Opinion June 16, 2019

The rate per stream and the future of the music industry

Jake Udell

One of the most common questions I get asked is how much 1MM streams are worth on Spotify, Apple, YouTube, etc.

This number is a great gauge for a general understanding of how much streams are worth today, but it doesn’t tell the full story – more specifically, what is going to happen in the future.

The rate paid per stream to copyright holders is going to decrease in the coming years… And we as an industry have to be ok with it.

The monetization from emerging markets will be lower, but this incoming revenue is still important for two reasons.

1. It has never been collected before – Physical CD’s were not sent to these markets. At the onset of the internet era, these countries did not typically purchase music and instead pirated it. This is the first time in history revenue is being collected from fans in these territories.

This process needs to be eased into based on what the markets can afford… Even if the only cost to the consumer is their eyeball attention as advertisers subsidize the cost and pass the revenue onto the copyright holder.

2. It will grow – The revenue from these countries may be small at first. Over time, future generations in these emerging markets will understand music is valuable and not free. The money from emerging markets will continue to increase in the years to come, even if at a much lower rate than more established economies.

“Given consumer spending is lower, the ads served hold less financial clout than ones served in the US, for example.

“However, to simply frontload a music strategy for financial gain in the short-term ignores the fact that greater monetisation in the long-term will be found by building dedicated audiences in regions that are likely to deliver stronger ad-supported revenues as their economies develop over time, not just in media but outside of the streaming ecosystems.” (as reported on MidiaResearch)

YouTube is currently the most accessible service globally, reaching significantly higher penetration in emerging markets than the solely music streaming platforms (if they are available). Over time, subscriptions will continue to be introduced in these markets at rates affordable to the consumers.

Lower priced advertising and eventually lower rate subscription models will contribute to the lower rate labels and independent artists will receive per stream. However, overall, there will be more money generated for the industry, and this is a good thing.