Report: How Much Are Next-Gen Music Services Really Paying Artists?
December 15, 2012, 2 years ago
Following is an excerpt from a new eye-opening report from Louie Herr at Digital Trends:
Bandcamp, Spotify, and Pandora have made music available as never before. However, how much money is being made for the musicians you love? Probably a lot less than you think.
Even if you love the nostalgia of tapes and vinyl, there’s no denying the convenience of millions of songs in a single app, all ready to play or download with a single click. This is the world that Spotify, Pandora, iTunes, Amazon and even small players like BandCamp have ushered in. But how does it shake out for the artists who actually produce the music? I crunched the available numbers on all these services to find out, and as it turns out, the guy holding the guitar seldom comes out ahead.
For the sake of full disclosure, you should probably know I run a record label and I personally use Bandcamp. I love their product and consider what Bandcamp does to be a service to humanity.
That may sound like high praise, but Bandcamp deserves it. The site has helped artists sell their work who never would have been able to before. Its transparent terms of service are simple and easily found: There is no setup or signup fee for Bandcamp, just a 15-percent revenue share on digital sales. Bandcamp’s revenue share decreases to 10 percent if your account does more than $5,000 in sales. End of story.
Bandcamp is equally clear about how much money artists have made using its service. As of this writing, Bandcamp reports: “To date, artists have made $27,628,084 using Bandcamp, and $1,891,269 in the past 30 days alone.” It continues, “We’ve driven 4,102,728 paid transactions and served 43,383,108 downloads to happy fans.”
Simple calculations based on these numbers reveal a few other interesting data points. If we assume that half of Bandcamp’s sales pay it 10 percent revenue share (a generous assumption), then Bandcamp has netted more than $270,000 for itself in the last 30 days and just shy of $4 million all time. Bandcamp’s more than 4.1 million transactions have paid artists, on average, $6.73 per transaction.
These numbers are good, but they obscure some problems. Though some big-name artists like Sufjan Stevens and Amanda Palmer call Bandcamp home, the majority its 350,000 artists have much smaller audiences. This sprawling user base reveals how widely-adopted the service has become and how well it has scaled over time, but it also makes sums Bandcamp has paid to artists look a lot smaller. Even accounting for the fact that more well-known artists account for much greater proportions of that sum, this averages a little under $80 paid per user.
Bandcamp is a great service. I would even go so far as to call it irreplaceable, because, for many artists, it is the only way that their work is monetized. But not many are making much money from Bandcamp – Bandcamp included. Luckily, artists have Spotify – called by some a “streaming music savior” (gag) – and Pandora to help them make money from their work. Right?
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