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How DO Musicians Earn Online?

April 14th, 2010 | 23 Comments | Categories: New Music Strategies · tips for musicians |

Social web has been buzzing these last couple of days with a visualisation by Information Is Beautiful, entitled “How Much Do Musicians Earn Online?” Click here to see it.

In case you’re not able to see the list, it’s a visual representation of how many instances of a range of online ‘music payment events’ you’d require to make a living wage solely from that service.

Not surprisingly, streaming services come out of it badly, especially when compared to sales of CDs.

However, the problem with presenting data in this way is that implicit within the list itself is the assumption of linearity: the list itself says “these are distinct events between which there is at least conceptual parity when comparing how many instances of that payment event are required to meet a particular sum.”

What it doesn’t point out quite so clearly is that anyone who thinks that Spotify – or any other streaming service based on the same economic model – is going to pay them a wage is on ‘shrooms. That’s both a specious understanding of the value of ‘a listen’ vs ‘a download’ (which equates to not only ‘many many listens’ but also a nailing of ones colours to the mast of the band… A desire for a semi-permanent archive of that music to recall at will… an investment… a commitment of sorts) and also ignores the number of the events at the top of the list that are intrinsically reliant on events at the bottom of the list, that streaming and sales are cause and effect.

Spotify isn’t a replacement for CDs. It’s a replacement for adverts. It’s not stealing money from sales, it’s saving money from promo. It makes no sense to think otherwise, and if you *do* think otherwise, and your music is still on Spotify, you’re either an idiot, or trapped in the kind of record deal that is symptomatic of everything that was bad about the old industry – big corporate machines working against the expressed interest (well informed or otherwise) of the artists they really ought to be working *for*.

And *if* anyone has replaced CD-buying with Spotify, it suggests two things –

  • that their CD buying was only ever under duress, forced on them in the absence of another model that better represented the value – *their* value of the listening
  • that Spotify isn’t differentiating well enough between Lite and Premium in terms of the value to artists…

Yes, I think the Spotify payment mechanism is broken. Utterly so. Why? Because payment and value and gratitude and relationship are the four synchronous values in the online music economy. Not physical vs downloads vs streaming.

However, to worry about the cost of streaming is the equivalent of questioning the financial return in someone playing music to their friends. Oh go on, lets install motion detectors and credit card swipe machines on CD players – if more than one person is in the room, a royalty should be paid!!

Of course not. This is ALL about

  • ears
  • discovery
  • exposure
  • sharing
  • the free flow of excitement about great music around the web.

It’s fundamentally about the costless replacement of the irrepairably broken role of the paid ‘gate-keepers’ who acted in the old system as a deeply expensive and impenetrable barrier between musicians and their potential audience.

We don’t need ads now, we need fans.

Because fans = money.

Music – in any abstracted sense – has no value. None at all.

The value is in the relationship between listeners and the music. So we make the most awesome music we can, to load it with as much pure potential value as we possibly can, and then we invite listeners to realise that value, and infect their friends with it. To be carriers of viral value.

That’s awesome. Absolutely fucking awesome. And worrying about how many Spotify plays it’ll take to pay your rent is beyond moronic.

And yes, before it comes up in the comments, there are MASSIVE problems with how opaque Spotify are being with their accounting. It really ought to be challenged in court. I also think that the parity in royalty payments between lite and premium is a deal-breaker for many (clearly not all), as I wrote yesterday. But even a ‘fixed’, fair trade version of Spotify won’t live in isolation.

Think about these questions to get a broader picture of what the REAL questions are here

  • Why do people listen to you?
  • How do they discover you?
  • What percentage of your new audience comes from playing live?
  • When, after going to a gig, are you most likely to WANT to talk about the band, to share your joy at seeing and hearing awesome music?
  • When did anyone ever make a career out of *pure* CD sales (no radio, no live, no sync, no nothing…), even more so, out of CD sales without a MASSIVE promotional push up front?
  • How many bands *in the world* are written about in magazines?
  • How often do you see your favourite indie musicians represented in the press?
  • How often are you able to tell your friends on twitter/facebook/myspace/your blog/by email about how awesome they are
  • How much does it cost the band for you to do that?
  • How much does an ad in a magazine/on a billboard/on TV cost?

