Are you Making Money from Streaming?

A look at performance-based pricing for digital music distribution

2021-10-26
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Music is supposed to be for everyone! It's disappointing most people won't buy music when they can get it for free. It's disappointing customers are paying more to get a set of headphones than they paid for a streaming service. It's disappointing customers aren't buying music because they are consuming rather than listening. And it's disappointing if you as an artist don't use an aggregator, your music may never get in front of fans and customers who might love it. It's even more disappointing that it is exceedingly difficult to make money from your music as an artist!

The Current State of Digital Music Distribution

While the market was once dominated by a handful of aggregators such as CD Baby and Tunecore, then Distrokid came along a few years ago and disrupted the model by providing an unlimited subscription for artists. If you now do a Google search, you will find many options with almost neverending pricing plans and models.

The stark reality is that only a tiny percentage of artists make a substantial amount of money from streaming. The vast majority make very little, or it costs them hard-earned money to have their music on these platforms.

Only yesterday, a Reggae band that has around 10,000 monthly listeners asked me to analyze their sales and earnings with an aggregator. The result for me (and the band) was astonishing:

Since 2012 they had 1,378,200 streams across all platforms with earnings of $2,392.91, resulting in a $1.7362574 rate per 1,000 streams. At first glance, this looks good and in line. But they paid their aggregator $1,773.59  and made only $319.32 in 9 years. That is a per 1,000 streams rate of only $0.2316935.

I have had the opportunity to speak to many Traxfly members. In addition, I have been a customer of many aggregators over the years as a label owner and band manager, and the story constantly repeats itself. Unless you have a substantial amount of streams, you make very little, or it costs you to have your music heard.

Is There an Alternative?

Well, I think there is, and I am willing to put it to the test - it's called Performance Based Pricing.

Performance-based pricing is a strategy in which the pricing of a product or service is adjusted to reflect how well it performs. This strategy can be applied in various industries, including digital music distribution.

What if you pay no annual fees and will always receive a fair share of all streaming revenues? You can upload as much as you want, whenever you want, for as long as you want without paying any fees or paying for add-on products.

The aggregator has costs and needs to make money, but in this case, he is willing to reduce his share as your number of streams goes up.

At Traxfly, we have set up such a plan and are currently in the testing stage.

The artists' share ranges from 70 to 95%, and the feedback so far has been great.

If the streaming numbers of the Reggae band in the example continue with the same pattern, they will have net earnings of $1,675.04 instead of $319.32. The additional $1355.72 will buy a lot of guitar strings.

You can take a look at the plan and a calculator here.

Are Annual Subscriptions Ok?

Of course, they are - if you have sufficient streams and perceive you receive value. We have several members that successfully used our Flexplan and eventually switched to an annual subscription.

Do Yourself a Favor

I know we are all very busy people and much prefer creating and performing. But we also need to realize it is called the Music Business for a reason.

So take the time to analyze your revenues, costs, and actual earnings from streaming. If you would like help with that, drop me a line here.

As always - no music, no life! Thomas

Thomas is a Co-founder of Traxfly