Unless you live under a rock you’ve heard that Taylor Swift pulled all of her music off of Spotify. Her complaint (and that of every artist who isn’t named Dave Grohl) is that not enough money is paid by Spotify to the artist. Spotify of course says that they pay a majority of their revenue to the labels and the labels are the ones preventing the artists from getting paid. The labels say there isn’t enough money coming in to share and it’s not their fault. Big shock there, right? It’s always somebody else’s fault. Meanwhile radio has been real quiet about all this. Why?
Here is what Taylor and many artists don’t get and why radio needs to pay attention. Artists complain that they only get $.004 for each stream of their music. So every time someone plays a song the artist gets a measly piece of money. You know how much an artist makes each time song is played on the radio? Hint, it’s not as much as it is with Spotify. It’s nothing. Zero. EVER. Now writers and producers get paid but the artist doesn’t make a dime EXCEPT for the hope that the exposure leads to a CD or iTunes sale.
So what exactly are the artists complaining about? They don’t make a direct dime off of radio. Not even a single cent! Sure .004 cents a play or spin doesn’t sound all that exciting either but they aren’t getting that from radio. And with the entire radio industry claiming simultaneously that listenership has never been better but that budgets have never been tighter it seems unlikely that radio is going to give in even that much.
Let’s consider for a moment that a wise artist realizes this and talks to their smart manager, who sits down with the label and everyone realizes the same thing I did. .004 of a dollar is a TON of money compared to nothing. Is it fair? I don’t know. Maybe, maybe not.
Imagine that an artist makes about $4.00 for each CD/iTunes album sale. At the current rate from Spotify a song would have to be played 1000 times to equal that same profit margin. That’s more spins than I generally give an album. Even one that I REALLY like so I think the argument could be made for increasing the profit for the artist in this case. But on the other hand you know exactly how many people are spinning being exposed to your song. That’s something radio just cannot do. That kind of information is powerful and has a way of correcting a market that’s been based on speculation. Music may not be as valuable as we thought it was. Maybe the market won’t pay $4 to a an artist anymore.
Here is why radio should be concerned. Spotify may not be the most profitable way for artists to be paid but it’s the most accurate. The radio industry subscribes to Neilson, which for all the money spent is still extrapolated scientific guessing and estimating of how many people are listening. In DC 8-15 people coming in and out of the panel can swing 50,000 to 100,000 people in the sample. That just kind of shows how fragile the whole system is. Everyone has just agreed to not rock the boat and question it too much. To Nelison’s credit they continue to work on making the samples larger and more accurate but at the end of the day it’s still statistics with a possibility of error. They even tell you as much on the bottom of each report.
Now think in to the future. Digital media is becoming more and more a thing. Ad buyers are looking at where to spend their money. Spotify can tell the add buyer EXACTLY how many people are going to be exposed to the product. Radio says “We think it’s somewhere around 100,000 people.” If you’re smart with your money you’ll spend on the sure thing.
If you are a label in the near future are you going to invest in a guestimated audience or are you going to put your shrinking budget in to areas where you know exactly your return? Well, so far radio hasn’t had much competition in this regard. But how long before Spotify, Pandora or some other streaming service generate enough listeners that labels start going to them first for releases and public relations stuff? When radio isn’t the for sure go to for new music releases it’s going to have to rely on its talent and content. An area it’s ignored and marginalized for at least 20 years.
Find Ben and his podcast at www.sometimesthereisgod.com