RonPope

Ron Pope: How I Made $250K From Streaming

[Editors Note: This blog is written by TuneCore artist Ron Pope, and was originally featured in Billboard’s Op-Ed section on November 25th. Ron Pope continues our ongoing discussion on streaming music, but we love hearing your thoughts! We encourage discussion about how YOU feel about music streaming in our comments section.]

I’d like to start by saying this: I am an honest-to-goodness Taylor Swift fan. I’ve purchased each of her albums, I’ve seen her live, I cheer when she succeeds and find myself, almost inexplicably, personally insulted when people are unkind to her in the media. I wanted to be clear that I’m not bashing this artist whom I admire a great deal. She and I are interested in the same ends. I believe that I have a unique perspective on streaming and it’s role in the contemporary music industry, so I thought I’d take a moment to participate in this discussion while there seems to be so much interest in it.

Simply put, I believe that Taylor Swift and Scott Borchetta (president of her label, Big Machine Records) are misinformed about what streaming services are doing for emerging artists. Additionally, I feel that they are off-base in terms of what these sites mean for the future of our industry as a whole. The value of services like Spotify and Pandora within the music industry of today, and tomorrow, simply cannot be overstated. Also, it is of the utmost necessity for the continued growth of digital revenue generation that established artists participate in the building of audiences for services that pay out money for streams. For me, the explosion of streaming has proven to be yet another brick in the path towards a more democratic recording industry. I do agree that per stream royalty rates across the board are absurdly low. However, established acts removing their music from individual streaming services is not helping this fact. The media coverage on this issue has presented many of the facts regarding streaming in convoluted, confusing ways; I’m going to do my best to break down the streaming argument and explain how the music industry works for those readers who aren’t involved in the business.

Obviously, I’m not getting access to radio in the way that major label artists are. For instance, Jason Aldean (who pulled his new album Old Boots, New Dirt from Spotify) recently had a radio audience of 36.9 million listeners via 5,764 spins on US radio in one week. I haven’t had 5,000 spins on radio worldwide over the course of my entire twelve year, ten album career. Why? I’m not working with any of the large corporations, who have the power to help an artist make a real impact at radio. Over the past twelve months, I’ve had 44,560,048 spins on Spotify. In addition to allowing millions of people all over the world to access my music, those streams generated $250,867.86 (if you’re keeping score at home, that’s $0.0056 per spin). Promoting music on a global scale is overwhelmingly expensive; I’ve poured every cent of that money back into trying to share my music with new fans the world over. Since I do not have access to radio, it’s important for me to be able to reach new listeners via these more democratic channels of music consumption. Here’s an example of how this works for me; Megan likes my song “One Grain Of Sand” and says to her friend James, “Check this song out on Spotify!” There’s very little barrier to entry; James doesn’t have to pay for a download or for a subscription in order to hear my song. He clicks a button and boom, my entire catalog is available at his fingertips. If he listens to “One Grain Of Sand” and enjoys it, he can then listen to any and all of my albums. Now, instead of becoming a fan of a song, James is on his way to becoming a fan of me as an artist. While he’s doing this, he’s generating revenue (Spotify pays for every spin, even streams by users of the free, ad-supported service). For artists like myself, who lack access to traditional avenues of promotion such as radio, situations like the one I just described are an absolute boon. I’ve built a worldwide network of ravenous, devoted fans through these more grassroots channels.

In my mind, this is not an argument about Spotify, or even about the impact of streaming as a whole; it’s about the “old music industry” versus the “new music industry.” If an artist wants the worldwide promotional strength of a major label and a big time publisher, those super powerful companies are going to take a great big cut of your pie, as they always have. It’s expensive to promote a huge album on a global scale, so it’s understandable that a label wants to be compensated for making that investment. Universal (the label who distributes Swift’s music) most likely takes a cut from her streaming revenue. Her publisher also probably gets a cut. In a conventional record deal, an artist makes between 12 and 18 percent of profits. As an independent artist, I own 100% of my masters — the recordings of my songs — and 100% of my publishing — the rights to the songs themselves. When I finish a new album, I give it to TuneCore (my distributor) and they send it out to Spotify, iTunes, Deezer, and many other digital marketplaces. TuneCore distributes each of my albums for $29.99 up front, with a $49.99 yearly renewal charge. Since they don’t take a single cent on the back end, when Spotify, iTunes, or any other store owes me a dollar, I get the whole dollar. There isn’t a label or a publisher between the retailers and I. The upside of this sort of business model is obvious; I keep all the money I generate, and can use it to continue creating and promoting my music. The downside is that I simply do not have access to major, mainstream media. If Swift and Borchetta are concerned that they aren’t receiving a large enough piece of the streaming revenue that her catalog is generating, I think the first discussion that needs to be had is with her label and publisher. In a tweet earlier this year, Bette Midler said that she received $114.11 for 4,175,149 plays on Pandora. Based on what I’ve seen in my own SoundExchange reports, one million spins on Pandora generate over $1,000 for the rights holders. This means that somewhere between Pandora paying out over $4,000 and Bette Midler getting a check for $114.11, someone took a pretty sizable chunk of that money. Recording and publishing deals need to evolve with the times. I’d love to hear exactly what percentage of the two million dollars that Spotify has paid out to Swift’s team over the past twelve months actually made it’s way into Taylor’s hands.

