Thomas Hesse, CEO and Founder of Dreamstage.
Music streaming costs the same whether you stream one track a month or 3,000 -- $10 a month. It's all-you-can-eat. If music were ice cream, the parlors of Spotify and Apple charge the same to eat a tub a day as they do to eat a cone a month. But while this simple model created an incentive to get a critical mass of music lovers to subscribe to these services, it's probably not fair for the long term – and it's already starting to creak at the seams.
For creators whose music is on these services, revenue depends on only one thing: Their market share of all fans. Consider Joey, a hypothetical 55-year-old jazz fan who listens to one album of ten tracks a month; and Ben, a 16-year-old hip-hop lover who streams 3,000. Right now, they each pay $10 to streaming services, of which they share roughly $6 with labels. But in the ice cream analogy, Joe is the cone-a-month eater who likes the bourbon flavor, while Ben would rather have a tub of strawberry every day. Under the current model, 99.67% of their combined $12 go to the artists Ben likes, while the only one Joey listens to gets 4 cents – basically nothing. Joe's money essentially subsidizes the artists Ben likes. In ice cream terms, fans of bourbon flavor are subsidizing those who prefer plain strawberry.