Best Revenue Model for Musicians: Sell or Stream?

I’ve bought thousands of LPs and CDs in my life, and a surprising number of them I only played once.  Now I rent music from Rhapsody and Rdio – total cost $15 a month.  In my heyday of buying CDs, I’d usually spend 10x that or more per month.  I never got into stealing music.  I want the artists and record producers to make their money like they deserve.  However, it’s doubtful I’ll ever go back to buying CDs, and since I’ve acquired the streaming music habit, I have no desire to go back to buying music at all.

The question I’d like to know is:  Can the artists and producers make as much money by streaming as they do by selling?  Finding out about revenue from various music distribution sources is difficult, but there are some clues.

Problem #1 – Artists Used To Make a Lot of Money Off of Crappy Songs?

If I buy a CD for $15 and whether I play it once or a million times, the musicians and producers earn the same amount of money.  If I go to iTunes and sample an album and buy one song I like for $1.29, again it doesn’t matter how many times I play the song, they’ve gotten their money.

Now if I go to Rhapsody and play an album or song, the artist and their record company will get a tiny payment, I assume.  Now if I find one song that I love so much I play it 20 times a day for the entire month, that song should theoretically pay the creators of that song more money for my extra love.  But does it pay the music people enough?  Evidently not, according to The Black Keys, who have pulled their new album from streaming services.

I’m pretty sure selling CDs was the best way of making the most money.  Music lovers had to buy everything pretty much on faith.  The money was up front.  Money from streaming comes after fans play the songs.

Problem #2 – Can Streaming Succeed if Too Many Groups Pull Their Catalogs?

Artists and record producers want to sell albums.  But let’s be honest, how many albums in your collection are ones you like to play straight through and love all the songs?  Or even half the songs?  Or even one song?  Music lovers want to find songs push their music loving brain cells into ecstasy.  But we don’t know which songs do that until we play the album.  In the old days you bought a CD and rushed home hoping to find at least one, and hopefully several great songs on an album.   I’m through with that.  Those days are over.  I’ve been burned too many times.  Streaming music lets me try out all the albums I want, and the songs I love get added to playlists.  Life is easy, but will it last?

If music producers start pulling out of deals with the streaming music services it won’t.  Now we could see a tiered delivery service like we see for movies and DVDs.  Netflix is a cheap all you can eat service, but content comes there last.  This might work for streaming music, where albums go on sale for a period of time before they go to streaming.  I can dig that, but then I’m old and patient.

To get some idea what streaming music does offer, read “Spotify vs. Rdio: Who Has The Exclusives?” over at Wired.  I wished Rhapsody had an API to let it be compared too because I feel from just daily use Rhapsody has the best catalog.  What Wired did was look up 5,000 albums at both services to see which had the most.  Rdio was the winner to me, but Spotify had some much loved exclusives.

It also revealed the holdout groups for streaming music:  The Beatles, King Crimson, AC/DC, The Eagles, Led Zeppelin and Frank Zappa – but hell, I’ve already bought those, some more than once, some even three times.  Streaming music still has millions of albums, so for $4.99-$9.99 it’s a great deal.  But, how many groups have to pull their catalogs before people give up on streaming music?

Problem #3 – Can Artists Make Money Only On How Often a Song is Played?

To make money on streaming music services artists must create songs people want to play and play and play.   If you create an album with 10 songs and people only play one of them, then 9 songs won’t be earning revenue.  Streaming is a dog eat dog world of music competition.  Hit songs will make money.  But will they make the same kind of money as selling hit songs?  I don’t know, and I can’t find out.

Problem #4 – Can the Music Industry Convince People to Buy Music Again

Because of stealing sharing songs free on the Internet, a whole generation feel music should be free.  The convenience of streaming makes getting music for $5-10 a month far easier than stealing, so it might be a viable revenue stream, but can it compete with convincing people to buy music again?  And now that I’ve spent years using streaming music, I don’t know if I’d want to go back to buying music.  But then I’ve got 18,000+ songs I’ve already bought and I’m 60 years old, so I could coast awhile without buying.  If I did go back to buying music I’d buy single songs at Amazon and hope Amazon stays in business for the rest of my life.

Problem #5 – What Happens if Most Fans Go With Streaming?

Even though I own the Beatles, Frank Zappa, Eagles and others on CDs, I no longer play their music.  I went out and bought all the remastered Beatles CDs when they came out and then didn’t even play them.  Streaming music is too convenient and great.  I just don’t mess with my collection anymore.  I recently uploaded it to Google Music, but I don’t play it.  Spotify will call up my library when it can’t find it in theirs, and that’s cool, but I wished Rhapsody and Rdio did that.  I want all my music in one place – in one search engine, and I want it in the cloud, so my playlists work from any computer or mobile device.

Sorry Black Keys, but I’m not going to buy your new album.  Leaving Rhapsody and Rdio doesn’t make me want to go buy your album.  My world of music is now streaming.  If the song ain’t there it ain’t anywhere, at least in my musical reality.

