Consequence of Sound

Thom Yorke may consider Spotify “the last desperate fart of a dying corpse”, but to major label executives that smell is pretty sweet. According to a new report by Music Business Worldwide, major labels raked in $1 million an hour off streaming in 2019 alone.

The MBW analysis looked at official fiscal numbers (found via public records for Vivendi, Sony Corp, and Warner Music Group) for the recorded music divisions of Universal Music Group, Sony Music Group, and Warner Music Group. By pocketing $22.9 million every 24 hours last year, labels were essentially bringing in just under $1 million every hour by way of the big three. That is, objectively, a lot of money.

Overall, streaming accounted for 80% of the music industry’s overall profit last year, according to annual RIAA report cataloging year-end music revenues. In total, streaming revenues brought in a whopping $8.8 billion — more than triple the amount that digital downloads, physical sales, and synch licensing combined made, which was a modest $2.3 billion. That’s more than the entire amount of money made from recorded music in 2017.

The giant bump from last year’s streaming numbers is largely attributable to people finally dishing out for paid subscriptions. The total number of streaming subscriptions increased by 25%, which accounted for 93% of streaming revenue growth from last year. In fact, that increase alone accounted for $1.4 billion in revenue.

The next most profitable recorded music numbers come from digital downloads ($856 million) and all physical releases ($1.15 billion), with vinyl in particular seeing a nice increase ($504 million) for it’s highest numbers yet since 1988. Still big numbers, but they’re pithy by comparison.


Unfortunately, these big returns often don’t find their way to artists, who earn about $0.012 per song stream on Apple Music or the dreadful $0.003 per song stream on Spotify, equating to literal pennies in exchange for a full-album listen. (Remember when Spotify said it “overpaid” songwriters?) While it’s not exactly encouraging, this data at least helps suggest why. The rest of the money is going elsewhere, mainly to higher-level management. Streaming isn’t profitable for artists unless they’re tallying upwards of a million plays under this current model. At that level of audience reach, generally speaking, an artist is likely already signed to a label anyway, which theoretically helps support their income via other routes and deals.

Finding out how much major labels make from streaming per hour versus what a mid-to-small-tier musician makes from streaming per year is depressing, to say the least. RIAA chairman and CEO Mitch Glazier has some good observations on this year-end report, which could feed into how we balance the division of profits more equally moving forward. In a blog post on Medium, he noted that paid subscription streaming is “driving the return to growth,” but that we still need long-term, sustainable public policies to benefit artists.

“Today’s report reflects the prospect of a future in which creators have a path forward,” Glazier wrote. “But it also reveals how much farther we must go to assure a healthy music community in which all music is valued and creators are fairly compensated. We still have not realized the full value of music on all digital services.”

But from there, he leaned back, offering little insight or accountability on the matter to instead highlight the increase in numbers overall:

“As we continue to work to meet these challenges, it is worth taking this moment to reflect on what we have accomplished: by investing in a vibrant music culture of diverse voices, music companies have driven a fourth consecutive year of double digit growth and continued to build a digital-driven industry with a focus on the future. We are working in partnership with the entire music community to provide expanded opportunities for both artists and fans and keep the heart of American culture beating for another generation.”

Major Labels Make $1 Million an Hour Off Streaming: Report
Nina Corcoran

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