Submission + - Why the Major Labels Love (and Artists Hate) Music Streaming
Hugh Pickens DOT Com writes: Jay Frank writes that that the big four major music distributors and their sister publishers (Sony, Warner, UNI and EMI) make 15% more per year, on average, from paying customers of streaming services like Spotify or Rdio than it does from the average customer who buys downloads, CDs or both. Each label makes “blanket license” deals with Streaming services with advances in the undisclosed millions, which is virtually the same as selling music in bulk; they receive these healthy licensing fees to cover all activity in a given period rather than allowing Streaming services to “pay as they go.” "Artists are up in arms, many are opting out of streaming services," writes Frank. "Lost in that noise is a voice that is seldom heard: that of the record companies. There’s good reason for that: they’re making more money from streaming and the future looks extremely bright for them." The average “premium” subscription customer in the US was worth about $16 a year to a major record company, while the average buyer of digital downloads or physical music was worth about $14 so year over year, the premium subscriber was worth nearly 15% more than the person who bought music either digitally or physically. Meanwhile it will take an “indie pop/rock group” 34 months to make more money from streaming than they did from sales so the artist has to take the long view but "with many artists being financially irresponsible, is it so bad for them to get their money slowly over a prolonged period?" Moses Avalon writes that the rise of streaming services is helping to resurrect the model that made major labels powerful in the first place. "Streaming is anything but democratic. It has strict DRM and most importantly, it’s a royalty salad that puts control in the hands of the party with the confidential data-to-dollars formulas," writes Avalon. "It will bring back the power they had over distribution, promotion and the edge they had over their free-wheelin’ indie competitors."