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I also want to point out that we need to be comparing apples to apples. Borchetta told Time that Big Machine received $494,044 for domestic Spotify streams of Taylor Swift’s catalog in the last 12 months. Spotify countered by saying that they have paid out over $2,000,000 to Swift’s label and publisher over the past twelve months worldwide. We have no way of knowing who took what piece along the way, because Borchetta is talking about domestic numbers and Spotify is talking about worldwide numbers.

71 million people “like” Taylor Swift on Facebook. So far, her new album, 1989, has sold around two million copies. I’d imagine that more than three percent of those people who liked her on Facebook are listening to her new record. Some people who love her have purchased the album, of course (I’m one of them). So what about those other 69 million people? Fans are illegally downloading, they’re streaming on YouTube and they’re listening on radio. These are places that generate little to no revenue. My digital sales have declined in the past twelve months much as everyone else’s have across the industry, but my overall revenue is growing, because I’m making more via Spotify and SoundExchange (my SoundExchange royalties grow as Pandora’s user base does; I’m generating 15 million streams per month through their service). Borchetta told Time that taking Swift’s music off of Spotify was meant to make a larger point. He stated that the “music industry was better off before Spotify.” He’s right in saying that the music industry was better off in 2007; I’d counter by saying that seven years before that, in 2000, the music industry was incredible! Just like we can’t go back to the year 2000, when the tenth-best-selling album of the year (the Oh Brother, Where Art Thou? soundtrack, which moved 7.9 million records, according to Nielsen SoundScan) sold more than the number-one-selling album of 2013 (Justin Timberlake’s The 20/20 Experience, at 2.5 million copies sold, according to Nielsen SoundScan).

We can’t go back to 2007. We have to deal with the music industry that we work in today. Fans under 25 have grown up in a world where music has always been completely free. I’d much rather my fans consume music via a service that will pay me, like Spotify, as opposed to downloading it illegally or streaming it somewhere that pays me nothing. Yes, modifying people’s behavior is challenging — but I’m excited that a large percentage of the current paid subscriber base of Spotify began as free users. That means Spotify is, in fact, modifying the behavior of their users. Their service is taking people who are used to paying nothing for music and getting them to change their minds and spend money on art. That’s exciting news in my book.

Taylor Swift told Time that she believes her music should only be available via the “paid” portion of streaming sites, an option that Spotify doesn’t offer. I honestly believe that Spotify’s “freemium” model — where users are offered a free service and then allowed to upgrade to a “premium” paid service — has been working. This model is getting some people, who weren’t paying for music to, eventually, pay $120 a year for music via Spotify Premium’s $10 per month fee. Spotify also generates revenue for artists, through ads, from listeners who aren’t spending any of their own money on music. Spotify co-founder and CEO stated in a blog post that 80% of their premium users started using the service via it’s free option. These new subscribers are essentially being recruited from the base of music fans that didn’t want to pay for music. Why would any Taylor Swift fan want to sign up for that free service in the first place if they can’t access her music? By limiting access to your music to those fans who use the paid portion of a streaming service, you’re virtually guaranteeing that none of your listeners will sign up for the free service, thus negating the possibility that any of those fans might one day upgrade to a paid service. Why do I care if fans are paying for the service versus using the free option? The per stream royalty rate is higher for paid users versus ad-supported, free users. It’s in everyone’s best interest to grow the paid subscriber base of a service like Spotify.

I am honestly worried about the future of the music industry; as a result, I want nothing more than for my fans, many of whom are not accustomed to paying for music, to listen to my music in a place that may help them modify their behavior so that one day, they might pay for music. In my mind, on some small level, that’s a contribution I’m making to the future of the music business. I’m watching Spotify grow; I’ve had nearly 100 million overall plays since I put my music on their site in 2010 and nearly forty-five percent of those have come in the past twelve months.