In the honest, real, proven answers to those questions are the big answers to the question at the top – there are loads of answers. They aren’t linear, they aren’t mapped, they are all experimental, and most of them require clevers, not cash to make them happen.

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23 Comments so far ↓

  • StoryGas

    AWESOME post — I blog about web series, and how TV writers & performers are grappling with the same issues…

    …and it keeps coming back to the value of individual pieces of content online = zero
    …the value seems to lie in having a *community* around your* stream* of content

    interesting case example in film here
    http://www.storygas.com/2009/09/why-free-works-case-study-sita-sings.html

    my rantings on it are here
    http://www.storygas.com/2009/03/how-to-make-hit-internet-show.html

    love the blog

    All the best

    NEIL
    http://www.storygas.com

  • Ethan Waldman

    having followed your twitter discussion about the infographic in question, I have to say “amen!”. you’re seeing more and more artists switch over to the logical side- give away streaming content for free to lead to new fans. this reminds me a bit of the OKGo controversy with their fantastic music video that their label didn’t want them to allow to be embedded on fan sites. They pulled plug on the label and are better off for it..

  • Joe Buck

    I once paid for CDs, which I regret today. Then I tried the pirate thing for some years and today I pay for Spotify premium. I’m pretty sure I’m not the only one with this behaviour.

    CD sales are doomed and it’s very likely that digital downloads will follow. In the end services such as Spotify will be a very good alternative for labels and artists.

    • Steve

      right, cos you know the future of music, do you? 5 years ago, did you know that Vinyl was going to be an emergent market? Did you know Spotify would exist? No. None of us know what will happen.

      CD sales are CD sales – we have no idea what the emerging trends are. What I know right now is that within the digital environment it’s easier than ever for musicians to connect with people who care about what they do, and then all of the macro statistics and projections for ‘the industry’ are swamped by the power of a relationship.

      So maybe the viable, sustainable future of making music will be in relationship with our audience. I’m happy with that. Then the technology will just a vehicle for sharing that with them.

      • Corey Mwamba

        “So maybe the viable, sustainable future of making music will be in relationship with our audience. I’m happy with that. Then the technology will just a vehicle for sharing that with them.”

        But that’s the thing though – the technology has ALWAYS been a tool. You’re talking about how things SHOULD BE and ARE, with people who do Meaningful Work.

        The issue is when people see a tool as The Way. Tool != Way.

        Each time I read one of your posts, you’re saying the same thing – Meaningful Work is Good. It’s a great message. Micro-discussions are all right, but the big message is the same. And I’m glad you’re shouting it clearly.

        But my feeling is that some musicians will not do the Meaningful Work [treating the work of a musician as an economy of mixed sources, putting time into the craft of music-making rather than crafting an image, &c.] and are more interested in being hip.

        Hope you’re all right man.

        • Steve

          Hi Corey,

          lovely to hear from you – I’m DEFINITELY saying the same thing every time. The outcome is always the same. The bigger explanation seems to actually be about busting myths about how things were from 1956-1998, when the music industry was the dominant entertainment force… that still wasn’t an industry that was remotely interested in what we do, beyond where what we do overlapped with what they could sell. A lot of great indie labels operated outside of that industry, and a not inconsiderable number of amazing and awesome artists ended up making records inside it, but they were a tiny fraction of the great music that existed, and the industry as a whole did pretty much nothing to make the music lives of those people sustainable and visible.

          Now we can do that bit of it ourselves. How we give people the opportunity to be a part of it by paying for it is the interesting bit. It’s odd when people categorise my position as being for or against a particular technology/platform/whatever – I’m just for music. I’m for musicians, and I’m for audiences finding meaning in music, and being able to filter music in meaningful ways. I’m not interested in helping anyone make money just because they think they ought to, and I’m also not interested in any technology or culture that dehumanises us.

