 78 cents.

It takes 385 plays on YouTube for me to earn one penny! Total income from 22,045 people enjoying my song in one month is $1.85. Is it any wonder I recently had to rent out the carriage house on my estate to some scruffy software developers? I used to rent it to fellow musicians, but they can’t afford it anymore.

The world, and the music business in particular, has changed mightily over the last decade. Where do I find new music, where do I listen? I like and use Spotify. I rarely pay for and download music anymore. As a consumer and music lover, I’m loving this whole streaming thing: any song, any time. And if I’m consuming music this way, I can’t expect you, dear reader, or anyone else, to forego such convenient and amazing access to music. But…

The business model is pretty much broken. When people used to download a song, musicians like me would be getting 60 cents. Sell 22,000 downloads and you’ve got $13,200. I could live off that. Shoot, I did! But no one can live off the $1.85 that 22,000 listens brings in.

The answer? I’m not good enough at math and economics to say exactly how to fix it, but when you hear of Pandora and Spotify trying to twist Congress’ arms so they can pay artists less, understand that they’re already paying us virtually nothing. If we tripled the cost of subscriptions (so that, say, Spotify would go from $10 to $30 a month) but they only tripled their payout rate, that would still mean virtual peanuts to me – $1.85 x 3 = $5.55.   A sandwich at Subway.

But what if I got a penny for each listen?  Surely that’s not asking much.  That would mean over $220 a month to me, just for that one song.  I would be making at least part of a living again.  How much would the listener pay?  Assuming the average song is 3 minutes, that means 20 cents an hour.  If you listen an hour a day, in a month you’d pay $6.  If you like to have music on in the background all the time, 8 hours a day would cost you $1.60, amounting to $48/month.

Now assume that Spotify et al are getting by currently charging $10/month.  If the average consumer listens for an hour a day, Spotify can afford to pay out a penny per listen by charging only $6 more.  Voracious users might have to sign up for an “all you can hear” account for $50/month.  But compare that to just 15 years ago.  We heard most of our new music via radio and TV, which pay decent royalties to music creators, and when we heard something we liked we’d go out and buy a CD for $15-18.

Think back to your CD collection – you had a mere fraction of what’s available at the record store.  Now, you get the entire contents of a record store any time you want it.  It’s amazing!  It’d be an amazing bargain at $50/month.  A mind blowing bargain at $20/month.  But at $10 a month?  Somebody somewhere is not getting paid…

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