Over a year ago, I became frustrated with the advent of streaming music. I was firmly in the camp that streaming royalties were totally shafting labels and artists. I was outraged by what the royalty per stream was and since anyone could pay as little as $5 a month for unlimited music – if they paid at all. The only thing I could see was fewer and fewer sales. As a label owner, I depend on sales royalties to stay in business. Every sale counts in this digital age. With streaming, there are no more sales. You get paid only for a play and that’s not much. After our distributor’s cut, MK837 pulls in about $0.003 per play. That then has to be split with the artist. It truly is a nightmare situation.
Then, I too became a Spotify subscriber. This happened during the course of doing research for an article on streaming and this new world order. I realized then that as a consumer, I couldn’t justify paying $10-40 a month on new albums when I could have them and more for $5 a month. I felt bad about it at first, but then something happened. It wasn’t a huge earthshattering event. It was subtle. I made a playlist.
I took one of the most common actions that we do every day in iTunes or even Traktor. I made a playlist of music I wanted to listen to over and over again. Even then though, the significance of that didn’t hit me until recently. What I had done was latch onto the fabled long tail.
The long tail is the idea that your sales distributions over a long time are just as important as or more so than your initial release sales when it comes to music. In a physical music store, you would have limited shelf space and so your music had to make the bulk of its sales out of the gate or you would be gone next week. The Internet doesn’t have physically limiting space. Even if your music never sales, it’s still going to be on the shelf. So, rather than having all of your sales up front, you can spread them out over the course of years. For more reading on the long tale check out The Long Tail: How Endless Choice is Creating Unlimited Demand by Chris Anderson.
So, let’s get back to Spotify and my playlist. By creating a playlist, I had created a long tail. I had a list of music that I intentionally set aside as music that I not only enjoyed, but wanted to hear over and over again. Over the next few weeks and months, I listened to this list and others almost constantly while at work. Sure, I’d skip songs from time to time, but they still were played and what took me a long time was the realization that every time I played one of them, someone was getting paid and since I own a label, that somebody getting paid could be me… if my music stands out.
Obviously, this led to the creation of the MK837 Label List. Yes, please subscribe to it.
Back to the getting paid part thing. With each stream of a track, somebody is getting paid. Let’s look at some real numbers. The average person who is subscribing to Spotify is not planning to DJ the music they listen to on the service. Because of that, I’m pretty much guaranteed not to have a sale on Beatport or one of the other boutique stores from that person. At best, I would probably see a sale from iTunes.
Well, as a label, MK837 gets about $0.54 from each sale on iTunes to split with the artist. That’s also all we will ever get from that person in exchange for that track. They could listen to it 9,000 times and we’ll still only get the initial $0.54. On the other hand, if someone really likes the track and ads it to a playlist and listens to it for several months, I not only will I earn that $0.54, I’ll exceed it if that person keeps playing it. All it takes is 180 plays. That seems like a lot, but if the track is really good it won’t take that long for it to hit the 180 plays mark.
Although there is talk now about Spotify lowering their payout to labels, the basic take away is the same. Rather than fighting this system, we need to embrace it. Streaming isn’t going away. It’s only going to become more dominate. And while I hope that it never will become a service that DJs embrace for their Traktor/Seratos crates, it is eventually going to happen and we can’t stop it.
So how do we embrace streaming so it’s profitable to us? It’s an elegant answer that is easier said than done. We have to write better music. We have to write music that people will want to listen to over and over and over and over again. Streaming just might be what we need culturally to stop being lazy in our productions and to write music that matters, that touches souls and can truly be lasting works of art. It’s not an easy thing to do, but it’s the right thing.
I don’t know about you, but I’m reaching for the long tail now and for the future.