          A lot of the talk I hear coming from the ‘all music should be free’ crowd is framed in some kind of ultra libertarian framework, but sounds a whole lot like selfishness.

          The more I think about it, the more I actually see the break in culture/communities that has lead to this as being a problem of modernity, in an uneasy marriage with the breaking of the social contract that happened as a consequence of the politics through the 80s/90s… The marked individualism that drives people’s sense of their ‘right’ to anything is a wholly modern and not very pleasant or community oriented ideology… There’s a lot more to be explored here.

          But yes, be awesome, talk to your listeners, trust them and much will become clear :)

          • Crosbie Fitch

            It’s not “All music should be free”, but “All people should be free (of copyright’s constraint on their cultural liberty)”. Compare with “Free as in free speech, not as in free beer”.

            No libertarian worthy of the term would interfere with an artist’s right to exchange their labour in a free market (that’s why they’re against monopolies).

      • Joe Buck

        “right, cos you know the future of music, do you? 5 years ago, did you know that Vinyl was going to be an emergent market? Did you know Spotify would exist? No. None of us know what will happen.”

        Let me put it this way: right now of all the people I know there is only one person still buying CDs. Some people still love music though and happily pay for Spotify, concerts, or an occasional mp3-tune, while others pay nothing. And this is the case for lots of young people today. It seems strange to ignore these trends completely.

        Sure, there will always be people buying a CD, but when you compare the value of an overpriced CD (yes, even most indie releases are overpriced!) to other things in life, the CD can’t compete. However, fans will always support the artists they love and sometimes this means buying something useless just to help them. I would rather be able to pay money directly to artists, but most artists seem to disapprove of that idea…

        • Steve

          “right, cos you know the future of music, do you? 5 years ago, did you know that Vinyl was going to be an emergent market? Did you know Spotify would exist? No. None of us know what will happen.”

          Let me put it this way: right now of all the people I know there is only one person still buying CDs. Some people still love music though and happily pay for Spotify, concerts, or an occasional mp3-tune, while others pay nothing. And this is the case for lots of young people today. It seems strange to ignore these trends completely.

          …the trends amongst your friends. Right. Ask people across different groups what the trends are and you’ll get loads of different answers. I’m constantly getting emails from people concerned that I may not press my next album on CD, who don’t do the download thing at all. Which is indicative of what? Just that different demographics show up different trends.

          When I was at school, most of my friends listened to copied cassettes. One person would be an album (on tape, usually) and about 10 other people would copy it. As they got older, and more discerning, some were concerned about the loss of quality, some just wanted to own the actual item. Some happily continued to copy tapes.

          Others were music obsessives, and bought music all along.

          What were the trends? Just that people did different things, and the degree to which they paid for music was variable, as it is now.

          Before you come here stating the bleeding obvious, it’d probably be smart of you to go back and read some of the ‘New Music Strategies’ category archive here. Accusing me of ‘thinking like a record label’ and of thinking of piracy as ‘stealing’ just makes you look like an idiot.

          So, take a deep breath, and if you want to be a part of the ongoing conversation here about finding a way forward, rather than sounding like you work in PR for a company, I’d set aside some time and do some reading.

          you don’t have to, but if you keep posting ill-informed nonsense, I may start moderating them out. Who knows.

  • Brenda K of The Panache Orchestra

    Thank you for a spot-on post (pun entirely intended)! I just “met” you today online through a convoluted chain of Twitterings whilst battling boredom at my day job, and love it that you said in that video that being good will get you nowhere.

    My band partner/husband and I have spent our whole lives becoming “good”, to no avail. Nonetheless, I have just begun the massive up-front promotional effort you described in your post, and early results are promising. My nascent blog details my laboured slog through learning the PR ropes (and ending up on the ropes in the process), and my experience thus far indicates that it’s just as you say: it’s all about our ability to attract and connect with our audience and build as much value into their experience as we possibly can.

    You rock!