I believe this is an important discussion and I’m excited that it is being had on the national stage. I’d love to have people who are in positions of power at Spotify, Pandora, Rhapsody, iTunes and all the other digital retailers sit down with artists and have an open, honest dialogue about what we all want and how we can get there together. I also hope that labels and publishers can be open and honest with their artists about just how much revenue is being generated via streaming. Many artists seem to be in the dark about how much money their music is creating in the digital marketplace, and just whose pockets that money is ending up in. That is a tale as old as recorded music, and it is my prayer that one day we might get past the “us versus them” ethos of the old school label-artist relationship.

Do I think that every artist should do what I’ve done and stay completely independent in an attempt to run their entire career on their own? Of course not. We’ve never seen an artist promote their own career without the assistance of a major label and/or publisher and still become a Super Bowl halftime headliner. If you want to climb that mountain, you need assistance. I am, however, extremely proud that my team and I have been proving each and every day that success is no longer an impossibility for people who are game for the challenges of true independence. The future of the music industry is being shaped as we speak; I think artists should step up and make their voices heard.

  • http://angelsongcreations.com Tim Wilson

    The most powerful marketing action in the world is free sampling. In a previous life, I worked in Fortune 50 marketing where advertising budgets were gigantic. I was responsible for determining the impact of various actions i.e. what really move the sales needle. It wasn’t sponsorships, print or television advertising. Those are now just brand builders. Coupons could give you a short term kick but what really moved the needle permanently was free samples and that is how we look at Spotify.

    For our music business, we designate some singles as free samples and let those go everywhere. Then, for those fans who really love our stuff, we keep the rest of the albums and songs as paid only.

    Use Spotify and its kindred spirits as free advertising for your paid stuff i.e. give out some free samples in order to find your paying audience. (One tip: make the free stuff among your very best. It has the most important job to do…lead generation) Just my two cents.

    • tunecore

      Thanks for weighing in, Tim! We’ve definitely seen artists who choose to window singles and small selections of their new releases on services like Spotify, if not experiment with it.

  • Eondo

    I think the problem is more around how small/medium artists are effected. Swift made headlines… but an artist who sells enough albums to make 80-100k per year, may or may not see the streams/plays volume increase at the same rate. So there are legitimately a lot of artists losing money as people stream instead of buy – 100k in album sales was 18000 units-ish. 100k in streams is closer to 20 MILLION. to assume that the fanbase of all or even most small to medium artists can and will increase by that large of a percentage is just madness.

  • Tommy Shafer

    Ron, I buy all of your music
    You have changed music
    Thank you for that
    I’m a singer as well and will be distributing my debut EP through tunecore
    Check me out,
    YouTube.com/Shafer39

  • MikeC555

    “Meet the new boss. Same as the old boss.” (The Who – We Won’t Get Fooled Again). Ron, congratulations on over 44 million spins on Spotify. But you say that “every cent” of the $250,000 you “made” went right back into trying to promote your music. Assuming you didn’t lie about that fact, then your headline is misleading, because in business when you have $250K in revenues, and $250K in expenses, you actually “made” $0.

    Spotify boasts over 10 million Paid Subscribers, at $120 annually, that’s $1.2 BILLION in revenue to Spotify, and that doesn’t even count their Ad Revenues.

    As Eondo point out in the comments below, how is this good for the small/medium Artist? You’ve had amazing global success at 44 million spins, but you’ve taken home $0 in pay.

    I think for Taylor Swift and others pulling their music from streaming, the message is “Our Art has value.” And to the New Artist starting out, the question they need to answer for themselves is, “Does my music have value?” If my music is good, it should have value. If I can only give away my music for free, then I am not an Artist, I am simply a Hobbyist. And there is nothing wrong with being a Hobbyist. I grew up next door to a woman who did beautiful Oil Paintings of birds and flowers. Incredibly talented. She would give them as gifts, but she never sold them. She was a Hobbyist, and that was fine for her.

    Back to Eondo’s point, if a New Artist wants to make a living at music, they can sell $5 EPs or $10 CDs, and if they’re good enough to gain a loyal fan base (if you can play one show a weekend for 100 to 200+ people, a few Fests here and there, with some hard work (and if you’re actually GOOD), then 10K to 15K fans is realistic). At $5 per EP, that’s $50,000 to $75,000.