Sources of Streaming Music News and Reviews

JWH – 12/14/11

9 thoughts on “Best Revenue Model for Musicians: Sell or Stream?”

  1. I would say that, as a semi-professional musician and sometime composer, the model that most appeals to me is the following:

    1. Create a website where songs can be sampled, and then purchased as wanted – via the website only – for 99 cents. Why? Because that way the musician/artist does not have to share the money made with anyone. So if a thousand people worldwide download one song, that musician/artist is $990 better off than they were to begin with. This would be the primary source of revenue.

    2. Make live performances the secondary source of revenue; it worked well enough up until the advent of recording technologies. So a band or individual can pick and choose their performance locations based on where their music is being purchased the most (say, Buffalo, NY, or Norway). If someone doesn’t care about performing live, then they could be satisfied with #1 above.

    This provides the musician/artist with complete control over the music, which, I believe, is really where the music scene is heading. Sorry to disagree with your high regards for Rhapsody or Rdio or Spotify or whatever comes next, but they are all just middlemen – not much different than music execs and “managers” who make money off of the actual musicians. Your vision of calling up only music you have already determined must meet your standards of access makes you a middleman, as well. So what will you do when hundreds – thousands – ALL – musicians decide they want to get away from any semblance of the music industry – whether it be sleazy promoters or slick streaming companies…?

    1. If most musicians pull out of streaming music I’ll have to go back to buying music but it won’t be as much fun. Mainly because it will be too much work to find new music to like, and because I will no longer have the variety of music to try out. Some weeks I try out 10-12 new albums.

      Every Tuesday when the new albums are released I can go to Rdio and see hundreds of new releases and try out any that catch my eye. Your web site selling method would never off that kind of promotion. Also Rdio (as well as other services) lets me look at other people’s playlists. I can pick a song I love, look up what playlists its on – sometimes it might be 4 or hundreds, and try those playlists out, letting me hear songs I never would have discovered on my own. For example, I like a song “Devil’s All You’ve Ever Had” by Alberta Cross. It’s on 4 playlists at Rdio, reflecting it’s not a well known song. From there I found this playlist. It’s full of songs I’m not familiar with, but I’m going to try them because I know the owner of the playlist likes an obscure song I like. That kind of social networking just doesn’t happen with your model of marketing music.

      1. Well, that is because, frankly, I don’t give a damn about interacting with total strangers – er, I mean “social networking”…! If a “real” (as opposed to virtual) friend shares something they like, and we are of like mind regarding music, film, art, etc., that is great, and we might debate its merits. But to scour through total strangers’ files just seems, I dunno, creepy to me. And I don’t want strangers going through my stuff, either. I guess that makes me an anti-social non-networker…

      2. The idea of seeing and accessing playlists of other users, and having them see mine, has felt very strange to me up till now. It seems so much a part of the aspect of American culture where the very idea of personal privacy seems to be disappearing. Reality TV, the compulsive Facebook ‘liking’, having a million Facebook friends who you barely know, public and manipulated over-display of emotion on TV — it all seems so odd and falsely-intimate.

        But in the last week or two as I have been using these music-streaming (and -sharing) services I am slowly trying to get used to the idea. I may warm up to it.

        1. I discover a lot of new music I like through playing other people’s playlists. What I’ve really found shocking is how different other people’s tastes are, even for people who are my age. When I go to a young person’s playlist I find practically nothing I know, and I wonder where the hell did they find all these songs. And I keep up with the more famous contemporary pop artists that hit the Billboard charts or get mentioned in Rolling Stone or Entertainment Weekly.

          There are millions of music performers out there all looking for fans, and the playlist is very effective at finding new songs to try. And Rdio’s use of playlists is the best I’ve found.

          1. Yup, I seem to have settled on RDIO as my primary service at least for now, after I discovered that they seem to have the best info about the artist and even the album, at least compared to MOG and Rhapsody which, unless I’m missing something, simply don’t include artist and album information.

            Can you tell me how exactly you look for and find other people’s music? You pull down the drop-down at your name, and then choose Playlists, and then…?

          2. Find a unique song you like and go to it in Rdio. It will then show how many playlists it’s on. If it’s too many, you might try another song. What you want to find is a playlist that picked this song as one of their favorites, so hopefully other songs this person puts on their playlist might appeal to you too. It doesn’t always works. But sometimes I can find a playlist that has many songs I never heard of before but that I liked.

            For example, here’s a playlist that I picked because it has “Devil’s All You’ve Ever Had” by Alberta Cross. Here’s the link to that song and it’s only on 4 playlists. So it’s rather unique.

            If you pick “Rolling in the Deep” by Adele it’s on 12,456 playlists – so that’s no help. Pick a song you feel is uniquely wonderful and go look it up.

            By the way, here’s my “Songs Rated 10” playlist to see if you and I have any common songs.

          3. Ok — I didn’t realize that you do it by starting out with a song. So you click on a song and it opens up that song’s page. From that page you then click on the “Playlists” button. A song could be in a listener’s Collections or in one of their Playlists?

            I’ll check out those playlists.

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