    Brenda K
    Fiddlerchick of The Panache Orchestra
    http://fiddlerchick.wordpress.com/
    http://panacheorchestra.com/

  • Crosbie Fitch

    I posted the following comment to that site (more than once), but for some strange reason it was not published (even when I removed the hyperlink):

    I’m working on implementing what is variously known as micropatronage, crowdfunding, or the “Thousand true fans” business model. This is where copies or streams are free of charge (can be made and sold or given away by anyone royalty free), but where fans share in paying the artist to produce the music – in expectation and exchange for sharing the music they’ve purchased. The Contingency Market aims to be free of charge. Thus when its users come to pay their bill (for all the music they’ve commissioned) of £10 say, then if paid via PayPal (taking 20p+3%) that leaves £9.50 going directly to the respective artists. So at the very top of your list you could add “Self-produced CD @ $9.99 must sell 122, label: 0%, artist: $9.49″. So the artist either produces one CD a month to 122 fans at $10, or to 1,220 fans at $1, or 1 CD a year @ $10 to 1,400 fans.

    Where’s my cut? I develop software to my ‘fans’ or users on the same basis.

  • Kotope

    Hi Steve,

    An interesting wrinkle imposed on Spotify, and services like it, is this: the royalty structure is based around a single instance of a song’s play having a fixed rate. So, to make the (commercial, private) business of playing music legally online work, it has to be set low enough that the hugely played songs do not bankrupt the services offering them. The smaller artists and outlets, therefore, are roadkill along the way. As probably was ever thus, if you remember the US royalties tribunal when it turned up.

    What that leaves, however, is a strict actuarial model: a fixed pool of royalties (say, the revenue of Spotify Premium, or – had it worked out – last.fm subscriptions) divided by the quantities of play. You might make it logarithmic rather than linear, to make the floor more reasonable in terms of actual revenues, but that’s an implementation detail.

    To continue the point I was making on Twitter, the BBC had a major failure of vision, or at least of internal politics here. While it’s been very, very happy to hive off all parts of itself that weren’t strictly about programme making, it didn’t realise that its job, and that of the licence fee, had been transformed by the highly network environment it found itself in. Its seemingly miserly per-minute fee that you quoted is therefore a mistake not because it’s cheap – and it is – but because it should actually be factor of a precisely audience-weighted figure at the moment of playback (if you’re running an FM delivered streaming service, say…) versus the remainder of the licence fee left after overheads 😉

    I’m curious if you’ve read PROMISES TO KEEP (William Fisher), and if you find it convincing as it’s seemed. I’ve not yet read it – before I’ve been happy to let Orlowski read it for me – though I’m thinking I should change this.

    (The kiboshed Virgin Media streaming service would have been really nice to examine in detail, too, for its royalty structures. You could do wonders with watching trackers, too, for audience figures – and having ISPs proxy every torrent across their networks to bring their transit bills back under control.)

    I’m sure there’s a future here, somewhere :)

    Best,

  • How much does music really earn? | Radio Clash Music Podcast & Blog

    […] Steve Lawson says quite rightly it’s comparing different things, that streaming services such as Spotify isn’t about selling but promotion…I would take that further and say the problem with the graph – or more likely those who read it  -is there is an implied top to bottom causal relationship, that a comparison is taking place which doesn’t happen in the real world. […]

  • Andrew Orlowski

    You should never let me do your reading for you, Kotope, it’s like outsourcing your vote to somebody you don’t know 😉

    You’re right that the original Virgin Unlimited service would have offered something completely new, and allowed us to explore how the value of music can be realised. You can do this when people pay real money.

    (By the way it was much more than streaming, it was full P2P as well. Think of the original Napster but implemented through a social network-style UI. Very funky).

    The problem with the graphic is that it omits the main source of income for successful acts – their performance rights. If they’re on a major, they may never recoup – but performance rights are received (almost) immediately and carry on for as long as the music is being played.

    Steve is right, the net makes it easier for musicians to connect with fans. But there’s no need to chuck out the institutional power of collective bargaining that PRO’s bring to the party.

    The statutory approach has its problems, I outlined a few here:

    http://www.theregister.co.uk/2008/11/20/how_to_destroy_the_music_business/

    • Kotope

      You don’t have to pay for the BBC either, much as TV Licensing like to pretend otherwise 😉 A statutory stick, yes, but one doesn’t have to take the carrot.

