Myths of Digital Music

In recent years there has been a lot of myths and half truths about the current state of the industry. Many have misunderstandings about how digital music has changed the market. Let me set a few of these misconceptions.

Subscription and Streaming Services Don’t Pay Artists Enough

As an artist this is a very important subject in this digital age of music. Streaming services tend to pay .3 to .4 cents per stream, which is decent when you think of the volume that music is streamed in as oppose to purchase. I will say that it seems company’s like Spotify could pay out more to their artists. Yet this is also an industry in its early stages (keep in mind Spotify only came out of Sweden 4 years back), so we can hope that as less is required in marketing and development a larger portion will go to artists.  In a recent Billboard article they describe digital music as being in a “financially precarious, low margin business” and went on to say, “There are three ways for artists to make more money from this service [streaming music]: a) the service can pay out a greater share of revenue; b) the service can acquire more subscribers; or c) the artist can renegotiate his or her contract with their label. Only b) is likely to happen in the short term, while a) would ruin the company and c) touches upon a larger issue…“ Also, streaming has also been shown to work as a synergistic marketing tool for other revenue sources such as digital and physical album sales and live performances.

No one buys music, especially teens who just illegally download

Actually, more teens (72%) bought some kind of music last year which is greater than the general population (68%). Also, 36% of teens bought an album in the last year and 51% bought some kind of download.

Physical Sales Don’t Exceed the Revenues from these New Digital Revenues

According to the International Federation of Phonographic Industry’s (IFPI) “Music Industry in Numbers 2012” report, the digital recorded music market was larger than physical, 2.2 biliion to 1.8 billion. Even major labels are making more in the digital market than physical. Warner Music Group for instance made 215 million in digital revenue and 188 million in physical revenue last quarter. Digital was the majority of revenue even when including licensing, syncs, and performance rights revenues.

I am sure there a lot more misconceptions out there and please feel free to add them in your comments. But generally I think doing the research and looking at the numbers is the right way to form opinions about the music industry or about anything. I know, it’s a novel idea.

 

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