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Australian Hi-Fi Magazine
November / December 2015
In This Issue...
Why Did Taylor Swift Cancel Her Contract With Spotify?
And why wasn't this a surprise to Mark Waldrep of Aix Records? Questions, answers and apologies...
Editorial By Greg Borrowman


Australian Hi-Fi Magazine November / December 2015

  In my Editor's Lead-In for the July/August issue, I wrote that Spotify is probably the best chance for musicians to make money they've ever had... given the proviso that they arrange their business affairs so that they get ALL Spotify royalties (which means they need to own all rights — performance, recording, reproduction... the lot — in their work. So what happens if you don't own all your own rights? Ask Taylor Swift. Spotify says it paid Swift $US2 million last year, but Scott Borchetta, CEO of Swift's record label Big Machine, told Time Magazine that the label only received $US500,000 in Spotify royalties. The reason? Spotify paid the $2mil to Universal, which took its cut before passing the balance to Big Machine (which would then take its cut, before handing what was left to Swift. (Which I guess is one of the reasons Swift cancelled her Spotify contract.)

This didn't come as a surprise to Mark Waldrep of Aix Records who says many major artists receive only very small cheques despite their music having been streamed millions of times. He claims streaming benefits only the established large technology companies and the big three record labels and that the major artists will soon wake up to this and follow Swift's lead by cancelling their streaming contracts. 'There is simply no incentive to participate in these services when there is no upside for the artists creating the music,' he wrote on his blog. 'It used to be possible for an emerging band to sell 1,000 physical CDs or downloads and come out ahead. Now, if 1,000 people stream the same album 10 times, the band receives pennies. It's simply not sustainable.'

Waldrep says that it costs around $US15,000 to record an album and press 1,000 Blu-ray discs, so a musician only has to sell those discs at $US15 a pop to break even, after which all the money from every additional disc sale goes directly to the artist, so this is the best way for musicians to make money. Although I get where Waldrep's coming from, about the only place a band can sell a disc is at its own gigs, which limits sales to those who attend those gigs. For a band playing twice a week at large venues, I'd figure on it taking around a year to sell 1,000 discs, so it'd take a year to break even and then, if they sold 1,000 the following year, the band's income (not counting appearance fees, which in my experience are next to nothing), would be $US15,000. So, for a five-piece band, over two years that would represent an annual income of $US1,500 for each member. So how much might your band make if it were on Spotify? Since Spotify shows download numbers for every track on its site you can get a rough idea of how much money a musician might make by adding the downloads, multiplying by 0.005 then dividing by 2 (which assumes that half the streams will be monetised... a big assumption), and then dividing again by the number of people in the band. I did this for a few musicians I'd like to be as well-known as and became quite depressed by how little money I'd make if I were. So it doesn't look like I'll be giving up the day job any time soon.


--- Greg Borrowman



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