Benom Plumb, Assistant Professor of Music Industry Studies at the University of Colorado Denver, reviews the biggest stories of the week affecting music royalties. He is a music industry professional, not an attorney. For more info about Benom, visit his website at www.professorplumbmusic.com.
Taylor Swift Will Keep New Album From Streaming For One Week; First Week Album Sales Projected Over 1 Million Units.
This week’s big news is the highly-anticipated Taylor Swift album, “Reputation,” released today in physical and digital formats. The Nashville star turned New York pop princess already teased the public with the release of songs like, “Look What You Made Me Do.”
But it will be another week before fans can listen on their favorite streaming service.
There are high hopes that the album will further cement Taylor’s place in the pop music genre. Given her loyal and passionate fan-base, Taylor Swift’s label and distributor project this first week of sales will reach between 1.3 million to an optimistic 2 million for physical and download units.
Of course, keeping streaming out of the equation can certainly help physical and digital album royalty margins. Even though the digital revolution is here to stay, and yes the entire market is moving to the streaming platforms, the biggest dollars are still in the physical and digital formats. In a moment, I’ll provide numbers so you can see what I mean from the songwriter and publisher perspective.
For a little historical background Swift also held back her last album, “1989,” from streaming services for a time. This resulted in over a million units sold in the first week. “1989” also went onto sell more than 7 million units, in addition to millions upon millions of paid streams.
This “withholding” strategy is something that many inside and outside of the industry may frown upon, but streaming holdouts are nothing new. The Beatles didn’t allow their catalog on streaming services until 2015, and just this year Tool finally got on board with streaming services. Besides, it’s not like you can’t get your Swift fix on Spotify. But, if there’s a new album, you’ll have to wait.
The point I’m making here is that withholding from streaming services may be a good strategy, depending on your point of view, your stature and your audience. For the Taylor Swift team, it appears to be a strategy that has worked in the past and makes perfect sense for her fan base and financial success. That doesn’t mean it will work for everyone.
In my Senior-level Music Business Analysis course, I have the students calculate the mechanical royalties from Taylor Swift’s “1989” album. Because we know exactly (or almost exactly) what songwriters and music publishers earn in these royalties (due to government regulation), we can do some simple math. It’s important to note that we don’t exactly know what the labels and recording artists earn. Those details are subject to confidential agreements. Any calculations on the sound recording side come close to pure speculation, except in the case of SoundExchange royalties. (These royalties range from $0.17 to $0.22 per 100 non-interactive streams.)
Nevertheless, the royalty amounts I’m about to show you express in the most stark terms the difference in physical/download payouts vs. paid streaming for songwriters and publishers.
Currently, mechanical royalties for physical and download sales paid to the songwriter and publisher is $0.091 per song, per copy, up to 5 minutes of music.
“Reputation” has 15 songs on the album. At 9.1 cents per song x 15 songs = $1.365 per album mechanical royalties. $1.365 x 1.3 million albums = $1,774,500 in mechanical royalties. So if the analysts are correct about the first week of sales, we are safely in the ballpark to say that mechanical royalties alone, will be between $1.5 million and $2.5 million for “Reputation.”
Of course, there are likely some co-writers and co-publishers on these songs. This estimate is the gross amount generated in week one, which is then divided up according to each songwriter and publisher’s copyright share of the song(s). But just a few parties splitting $1.5 million - $2.5 million for one week of royalties ain’t bad at all!
The basic mechanical royalty for streaming is over a 100x less for songwriters and music publishers. The first week of mechanical streaming royalties when “Reputation” goes to paid streaming services, if we assume that each song on the album is streamed 1 million times, would earn about $10,000 to $15,000.
[Editor’s note: The difference of course is that Swift will continue to collect streaming royalties for each stream of her music forever. With physical sales, she collects the royalty all at once.]
We only have to wait a week to see how the final numbers will shake out.
And now for this week’s other headlines: