“Because as Spotify subscription numbers increase, so do payments. So, what DJ Khaled gets for a stream today is more than what Ed Sheeran got in the past.”

Ah, the nitpickers are out in force. I hate to interact with them, but I’m wary of misinformation being spread.

What I wrote above is loose language, you can even say it is presently technically wrong. Because the truth is PER STREAM PAYMENTS have been going down, not that that is written in stone, BUT STREAMS HAVE GONE UP so the resulting payment for a hit is higher.

My point is very simple. The greater the number of Spotify subscribers, the larger the pool of money to be distributed.

BUT THAT’S NOT GOOD ENOUGH FOR THE WANKERS!

First and foremost, Spotify does not have a per-stream rate. Never did, still doesn’t, and never will.

The per-stream rate is math done to interpret the modern world for those still living in the past. They’re used to percentage royalty rates on physical. For some reason, they can’t understand pool percentages.

FURTHERMORE, these same people complaining, and just like Daniel Ek said, it’s not the big artists who are complaining, who are rolling in dough from streaming payments, IT’S THE LITTLE ARTISTS! Which makes no sense, because if the per-stream payment is going down, that means more tracks/artists are getting paid, which is exactly what Daniel Ek said, once again:

“”Gone are the days of Top 40, it’s now the Top 43,000″ – referring to the fact that the streaming service’s ‘top tier’ of artists – those accounting for the top 10% of its streams – now number more than 43,000, compared to 30,000 a year ago.”

Spotify CEO talks Covid-19, artist incomes and podcasting (interview)

Funny how those who lean left, the majority of the artists, those who believe the little musician should make more money from streaming services, nitpick just like those on the other side of the political spectrum do. They cannot handle the spirit of the statement, they have to cherry-pick and twist to make their point.

And to beat a dead horse, as Spotify increases in subscribers, more artists are sharing the wealth. Somehow that’s a problem? Because each and every stream might be worth less?

This is the basic rule of scale. Which, ironically, Spotify doesn’t have (scale, that is).

Let me explain…

These internet companies become more valuable because more people use them. And the cost of acquisition per customer drops, because users tell other users, people want to get in on the game. And costs can be spread over more people, therefore lowering them per user.

Spotify becomes more valuable as more people use it. That’s why its stock is high (along with the venture into podcasts).

However, Spotify still has to cough up approximately 70% to music rights holders no matter how big it gets.

Going back to the past to explain this to the brain dead…the reason record companies were so profitable in the past is because recording costs were a set figure. And, as a record caught fire, fewer marketing efforts were needed to sell each subsequent album. So, doing little more than pressing and shipping the product, at a certain point almost everything was profit. Sure, you can amortize the costs over each and every album shipped, but most records’ costs are never recouped anyway.

Once again, it’s sad to have to describe the music business to those agitating for results that are impossible. Spotify can’t lay out more cash to artists, who are paid by their label anyway, if they’ve got one, because then it would GO BROKE!

I remember a conversation with Lucian Grainge. He lamented the artist blowback on Spotify because THEY’RE HIS BIGGEST CUSTOMER! The healthier Spotify is, the healthier the labels are. And there’s no point in putting Spotify out of business, because it would hurt the labels.

If you know anything about retailing, about concert promotion prior to the Sillerman roll-up, you know that the first rule of these businesses is TO KEEP THEIR BUYERS SOLVENT! Which is why manufacturers extend terms to retailers, why acts give back money to concert promoters, which they still might do with indies.

But the problem with the internet is it’s flat. Everybody gets a voice and everybody’s can be amplified. And then this misinformation, or twist of information, gets picked up by the ignorant with an agenda and you end up with a paper tiger. What next, Lucian and Rob Stringer running a child sex ring out of the dressing rooms in Madison Square Garden?

So, you hate the big boys. I get it. They’re up here and you’re down there. You want more. And I believe in a safety net for everybody, a roof over their head and food on the table, BUT I DON’T BELIEVE EVERY ARTIST IS ENTITLED TO THE SAME THING! And just so the nitpickers won’t bite back, there should be a government safety net for these people, but as far as their artistic work…NO WAY!

What next? Do we get rid of all pool percentage deals?

