D.I.Y.

More Free Users Means Spotify’s Per Play Rates Continue to Drop

Spotify-icon1Often criticized for its failure to make money for rights holders, Spotify's average rate per play continues to decline, calling into question, yet again, the viability of the freemium model of music streaming.

_______________________________________

Guest Post on The Trichordist

Down, down, down it goes, where it stops nobody knows… The monthly average rate per play on Spotify is currently .00408 for master rights holders.

PerStreamAvg_Jun11_July15

48 Months of Spotify Streaming Rates from Jun 2011 thru May 2015 on an indie label catalog of over 1,500 songs with over 10m plays.

Spotify rates per spin appear to have peaked and are now on a steady decline over time.

Per stream rates are dropping because the amount of revenue is not keeping pace with the  number of streams. There are several possible causes:

1) Advertising rates are falling as more “supply” (the number of streams) come on line and the market saturates.

2) The proportion of  lower paying “free streams”  is growing faster than the proportion of higher paying “paid streams.”

3) All of the above.

This confirms our long held suspicion that as a flat price “freemium” subscription service  scales the price per stream will drop.  As the service reaches “scale” the pool of streaming revenue becomes a fixed amount.  The pie can’t get any larger and adding more streams only cuts the pie into smaller pieces!

The data above is aggregated. In all cases the total amount of revenue is divided by the total number of the streams per service  (ex: $4,080 / 1,000,000 = .00408 per stream). Multiple tiers and pricing structures are all summed together and divided to create an averaged, single rate per play.

Share on:

7 Comments

  1. This BULLSHIT needs to end. Musicians are required to get paid for their work! The government needs to stop worrying about the F ing middle east and lay down some laws here in the US. There is such a thing as COPYRIGHT LAW!!
    Who ever authorized these scumbag corporate rats who jumped ship from the record labels to come in and take musician’s work and rip them off?

  2. It will keep dropping until it reaches .00000USD. Music is free. We live in a fantastic era. Some time soon, every product and every service will be available as a free download. Music is just the beginning.

  3. Customers are gradually starting to understand the economics behind Spotify’s model and how it screws artists, enriching corporate interests like the labels. But, what about the opaque Venture Capitalists and Investment Banks waiting to take Spotify public and make fast money at everyone’s expense?

  4. I don’t get it I guess. Please convince me how spotify is different from listening to music on broadcast radio. Plus, like swift , if the musician doesn’t like the deal then walk away.

Comments are closed.