  • mbob

    except of course that no-one from spotify is ever going to actually go out and promote your music, no-one will ever listen to your music on spotify or other streaming services unless they search for it. so, as “promo” goes, its completely useless. Imaging if your radio plugger or press agent, simply put all your promo cds in a drawer and waited for the top magazines and radio producers to give them a call and ask for them. So… not really a replacement for promotion in any way then, is it? you might consider it a replacement for radio – except, of course, that radio presenters/stations actually do promote your music to people who don’t already know it, AND do pay artists properly. so… it’s good for? oh, yeh, consumers and venture capitalists, just like every other streaming or file-sharing service on the web. great!

    • Steve

      mBob – Spotify makes it possible for me to email links to great music to my friends. It costs me nothing, it costs them nothing. That was possible with Myspace, except that it came with a whole load of crap and the listening happened in a web-browser, was limited in terms of the number of tracks etc. etc.

      With Spotify (or any other streaming service like that) links to entire albums are sharable. That’s transformative. Previously, I had to buy the CD and then either make copies to send to people, or invite them over to listen to it/lend it to them. I couldn’t broadcast it.

      I get WAY more new listeners when someone on twitter sends out a link to my music on Spotify (or last.fm, or my own site) with a recommendation to listen that I ever have through a magazine review. I get more traffic from blog links on twitter than I do from national newspapers writing about me. Ten times as much.

      I don’t need a radio plugger or press agent. I can still get press and radio the way I always have – talking to the people who actually make the decisions – but I’ve had WAY more actual interaction/sales/plays through people sharing my music with their friends. The only thing that has every brought me more listeners than online link sharing is when I did a tour opening for Level 42 in 2002…

      So, yes, it’s a brilliant replacement for promo. An awesome replacement for promo. Demonstrably so.

    • Corey Mwamba

      “Imaging if your radio plugger or press agent, simply put all your promo cds in a drawer and waited for the top magazines and radio producers to give them a call and ask for them. So… not really a replacement for promotion in any way then, is it?”

      The press-agent, radio plugger and Spotify are all just tools.

      Use them all if you want. Ignore the ones that don’t work for you.

      As long as your work is meaningful.

      • Corey Mwamba

        I meant to add:

        Just stop complaining about one or the other of them because you don’t happen to like one.

        Disclaimer: I am not on Spotify. But then I don’t have a press agent either.

  • Blancomusic's Blog

    […] It’s good, a little sensationalist, but good stuff for the public to be aware of. You know already that BlancoMusic is against the idea of streaming, as much as a protest against the revolting cash-in that the streaming services do to both the unwitting artists whose material they profit from, but also from the best intentions of music lovers who see the services as a way of hearing music whilst compensating the artists they love. I hate to see that intention exploited by entities who do nothing for the artists who provide their content. We don’t feel that the resulting PR gained from streaming sites is worth it, and so we don’t stream. There are others who make a very valid case for streaming sites too, it’s all about perspective. If you’re interested in hearing a viewpoit on this other than my own repetitive ranting, go check out Steve Lawson’s blog here: http://www.stevelawson.net/2010/04/how-do-musicians-earn-online/ […]

  • Kari

    Steve, in case no one has pointed you to this story yet, here’s a great story from NPR about DIY music. It’s a couple who make a living from selling mp3s online (they’ve never printed a single CD) and they have some great things to say about why it’s not necessary to be signed to a label.

    http://www.npr.org/templates/story/story.php?storyId=125783271
    (Don’t just read the story, listen to the audio if you can.)

    K xx

  • How Much Do Music Artists Earn Online? | Information Is Beautiful | IndieLab - Promoting Independent Indie Music in the UK and Beyond

    […] Lawson makes the astute point in this article asking DO musicians earn online? that in many ways streaming and CD sales should not be compared because they are actually part of a […]

  • This Reality Podcast

    Inspirational thinking, as usual. Thank you.