How many streams does it take to make the same amount of money you could make with the sale of a single 99 cent iTunes download? Spotify says it pays artists .006 cent per stream on average. Looking at that, it would take about 165 streams to generate the same 99 cents you could earn from the sale of a single iTunes download.
Here’s an even better question. How many streams does it take for you to generate a sale? Like how many times is your song streamed before somebody buys it? In order for iTunes sales to surpass the value of streaming revenue you’d need to average one sale for every 165 times your song is streamed online. That would come to about 6 sales for every 1000 streams. There aren’t many artists I know that are averaging 6 sales per 1000 streams. There aren’t many artists I know that are averaging one sale per 1000 streams.
Let’s say an artist is averaging one sale per thousand streams. The argument is artists want to make a living and how could they make a living only making .006 cents per stream. Say you want to make $30,000 for the year. At the rate of 1 sale for every thousand streams you’d need 33 million streams to make $30,000 in iTunes revenue. Where those 33 million streams would make you $30,000 in iTunes revenue, they’d make you $180,000 in streaming revenue on Spotify. If you swap Spotify with Rdio and their payment of .01 cent per stream, you’d make $330,000.
The issue with streaming is that most artists underestimate how often their music is streamed and where those streams come from. They tend to view the people who stream their music and the people who buy their music as the same people. They ask questions like “how many times is somebody going to listen to one song or album?” and use how often they listen to their favorite albums to estimate how often their fans will stream theirs.
Someone with 1000 friends shares a link to Facebook. Each of those 1000 friends has at least 500 friends of their own. They all share the link and listen to your song. You generate 500,000 streams from one medium in Facebook. These things happen, maybe not in the exact way of my example, but they do. Look no further than Soundcloud for evidence where you’ll see artists hit 500,000 streams in a day or two
What should stop being implied is that streaming is unprofitable for artists as some type of general rule. What it comes down to is your rate of sales to streams. If you’re generating a large amount of streams that’s only resulting in a tiny percentage of sales then streaming would be the more profitable of the two. Alternatively, if you’re generating a large percentage of sales from a small number of streams then sales would be the more profitable of the two. It’s up to artists to find what works best for them.
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