    However, when you say the “New Model” is that you should give that away for “free”, your telling the “true Artist” who is good (and could be making a living), that instead they should place themselves on the same level as the Hobbyist who gives away (which quite often, is usually junk – which is why it is free) their music.

    I think that is the bigger point Taylor Swift and others are starting to take a stance on. It’s saying, “I believe I’m an Artist. I believe my music has value. I’m not willing to put it out in the marketplace at the same price tag as the Hobbyist.”

    From a Music Fan’s perspective, with technology today, there are thousands upon thousands putting out music. I like a model that basically says, “Here is what thousands of others are willing to PAY to hear.” vs. “Check out this new song that one old friend from high school thought was cool, but wouldn’t necessarily spend their hard earned cash on.”

    The last “reality check” I’ll leave you with is this… As pointed out above, Spotify is taking in over $1.2 Billion Annually already. I hear the argument, “As Spotify grows, Artists will eventually make more”. Really? When they go from 10 million Subscribers, to 100 million subscribers, their revenue will go from $1.2 up to $12 Billion, and they will still pay you $0.0056 per spin. Why would they pay more when they know there are Artists already willing to accept that amount?

    “Meet the new boss… same as the old boss…”

  • SteveC

    Quoting numbers I’d like to see raw data if you’re willing to share. Getting that many plays on spotify is great – congrats – but does that transition you into a different level than say an emerging local artist who has no worldwide audience?
    At this point, I think youtube and other online video platforms are more important and effective revenue generators than audio streaming. There’s a reason the ad-supported monetization model is pervasive – it works.
    Shouldn’t artists get a portion of the ad revenue of the free spotify users? After all it is their content that is driving the attraction to ads.
    I think youtube and google have solved this better than spotify, even though unintentionally in terms of for music. But with the upcoming youtube music…

    • Pawn Raul

      Some artists are more equal than others.

      Some artists get better attention and deals than others. Even if the percentage per stream is the same between Katy Perry and you (it’s not), they count more streams for bigger artists. The Game Is rigged. The odds are with the house. It’s time to.walk away.

      This guy was a walking poster child for Spotify through Billboard. It was an awareness campaign for Spotify through a publicist and PR agent.

  • Pawn Raul

    I disagree with the premise that artists need Streaming Services. This is simply not true. In fact, this is suggestive hypnosis and a framing of an argument the is a ” lie by ommission” of economic laws that have proved themselves more tried and true over time than any other. If you are not familiar with the economic theory of scarcity, do some reading and critical thinking.

    If an artist were to apply for a placement through music x ray and land a non exclusive publishing deal for a movie and ean $10 advance after fees, and that movie does well (gets eyeballs and syndication somewhere), then many people will be demanding that song. If that song is only exclusively available through only one channel, and only so many copies can be purchased then the song becomes much more valuable. It is a commodity that is different from all the rest b/c it is unpaired to multpile services. It is the one left over without. Partnerahip. Then the laws of supply and demand take over. This is just one example of many uses of these theories and laws.

    You do not need Streaming.

    Sell your music through PayPal on your site.

  • Pawn Raul

    If every artist only made 100 CDS or LPS available of each new release and never did another pressing, and only shared portions of the song digitally, then the entire model of the industry would change.

    But no. Nearly every artist wants to be Jay Z or Beyonce and sell millions of streams/downloads. Thus the long tail of supply will sink the boat that can give proper demand.

    Lets say your music doesnt sound like a demo. Big assumption but lets make it. If you sold 100 hand signed and numbered CDS at $50 each you would make far more money and create demand. You may even create a legacy, not that it matters really.

    What is 100 divided by 7.7 billion?
    This is how precious your music would actually be.

    Good luck!

  • Pawn Raul

    Ron, congratulations on the awareness campaign. For your music, Spotify, and Tune Core. Glad you went from the subway to pay day, but I hope you realize this is all short lived and worthless in the long run. You had your 15 minutes of fame. And so did Spotify. Tomorrow it will be some other technology and some other fly by night musician.

    Pat yourself on the back. But reality check: your “art” pales in comparison to millions of artists worldwide over the past 100 years whose works will have a lasting meaning because their message and approach rings true– and they never even had a PR agent or publicist to tell the public why they should swallow it whole. Often their performances were just THAT moving.

    Meanwhile, art that is relevant for hundreds of years will be created and hopefully will survive the impending hollocausts. Maybe all that music will be scored, documented, and preserved because it was worth publishing in that way. Maybe not. Maybe only shit music will be preserved and humans will be only eating each other.

