Streaming battle

June 11, 2020 | By ae4y49e2 | Filed in: clvnhr.is.

Hi, I'm Tony van Veen CEO of Disc Makers. We're doing a little construction here but I wanted to get another video out for you. I've been thinking a lot about streaming and I've come to the unfortunate conclusion that streaming rates for artists are not going to increase any time in the near future.

 

They're going to stay really low; why is that? Three reasons. One all the streaming companies Spotify, Apple, Amazon, Google, Deezer, are locked in a battle for market share. They are entering all sorts of territories where there's no streaming yet and even those where there is streaming and they are fighting for market share in each of these territories. That is keeping pricing low. Secondly, the industrialized economies the United States and Europe primarily are already fairly saturated so a lot of the growth in streaming and streaming subscriptions is coming from emerging markets where pricing is lower. So a listener or subscriber to Spotify in India for example may be listening to as much music as you are in the United States but they will be paying a subscription that is 80% cheaper and so those streams will monetize at 80% less.

Thirdly, Spotify specifically is a pure play streaming company that means they make all their money and have to make their profit from streaming revenues from subscriptions and advertising; Apple and Amazon their major competitors can use streaming as a loss leader. And so Apple for example does not need to make money from streaming they use streaming to keep you hooked onto their phones. And Amazon doesn't need to make money from streaming. They use streaming to keep you renewing your Amazon Prime subscription, so that keeps prices low. Again Amazon and Spotify cannot raise their price much higher than Apple or Amazon because the service is not that different.

Now that doesn't mean that these companies are ripping you off, in fact Spotify between streaming royalties for the sound recording and public performance and publishing pays about 70% of their revenues out to rights holders. So streaming rates are not going to go up unless pricing is going to go up significantly. The major labels are going to try to do that push the pricing up, but unfortunately I believe that even if they can drive somewhat of a price increase and it'll probably be limited that price increase will be offset by lower fees everywhere else in the world where these services are growing faster.

Unfortunately that's not great for you as a musician but that's how I see it. Don't shoot the


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