Once again, I don’t want to go too deep here, giving those on the other side cracks they can burrow down into…

However, do you know if you buy more you pay less? Which is why if you buy from a one stop you pay more than you do buying direct? Ever try to sell to Wal-Mart? It’s only interested in products that can scale, that can sell zillions. They don’t want to stock any product that won’t, because it’s going to eat up shelf space that could go to a more valuable product. Then again, in the virtual world, like SPOTIFY, there’s unlimited shelf space, so there is more room to play!

Creating music is a social experience. Not one of hard facts. Whereas the business side is. Which is why you see a clear division between the two. The artists need the business people and vice versa. Hell, most musicians couldn’t even work at the 7-11, they couldn’t show up on time. And you can’t sell the music of the execs, believe me, many tried, they gave up.

But your response to my screed has the chance to not only reach as many people, but more.

And I get it, you’re mad that I have a bigger audience than you do. But you truly aren’t aware of what it cost to garner that audience in blood, sweat and tears, sheer work. Without ads or promo, without buying followers. Furthermore, I’m not getting paid for my writing. I choose to do this. Because the wider my reach, the richer the opportunities to make bank. JUST LIKE SPOTIFY!

Which is why if you’re a nobody and you’ve got a paywall, good luck, your odds of making it are low. Like all those people on Patreon. If you’re making a living, more power to you. But spreading the word, growing, gaining significant mindshare…NEARLY IMPOSSIBLE!

There’s plenty of money out there, tons. And if you’re interested in cash, figure out a way to make it.

The biggest artists make most of their money from brand-associated income, perfumes, makeup, clothing, tchotchkes. And it’s not that streaming pays so bad, but you just can’t make as much as Jeff Bezos from it. And you can try, but it’s literally impossible to do, no one makes triple digit billions in music. But music gives you the right to speak truth to power, to have an impact…THAT’S ITS ESSENCE!

Believe me, if you’re great, people will find you. But the process is slower than ever before, because the channel is overwhelmed with junk. So, you’ve got to work longer and harder to make it, and you still may never make it. How many people have that gumption? Maybe you had an interest in medicine, but you didn’t want to study and get good grades and therefore get a good MCAT score, never mind spend all those years in school and as an intern and resident, so you’re closed out. What next, should everybody be allowed to be an MD? Should the amateur MDs be paid more proportionally for each visit/operation, because they see fewer people? And what about the CUSTOMER! The customer won’t want to go to the amateur MD, no way, they want to see the big, licensed MD, so the amateur MDs get online and tell everybody how this is unfair.

This is the way it is. Who knows, I’m completely fried, I might have left a hole for a nitpicker to enter, to blow back. But the spirit, the essence of the above, is true, definitively.

Oh, one more example. There are always people lamenting their act won’t get signed to the major label, or the company released the music and have stopped marketing it with tons of bucks. EVER HEARD OF OPPORTUNITY COST? Record labels want to give themselves the biggest chance to make more money. They don’t want an album that can sell 10,000 copies, even if you give it to them for free. Because it’s gonna take up too much time and effort marketing said product and supporting it in other ways.

So you can decide right now which side you want to be on. Do you want to amplify the words of the losers, who don’t understand the business, or do you want to align yourself with those who are successful and learn from them? Believe me, in a business like music, it’s almost impossible to get a job and keep it. Not only can you not skip a day, YOU’VE GOT TO WORK ON SATURDAY AND SUNDAY AND MAY NOT GET PAID EXTRA! It’s a life commitment, and most people are not willing to suffer that much, and most people are not that great either. Do you think people want to pay to see castoffs from Little League as opposed to the Yankees?

I’m done.

“There is a narrative fallacy here, combined with the fact that, obviously, some artists that used to do well in the past may not do well in this future landscape, where you can’t record music once every three to four years and think that’s going to be enough. The artists today that are making it realise that it’s about creating a continuous engagement with their fans. It is about putting the work in, about the storytelling around the album, and about keeping a continuous dialogue with your fans… I feel, really, that the ones that aren’t doing well in streaming are predominantly people who want to release music the way it used to be released.”

Spotify CEO talks Covid-19, artist incomes and podcasting (interview)

Bingo!

