Our average track length is 4 minutes, so multiplying $0.0017 x 15 equals $0.0255. The economics of music streaming are typically evaluated by denominating revenues and expenses on an hourly - or “per 1,000 hour” - basis. In the US, the sound recording royalty we pay under the compulsory license is $0.0017 per ad-supported stream, nearly 19X the equivalent rate in Canada (which is why an ad-based model on a medium-sized platform remains viable there). The simplest way to demonstrate our range of options is to look at the math. Larger services have raised billions to fund continued losses or may simply use music as a “loss leader” to derive revenue through another business line. I know that some listeners are genuinely frustrated by the limits, but it’s important to realize that no digital music service is generating a profit. And our crowdfunding round this year, while a great showing of support from our community, has ended up coming in at a much slower rate, and at a lower amount, than we’d anticipated based on our initial survey of the community in early 2016.īottom line, the royalty rates we pay are too high to support our costs with a free, ad-based listening model in the US. Moreover, we saw a decline in our audience during 20, making the advertising model more challenging (more on that in a bit). Unfortunately, our royalty rates in the US grew by yet another 20%+ in 2016. Our devoted community has grown around this free, ad-supported model for years. We’ve long believed in the advertising model, as radio - historically and still the primary way new music is both promoted and discovered - should be free to allow artists to reach the widest possible audience. We grew out of Small Webcaster status in 2014 and, as our royalty burden grew, we became unprofitable once again. Top venture capital firms seek startups in less competitive sectors, with more favorable economics, which they believe are on track to be valued at over $1 billion. The challenges of streaming musicĭespite encouraging growth and even profitability, it proved challenging to raise a significant “Series A” round from traditional investors. We achieved profitability 18 months later thanks to our status as a Small Webcaster, which allowed us to pay royalties on a percentage of our revenues (rather than on a per-play basis that ignores the level of revenue generated). Three years after launch, on the back of a $1.2m seed round, we hired our first employees. We saw good early take-up and, by the end of 2010, began to get interest from investors. My belief was that music was most effectively “packaged” by people (not algorithms).įast-forward 10 years, I found myself bootstrapping 8tracks on a nights-and-weekends basis with a loan against my 401(k) plan, eventually launching the service on August 8th, 2008. Inspired the culture’s focus on the DJ, I envisioned a music-based social network that democratized the role of the DJ, allowing anyone who loves music to curate playlists for others who hadn’t the knowledge or time. My original conception of 8tracks dates back nearly 20 years, from the time I lived in London and enjoyed its rich, diverse electronic music culture. In this post, I’d like to go a bit deeper in explaining our decision, providing more context and detailing our underlying economics, to ensure our listeners have a crystal clear understanding of why we’re taking the tack we’ve pursued. We’re not happy about having to establish these limits, and we wouldn’t be taking this path if we had another option. As many of you are aware, we announced new limits for US listeners in October.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |