Tag: HITS Magazine

Must read: @HITSDD: The [Billboard Stream] Weighting is the Hardest Part

[Editor Charlie sez:  Just in time for the Spotify IPO…or debt rollover…Billboard is poised to visit agita on streaming boosters when it corrects the absurd equal weighting of free streams and subscription streams in its sales/airplay/streaming chart, which should also change the way some people…ahem…average the revenue value of the ad/paid streams.]

One of the biggest stories of 2017 is playing out right now, as Billboard works on a revamp of its Top 200 album chart that will give greater weight to paid streams, while ad-supported streams will be devalued. Most majors have been lobbying for just such a revenue-based revamp.

Presently, all streams are weighted equally, with 1,500 streams counted as one album. Those in the know believe the formula for paid streams will be adjusted to 1,250:1, while ad-supported streams will be devalued to 5,000:1. In other words, premium streams would have four times the weight of ad-supported. Under the existing metric, 100m streams of any kind would count as 66,667 albums, while under the new proposal, 100m ad-supported streams would count as just 20k albums, and 100m paid streams would count as 80k albums. On the other hand, albums that rely heavily on ad-supported streams for long periods of time could lose thousands of chart units.

YouTube streams will supposedly continue to be excluded from the Top 200, following vehement protests by rights holders over their possible inclusion.

Read the must read on HITS Daily Double

How Bad Is It? Read the fine print…

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As lower margin streams destroy higher margin sales, this chart tells you the best you can hope for.

And don’t miss the fine print at the very bottom of the chart:  “Revenue based on 91 cents per download and .00575 cents per stream”

Hits Streaming

In other words–cooked numbers.  You can’t use an average per stream income penny rate because the difference between ad supported and subscription rates is so vast. The subscription rate will ALWAYS pull up the ad supported rate, especially if you don’t adjust for the difference in subscribers–much higher for free and much lower for subscription.

Nobody makes .00575 cents per stream on ad supported streaming (see Zoë Keating’s royalty statements).  Ad supported is the lions share of Spotify streaming based on the ratio of paid to free accounts that Spotify releases–which are unverified.

Do you know anyone who actually gets paid “91 cents per download” on a 70 cent wholesale price?

This suggests that the revenue column for streaming is overstated–maybe wildly overstated.

Source: Hits Magazine