I thought this case was closed, but never underestimate oldsters in control of old media perpetuating the canard that streaming is the devil and if Spotify were just somehow equitable, they’d be rolling in dough.

“What tends to be reported are the people that are unhappy, but we very rarely see anyone who’s talking about… In the entire existence (of Spotify) I don’t think I’ve ever seen a single artist saying ‘I’m happy with all the money I’m getting from streaming.’ Stating that publicly. In private they have done that many times, but in public they have no incentive to do it. But unequivocally, from the data, there are more and more artists that are able to live off streaming income in itself.”

I was watching “The Real Housewives of Beverly Hills” and one woman asked a newbie how she got so wealthy. This new woman didn’t want to tell, she said she’d grown up in the south, all she’d reveal was her first husband was rich.

In a country where the president doesn’t want to reveal his income/taxes, do you think musicians want to either?

According to HitsDailyDouble’s Song Revenue Chart last week’s #1, DJ Khaled’s cut “Popstar,” featuring Drake, was streamed 25,705,000 times, or for the math challenged, in excess of 25 million times, and generated $172,352.

25 million streams might sound like a lot, but the biggest Spotify streaming track of all time is Ed Sheeran’s “Shape of You,” and it has 2,555,000,000 streams (in excess of 2.5 billion to the math-challenged), AND THAT’S JUST ON SPOTIFY!

Let’s extrapolate. Using the metric re DJ Khaled, Ed Sheeran would have earned approximately $17,235,200 (once again, that’s $17 million) FOR ONE TRACK! That’s beaucoup bucks! And Ed Sheeran also has the #8 all time Spotify track, with 1,574,000 streams, and he has #12 and #16…as the Violent Femmes once sang…ADD IT UP!

Now those numbers re Sheeran’s “Shape of You” are fallacious. Because as Spotify subscription numbers increase, so do payments. So, what DJ Khaled gets for a stream today is more than what Ed Sheeran got in the past (approximately, Queen Jane, as Dylan would say, there are other factors, but generally speaking this is true). HOWEVER, we are only talking SPOTIFY numbers, not Apple, Amazon, Deezer, Tidal, even YouTube, which would increase the payment.

As for the most-streamed Spotify tracks of all time:

List of most-streamed songs on Spotify #100,

“Youngblood” by 5 Seconds of Summer, has 992 million streams, so when you have a few million and believe you should be making millions, you’re wrong.

So, first and foremost, you’re probably not as big as you think you are.

Second, the metrics of old don’t apply today. In the old days it was about sales, today it’s about streams. You get paid for consumption until the end of copyright, which never seems to end in the U.S. anyway. As for talking about that royalty from physical…chances are, you weren’t even in royalties, you owed the label money, unless you were in the equivalent of the Spotify Top 100 of all time. Yes, you got advances from the label, but there’s a good chance that’s all you got. You went on the road and lost money, the label supported you. Sure, eventually you might make some money on the road, and that’s good, but there were fewer avenues of additional cash. You may or may not want to have sponsors, do endorsements, sell merch and perfume and… But all those opportunities now exist. You can monetize in so many ways.

Also, streaming tells the truth, just like Soundscan in the physical era. I mean how big are you really, forget the hype, are people really listening to your music? That’s what Spotify and the rest of the streaming giants tell you. So, you got ink in all the major newspapers and magazines, well, that doesn’t mean people care. As for radio…you’re still getting paid on that. And in the internet radio world, you’re getting paid on both the song and the record, same deal on satellite, whereas in the U.S. previously these were nonstarters generating no cash.

But you made more money in the past!

Well, thirty five years ago, computers cost $3 grand and were only a fraction as powerful as they are today. The rules of economics should apply everywhere but in the music business?

As for all the money going only to the elite, the most-streamed…

“Gone are the days of Top 40, it’s now the Top 43,000″ – referring to the fact that the streaming service’s ‘top tier’ of artists – those accounting for the top 10% of its streams – now number more than 43,000, compared to 30,000 a year ago.”

Once again, maybe you’re not as big as you used to be.

Would payments be different if everybody’s subscription was allocated to what they actually listened to? Economist Will Page reported that this would not be the case. Meanwhile, Deezer wants to attempt this, but so far the labels haven’t agreed.

