Royalty payments from streaming music web services Pandora and Spotify are still too small to help reverse the overall decline in revenue in the music industry observed over the past decade, artists and label reps explain in a New York Times story published Monday. Pandora and Spotify provide relatively small payouts, or micropayments, to labels and independent artists for every distinct play of a particular song -- reportedly between 0.5 and 0.7 cents ($5,000 to $8,000 per million plays) in the case of Spotify's paid user tier.
At the same time, both streaming companies have seen much success attracting listeners to their paid and premium offerings, and are now valued in the multiple billions, leaving artists and label reps conflicted when it comes to their support for such services over more traditional album sales, which many believe are being cannibalized in the process. As The New York Times quoted Cliff Burnstein, founder of Q Prime, which manages Metallica:
“There is a point at which there could be 100 percent cannibalization, and we would make more money through subscriptions services,” Mr. Burnstein said. “We calculate that point at approximately 20 million worldwide subscribers.”
Spotify counts 20 million subscribers in 17 countries, but only five million are paying customers, the rest electing for the free, ad-supported version.