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You see record labels promoting new albumns on posters and billboards - with the call to action being to listen on Spotify. How can that make financial sense if

by 0898 8y ago

You see record labels promoting new albumns on posters and billboards - with the call to action being to listen on Spotify. How can that make financial sense if they're not even getting a penny a stream?

thaumasiotes 8y ago
Who said you could only do things that make financial sense? If you believe it does, then the answer can only be that the costs of the advertising are covered by revenue from other sources. A simple model is: 1. Taylor Swift advertises a new album, which everyone listens to for free on Spotify. 2. Taylor Swift is beloved by the people, who have all heard her album. 3. Taylor Swift makes a lot of money selling concert tickets. It's hard to do step 3 when nobody knows or cares who you are.
- teknopaul 8y ago
  The point of the article is people do pay to listen to Taylor Swift on Spotify. Now, and more so predicted in the future.
  - tremon 8y ago
    I don't think Spotify's revenue model allows for billing per song? FAFAIK people's listening habits have no impact on their Spotify bill, so it's more accurate to say that people pay for having access to Taylor Swift's songs. It's the catalog that drives the revenue, not the listening metrics. I'm sure the metrics are important for Spotify's market position, as they drive its licensing fees and negotiating position. But as the parent says, people don't pay extra for listening to Swift's new album instead of the previous.
    - commoner 8y ago
      Spotify does indeed pay artists per song stream. The rate is between $0.004 to $0.008 per stream, and a "stream" is counted every time someone listens to a song for at least 30 seconds. https://qz.com/1519823/is-spotify-making-songs-shorter/ https://qz.com/1519823/is-spotify-making-songs-shorter/ https://qz.com/quartzy/1438412/the-reason-why-your-favorite-pop-songs-are-getting-shorter/ https://qz.com/quartzy/1438412/the-reason-why-your-favorite-... Incidentally, this model incentivizes artists to release shorter songs and to squeeze more songs into albums. https://pitchfork.com/features/article/uncovering-how-streaming-is-changing-the-sound-of-pop/ https://pitchfork.com/features/article/uncovering-how-stream... https://pitchfork.com/features/lists-and-guides/are-rap-albums-really-getting-longer/ https://pitchfork.com/features/lists-and-guides/are-rap-albu... And an artist's new release isn't just competing with their old releases. It's also competing with releases from other artists.
coldtea 8y ago
It makes financial sense by being a loss-leader product, which the make up with tshirts, ticket sales, lunch boxes, and whatever the kids buy from singers these days...
- bryanrasmussen 8y ago
  yeah but don't the artists make that money? I thought it was the albums etc. the record companies made the money on. Of course they probably also put the promotional stuff of the billboards into a list of things the artist needs to pay them for.
  - KozmoNau7 8y ago
    Some bands handle their own merchandising, in which case they get all the profit. But most bands that reach a certain level either hire a dedicated merch partner or have their record label handle it, who take a certain cut of the profits. Using a merch partner/label can be useful, because they have better deals on bulk purchases on t-shirts and so on, which may or may not be worth it for the artists. The best way to support artists is still to attend their shows and buy some merch while you're there. Online shops, payment processors etc. all take a cut, so direct physical sales are best for the artist.
  - coldtea 8y ago
    >yeah but don't the artists make that money? I thought it was the albums etc. the record companies made the money on. That's changed the last 1-2 decades or so. Popular artists get what's called a "360 deal", so the company gives them money ahead, and they get all their profits across merchandise, albums, tv appearances, online stuff, concerts, etc. https://en.wikipedia.org/wiki/360_deal https://en.wikipedia.org/wiki/360_deal
timrichard 8y ago
Streaming revenue isn't negligible, even if it seems intuitively that it should be. Record company revenues are textbook Long Tail. Source: spent the last two years working on a digital sales processing platform for a major label.
jdietrich 8y ago
Back in the 70s, most artists made little or no money from touring. You played live to promote your album, which made you the real money. Today, it's the opposite. Your album is practically worthless, but it might persuade people to pay $60+ to see your arena tour. The album is effectively a free sample of the "real" product, the live show. The recording industry isn't stupid, so most major artists are now signed on "360 deals" - the record label gets a share of everything, from streaming to tickets to merchandise. https://en.wikipedia.org/wiki/360_deal https://en.wikipedia.org/wiki/360_deal

by 0898 8y ago

thaumasiotes 8y ago

Who said you could only do things that make financial sense? If you believe it does, then the answer can only be that the costs of the advertising are covered by revenue from other sources. A simple model is: 1. Taylor Swift advertises a new album, which everyone listens to for free on Spotify. 2. Taylor Swift is beloved by the people, who have all heard her album. 3. Taylor Swift makes a lot of money selling concert tickets. It's hard to do step 3 when nobody knows or cares who you are.

