INgrooves boss warns of streaming dangers for labels

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INgrooves boss Robb McDaniels has written an op-ed piece for Billboard warning of the challenges that the rise of streaming music poses for labels. He points out that indie labels in particular have “lived off cash flow for many years now”, including up-front advances – but that streaming threatens to cut off that model.

“It takes 150-200 plays of a song before the content owner earns royalties on par with one download. Content owners typically get paid 70 cents per download and half a penny per stream. How long does it take the average fan to stream a song 150 times–six months? Twelve months? Longer? There’s the cash-flow issue.”

McDaniels’ piece ties into one of the current controversial issues in the digital music world – whether streaming music services are cannibalising piracy more than they are cannibalising sales of CDs and downloads. The likes of Spotify and we7 would argue that a lot of those streaming pennies-per-stream are new – additional – revenues for labels generated by music fans who might otherwise be using P2P. But more data is needed to prove this point before labels – and their distributors – accept that argument.