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For Independent Artists, Streaming Online Isn't Much Better Than Piracy

The demise of infamous P2P music service Napster last week -- the most recent in a 10 year history of "death and rebirth":http://www.theatlanticwire.com/technology/2011/12/napsters-seven-lives-are-finished/45646/ -- didn't seem to surprise or distress...
Janus Rose
New York, US
December 6, 2011, 6:28pm

The demise of infamous P2P music service Napster last week — the most recent in a 10 year history of death and rebirth — didn’t seem to surprise or distress anyone. It wasn’t so much a tragedy as it was a fading scar on the face of an industry that has since been pressured into getting a makeover. Its founder, Sean Parker, has since moved on to greener and considerably more legit pastures with Spotify, one of several legal, free (with ads) and fast-growing music streaming services. But Parker’s conscience isn’t entirely clean, and neither is yours — when you look at the numbers, for certain artists, streaming music can be about as beneficial as pirating it.

If you’re an independent artist hoping to make bank off the streaming revolution Spotify and other services like Rdio are promising, you might want to think again: The average profits from letting people stream your music are so marginal that it might actually be worse than simply giving it away for free.

On his blog, musician Derek Webb writes:

For example, I am paid $0.00029 per stream of a song on Spotify, and even this amount depends on whether the song is being streamed by a paid user or someone using the service for free. This means it will take upwards of 3,500 streams of a single song on Spotify to earn $1.00 versus that same revenue for one iTunes song purchase (not to mention the fact that Spotify refuses to pay the same amount to independent artists as they pay major labels, unlike iTunes).

It’d be one thing if downloads and streaming didn’t share the same proverbial table in the digital marketplace. But it stands to reason that if people aren’t paying for downloads, buying physical copies or simply pirating the music, they’re going to be streaming it. Even with companies like Apple looking to offer the streaming option in addition to downloads, It’s still being sold as an alternative to purchasing music. And if Netflix is any indication, people are going to want the most convenient method.

The worst case scenario is that the most convenient method will be the one that’s ripping off artists. Fortunately, ‘free’ will always stand to compete for that slot. It might be an idealistic and potentially unsustainable business model, but it’s doing things for artists that services like Spotify can’t.

Webb argues that by giving his music away in exchange for email addresses, he’s establishing connections with his listeners instead of drive-by streams that yield an infinitesimal fraction of a cent. These connections can get people to come out to shows, buy merch or download and pay for future releases.

It may still be too early to judge whether most people will embrace streaming, and granted, no artist should be expecting to make much from a nuanced distribution method. But if streaming services hope to replace digital downloads, it might behoove them to re-think their handling of independent artists. Or at least make the voices that play in those ads less creepy.

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