teknopaul 8y ago
The point of the article is people do pay to listen to Taylor Swift on Spotify. Now, and more so predicted in the future.
- tremon 8y ago
  I don't think Spotify's revenue model allows for billing per song? FAFAIK people's listening habits have no impact on their Spotify bill, so it's more accurate to say that people pay for having access to Taylor Swift's songs. It's the catalog that drives the revenue, not the listening metrics. I'm sure the metrics are important for Spotify's market position, as they drive its licensing fees and negotiating position. But as the parent says, people don't pay extra for listening to Swift's new album instead of the previous.
  - commoner 8y ago
    Spotify does indeed pay artists per song stream. The rate is between $0.004 to $0.008 per stream, and a "stream" is counted every time someone listens to a song for at least 30 seconds. https://qz.com/1519823/is-spotify-making-songs-shorter/ https://qz.com/1519823/is-spotify-making-songs-shorter/ https://qz.com/quartzy/1438412/the-reason-why-your-favorite-pop-songs-are-getting-shorter/ https://qz.com/quartzy/1438412/the-reason-why-your-favorite-... Incidentally, this model incentivizes artists to release shorter songs and to squeeze more songs into albums. https://pitchfork.com/features/article/uncovering-how-streaming-is-changing-the-sound-of-pop/ https://pitchfork.com/features/article/uncovering-how-stream... https://pitchfork.com/features/lists-and-guides/are-rap-albums-really-getting-longer/ https://pitchfork.com/features/lists-and-guides/are-rap-albu... And an artist's new release isn't just competing with their old releases. It's also competing with releases from other artists.

coldtea 8y ago

It makes financial sense by being a loss-leader product, which the make up with tshirts, ticket sales, lunch boxes, and whatever the kids buy from singers these days...

bryanrasmussen 8y ago
yeah but don't the artists make that money? I thought it was the albums etc. the record companies made the money on. Of course they probably also put the promotional stuff of the billboards into a list of things the artist needs to pay them for.
- KozmoNau7 8y ago
  Some bands handle their own merchandising, in which case they get all the profit. But most bands that reach a certain level either hire a dedicated merch partner or have their record label handle it, who take a certain cut of the profits. Using a merch partner/label can be useful, because they have better deals on bulk purchases on t-shirts and so on, which may or may not be worth it for the artists. The best way to support artists is still to attend their shows and buy some merch while you're there. Online shops, payment processors etc. all take a cut, so direct physical sales are best for the artist.
- coldtea 8y ago
  >yeah but don't the artists make that money? I thought it was the albums etc. the record companies made the money on. That's changed the last 1-2 decades or so. Popular artists get what's called a "360 deal", so the company gives them money ahead, and they get all their profits across merchandise, albums, tv appearances, online stuff, concerts, etc. https://en.wikipedia.org/wiki/360_deal https://en.wikipedia.org/wiki/360_deal

timrichard 8y ago

Streaming revenue isn't negligible, even if it seems intuitively that it should be. Record company revenues are textbook Long Tail. Source: spent the last two years working on a digital sales processing platform for a major label.

jdietrich 8y ago

Back in the 70s, most artists made little or no money from touring. You played live to promote your album, which made you the real money. Today, it's the opposite. Your album is practically worthless, but it might persuade people to pay $60+ to see your arena tour. The album is effectively a free sample of the "real" product, the live show. The recording industry isn't stupid, so most major artists are now signed on "360 deals" - the record label gets a share of everything, from streaming to tickets to merchandise. https://en.wikipedia.org/wiki/360_deal https://en.wikipedia.org/wiki/360_deal