The Economics of Streaming

Matt Stevens with The Fierce and the Dead

This very perceptive piece on the economics of music streaming by Anil Prasad, The Finger’s on the Self-Destruct Button includes this very illuminating quote from Matt Stevens.

“Streaming makes it very difficult for cult bands who sell 1,000 copies of each release,” the noted British guitarist and composer Matt Stevens told me. “If 1,000 people stream an album 10 times, we probably make a few pennies versus 1,000 download sales which create a model that will pay for modest recording expenses. At present, with downloads, it’s roughly sustainable, but not profitable. If we move to streaming and that income disappears completely, we’re in serious trouble.”

That’s a potentially very bleak prospect for much of the music that features heavily on this blog. Anil Prasad also believes the current streaming model of Spotify et al is unsustainable and will eventually collapse. What will that collapse leave in it’s wake?

It’s easy to be pessimistic, though it’s also important to remember the the old pre-internet music industry wasn’t perfect either; the vast majority of bands never got signed and never got to make a record, and most of those that did had to sign away the rights to their own music in order to be able to record and release it.

In many ways it’s a shame that hybrid streaming and download sites like mFlow failed, and that was forced to shut down their streaming radio stations. Both sites had great value for music discovery, and both drove actual music purchases. But both ended as internet roadkill under the wheels of Spotify.

Streaming in its present for isn’t going to provide a worthwhile income stream for anything other than the most mass-market and commercial end of the market that can benefit from scale. It’s easy to imagine a world divided into a small nunber of heavily hyped stars and everyone else relying on crowdfunding for much of their revenue.

Quite what the music landscape of a decade’s time might look like is anyone’s guess. All that can be said is that we live in interesting times.

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One Response to The Economics of Streaming

  1. PaulE says:

    Illegal downloading has been around for years, but millions still buy. Perhaps more people believe in paying the artist than some say. Streaming seams to be a typical large company solution which doesn’t scale down. For the more “cult” artist, crowd funding makes better sense.