    When artists actually create something special & innovative that connects with audiences, when artists cease agreeing to be pawns of the media puppets & corporate tools and recognize that we the people are not stupid enough to believe in the media and entertainment industry’s false constructs and premises then real indepenene will flourish.

    If a tyrannical law was passed that disallowed art to be paid for I wonder how many musicians would record music?

    I wonder if the parasitic labels would disappear?

    I wonder if the quality and sophistication of expression would up-level?

    Or would we have to still listen to/watch all the drivel and rubbish that companies like Sony advertise, and pass it off as art?

    Brahms is art. Vivaldi is art. Mozart!
    Lady Gaga is not. Not really.

    The Tempist is art. Romeo & Julie is art.
    The Interview is not. Not really.

    Expression is not necessarily art, even if one believes it to be.

    Spotify is not a profitable company, even if one believes it to be.

    You did not actually make that much money if you’ve done your accounting properly (net vs gross) even if one believes your story.

    • Chris

      All very negative, so many artists competing to make a living and only a few can, many of those that cant suffer from sour grapes, that’s just life. Spotify may be is not perfect, but it is the start of something and its go to be better than illegal down loads and zero revenue, this new age allows independents to be heared across the world on much better terms than the exclusive Corporate membership that would only let you in if you sold your soul.

  • jim

    Sorry don’t beleive this bullshit

  • yoyodagreat

    Lets say u made 250K, and had a side job along with that. You should be able to afford a good Publicist or an indie PR Run at least right? You say you don’t have access to big media, but the top is not that far. Saving money helps with this one. You can even contact big media outlets yourself and with the right convo (and price$$), you’re in the door.

  • Matt

    So can I use tune core without putting my music on spotify?

    Because I agree with these other comments, Id rather stick with paypal, iTunes or whatever else could pay me way more for now off the little that I do sell. Because, I’d rather spotify have to compete for better returns before turning my product into a legal buffet in their every location restaurant (which is the internet by the way). Once I’m on spotify, no one is ever going to buy off iTunes or anything else. Not even at a gig. So I feel like Im choosing all or nothing.

    Also, how can you actually believe this works for real business? Could a farmer just give restaurants and grocery stores near-free produce? They have tons of land and equipment to tend to that requires immediate money in the bank.

    What about movies? Are we gonna just stream those for free too on Spotify and then expect the next Lord of the Rings to get funded somehow? Buffet services get the worst products. Thats why netflix has a crap selection with none of the great classics like Home Alone or Princess Bride. Vudu on the other hand has all the expensive good stuff. I can see why movie biz owners or whatever won’t put their product on both vudu and netflix. See what i mean?

    My point is streaming is promoted as a little cream off the top. But it actually negates the whole thing because it requires the other ingredients but makes them impossible to maintain because of such low revenue.

    You will never get music without microphones, instruments….etc. These things are not going to get cheap just because of Spotify. Spotify will fail first and end up being only super indie bands and some huge label catalogs. The in-between curve doesn’t exist.

    then again we could just devalue our currencies so .003 is now like 2.99

    cheers

    • tunecore

      Hey Matt —

      Thanks for contributing with your feedback! We know not all artists stand to make as much from a streaming service like Spotify as Ron Pope, so it’s helpful when members from our artist community chime in to keep the streaming discussion going.

      But to answer your question, YES, you can sign up and distribute your music using TuneCore without having to stream on Spotify. With 150+ stores, we let you choose where you want your music to go! We distribute to streaming services in other countries worldwide – that means if you don’t have a fan base in these territories right now, you may view streaming your music there as a means of promotion, while keeping your music in your country strictly on iTunes, Amazon, etc.

      Feel free to hit us up if you have any other questions about TuneCore, and thanks again for chiming in!

      Cheers,
      TuneCore

  • Sean Jay

    how long for royalties to come

  • http://selfpedia.org J.T. Smith

    I don’t know many people who would spend $120 buying music a year, but I know a ton of people who are willing to pay Spotify $120 a year. This is a lot of money pumped into the music industry that I think is certainly a positive thing.

    • tunecore

      Good call, J.T.! The numbers being reported in the “Paying Premium Subscription” column across the board of streaming services should serve as encouragement for any artist :)

  • Modelsforcommunity Com

    Still navigating an opinion on this;
    but this is very well-written and
    informative. Truly, thank you.

    –ModelsForCommunity.com

  • CON WRECKER

    TuneCore is a scam. Google it. A lot of musicians are are now writing Royalty Free Music for Film and commercials. A good composer is with great music is Is RL Kuhn Productions