Who cuts the pie? Comparing revenues from Downloading versus Streaming

Earlier in the week, the New York Times ran an article titled “As Downloads Dip, Music Executives Cast a Wary Eye on Streaming Services.” The article is worth a read but here is the real question to ask when analyzing the numbers: Who gets paid?

At 1.01 billion tracks downloaded to date for the year and at an average cost of $.99, we’re just shy of a billion in revenue minus Apple’s third. Pocketing $332,966,700 aint too shabby for being the gatekeeper. So that leaves about $665 million to be split amongst all the stake holders. But don’t forget, the marginal cost of distribution via iTunes is $0 after you factor out Apple’s cut so one could argue that this is pure profit totally separate from physical CD sales.

The Times then quotes that  “streaming and subscription services generated $1.03 billion in revenue last year.” Now dissecting this number is much trickier. I’d love to see a breakdown of who earned that $1.03 billion and just how it was accounted for. Does this factor in ad revenue? Just subscriptions? What? And then how is it allotted and distributed? Until there is more clarity on those finer points, it’s all Enron accounting and we’re comparing apples to oranges (pun intended)

Read the full article but don’t be afraid to ask the bigger questions:  As Downloads Dip, Music Executives Cast a Wary Eye on Streaming Services – NYTimes.com.

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About the author

Mike Dias is a Sales Director for Logitech. He specializes in consumer electronics & pro audio with an expertise in headphones & portable audio. He has over 15 years of experience selling custom handcrafted in-ear monitors.

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