The labels…

It’s kind of like Ticketmaster, both the ticketing giant and Spotify get all the heat when the blame lies elsewhere. Ticketmaster just does what the acts tell them to do, and since the big acts take virtually all of the ticket revenue, the fees represent profit for Ticketmaster, which it also has to share with promoters, venues and potentially other entities, sometimes even including the act itself! As for Spotify, it pays in the neighborhood of 58% of revenues for recordings and 6% for mechanicals and 6% for performance. So, the more Spotify makes, the more it has to pay out. Maybe you have a bad royalty deal with the label. Or maybe you’re one of twenty writers on a song and you don’t own any of the publishing and you’re quoting royalties for streaming RADIO, which pays a lesser rate than on demand.

“The artists today that are making it realise that it’s about creating a continuous engagement with their fans. It is about putting the work in, about the storytelling around the album, and about keeping a continuous dialogue with your fans.”

The game changed. Like it did when we went from singles to albums. Once again, why should the music business get to stay in the past when every other business does not, what makes artists so special that they never have to adjust to business change?

I’m just one or two years and a couple of changes behind you
In my lessons at love’s pain and heartache school

“Fountain of Sorrow”
Jackson Browne

The history of the past twenty five years is the mainstream trying to adjust to the present, never mind the future. Go back to network news, it’s on YouTube, people laughing about the future of the internet, how it’s never going to happen.

So what you’ve got is aged know-nothings pontificating and getting ink because they mean something to the oldsters controlling big media but nearly nothing to those actually streaming music. Like David Crosby.

And never underestimate the complaining of the wannabes and losers. Come on, just go to your local bar (when it opens after Covid-19), and you’ll hear so many stories of inequities…I was gonna play for the Yankees but I got injured, someone stole my glove and I couldn’t afford a new one, my girlfriend dumped me and I was emotionally troubled…it’s the nature of the world, everybody’s got an excuse, everybody believes they deserve to make it.

But music is close to a lottery.

You’re not entitled to a living in art. Just like you’re not entitled to a living in professional sports. There’s a limited number of qualified people. Who make a lot, while you’re shut out. Be thankful in music that there’s no barrier to entry, that you can play at all.

So, when MTV started, the classic rock artists ruled. But them came Duran Duran and hip-hop and…they were squeezed out.

At the turn of the century, during Napster, the focus was on the past, to a great degree these same classic rock artists, unearthing old gems, rarities.

But today it’s about the present, what people want to listen to TODAY! And the truth is a lot of that is hip-hop. And if you’re a rock fan, listen to the songs on the chart, do they really deserve a wider listenership? And you used to have to buy them to hear them at all, now they’re all included in your streaming package, so if there’s something good, you can check it out.

The Beatles wiped out so many acts. From Perry Como to Fabian to Bobby Rydell… But only in the twenty first century do old acts believe they’re entitled to a large share of the pie of recorded music revenues.

Once again, youngsters are not concerned with this at all. They’ve accepted and bought into the new paradigm. It’s only the old people and the losers who are complaining, AND THEY ALWAYS COMPLAIN!

Ignore the next person who tells you streaming is the enemy. Spotify INCREASED recorded music revenue. And chances are, if there weren’t streaming services, your material would not be able to be heard whatsoever. David Crosby? Do you really think the retail stores of old would have stocked all your new albums? NO!

I’m a fan of David Crosby’s music. I like that he’s pushing the envelope artistically, but that does not mean his opinions are inviolate.

Sometimes you can’t teach an old dog new tricks, but never forget, the world is run by new dogs, accept it.

Attorney Don Passman literally wrote the book on the music business: “All You Need to Know About the Music Business.” Here we delve deeply into today’s deal landscape, as well as Don’s story, how he got to be one of the foremost lawyers in the music business. If you want to know about record deals, and publishing deals, and 360 deals and touring deals…this is the place!

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Tune in today, July 28th, to Volume 106, 7 PM East, 4 PM West.

Hear the episode live on SiriusXM VOLUME: HearLefsetzLive

If you miss the episode, you can hear it on demand on the SiriusXM app: LefsetzLive