The problem with a pro-rata share of advertising revenue is that the fraction may well always trend downward and is dependent on the growth rate of the service involved. If that sounds like a ponzi scheme, it is pretty similar.
[your plays/all plays] * [ad revenue]
If the fraction is always your plays divided by all plays, your plays may spike a bit but will always be more constant than the all plays number which continually grows at least on a relative basis as more recordings are released industry wide. The “your plays” number will likely never grow at a rate that is greater than the growth in the “all plays” number. The denominator will probably always grow faster than the numerator, which means the fraction is continually getting smaller.
This may be offset somewhat by growth in the ad revenue, but in order for royalties to grow for any particular artist, the percentage increase in the ad revenue would have to exceed the percentage decrease in “your plays” and your percentage piece of the pie. Based on the Trichordist findings, it looks like the percentage decline in the plays ratio is greater than the increase in ad revenue.
The same will probably be true of subscriber revenue as the “new money” starts to level off or even decline.
That’s why it’s like a ponzi scheme.
The last time we did this was back in 2014, so we thought it was time for an update. Not a lot of surprises but as we predicted when streaming numbers grow, the per stream rate will drop. This data set is isolated to the calendar year 2016 and represents an indie label with an […] […]