August 8, 2009 streaming royalty costs
TechCrunch has a great post that covers streaming royalty costs, plus some interesting information on the most active streaming sites on the Internet, including Spotify.
Like all webcasters, Spotify must pay a per song fee for every song they play. These range from 1 cent per play (for interactive playback) to 0.2 cents (radio experience). While the rates seem modest they add up quickly. 10 million streams per day translates to $100,000 per day, $30mm/month and $360 million annually in royalties - just for the UK operation. Royalty rates are similar in other countries and its Spotify claims 1mm users from Sweden as well. Advertising from audio and banner ads cannot generate even a sizable fraction of these royalty obligation….
… Ad rates cannot generate revenues sufficient to pay even the mandated royalty rates much less all the costs of running a high tech business.
interesting numbers, streaming trends | tagged napster, pandora, slacker, spotify
Reader Comments (1)
At 1 cent per play I might almost be on there hammering my own tracks...;) Turns out it's much, much less thanks to special agreements with the performing rights organisations. Thought you might be interested in some figures from Sweden, where Spotify began...
In August this year, Spotify paid out 500,000 kronor (c. 74,000 USD) to STIM, the Swedish performing rights society, for the period Oct 08 (official launch) to Feb 09. In October 2009, the Swedish media found out that this amounted to 0.23 öre per stream, or around 0.034 US cents.
STIM have said the agreement provides for payouts to grow as Spotify's revenues increase, and it would seem indeed that the only way is up. Still, better than a kick in the nuts, and more than the Pirate Bay used to pay.
SVT: 0.23 öre per listen (in Swedish)