Revenue challenges in subscription era; + books & DVDs not dead yet

Today’s newsletter focuses on the challenges of earning revenue in the digital subscription and streaming era. Ironically though, DVDs remain a strong business for Netflix.

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What You Need To Know 👀

  1. How much does streaming actually pay musicians? 🎸

Indie musician Tony van Veen breaks down his streaming income in Hypebot. Although his streaming revenue is low, he argues that streaming is a necessary “gateway to discovery and exposure to new fans.” Selling more tee-shirts is the answer, he (quite seriously) recommends:

“The trick is to leverage the fans and followers you gain on the streaming platforms and get them to buy other items from you. […] If you sell CDs and merch at your live shows and online, the profit you make from selling one CD equals approximately 3,000 streams. One t-shirt sold nets you the equivalent of 5,000 streams. If you play multiple shows a month and sell your merch and music, that revenue can start to add up. It’s going to take tens of thousands more streams to get you the same payout of a few merch sales at your gigs.”

My take: That indie musicians earn their money nowadays via touring and merch isn’t breaking news from van Veen, but it made me think about how this leveraging model could be used more in other cultural sectors. Book authors, for example, also struggle to earn revenue through sales or ‘streams’ (e.g. Kindle Unlimited) of their main products. Maybe tee-shirts are a stretch for writers, but there are affiliate revenue and even subscription revenue opportunities to explore. Although as van Veen says, it’s much easier said than done. See also #2 below…

  1. The ongoing challenges of premium podcasting 🎧

Caroline Crampton writes in Nieman Lab about the trend of podcasters offering premium podcasts and bonus content:

“It’s becoming increasingly common to monetize podcasts via a direct connection with listeners, whether via merchandise, donations, live events, or bonus or ad-free content. Big networks and publishers are doing it (e.g., Wondery Plus, Stitcher Premium, Slate Plus) and independent creators are too (via Patreon, Memberful, or other solutions).”

The problem for podcast listeners, as Crampton notes, is that “it’s not always straightforward to get your new paid-for content set up in your podcast app of choice.”

My take: There’s an open protocol currently being proposed, called PodPass, that would provide a standardized solution for premium podcasts. But as with email newsletters, there’s an even bigger need for bundling or aggregation on top of that. Luminary is a recent large-scale aggregation play, but I’d like to see more innovation on the bundling side (something I’m hoping Substack will do for email newsletters). The core problem for indie creators isn’t that people can’t easily access their premium content, it’s getting those people to subscribe in the first place.

  1. Reading books in the digital era 📚

English teacher and poet Dan Chiasson writes in The New Yorker about how the internet adds to the experience of reading a book. I liked this example especially:

“Perhaps more than any genre, nonfiction has been changed by the Internet, which turns a biography or a history book into a series of fascinating leads. Every reader brings her own curiosity to the printed text, and builds her own customized version out of adjacent or supplemental research. Read a biography of James Merrill, for example, and you might find yourself online learning about Wagner’s operas or looking on Zillow for the value of the poet’s properties in Key West or Athens.”

My take: A book remains the ultimate form for written artistic statement or an in-depth exploration of an idea. But Chiasson makes a great point that in the digital era, the internet (at its best) adds to the experience of reading books. I recently read John Steinbeck’s great novel, The Grapes of Wrath. Although mostly I was absorbed in the printed book, at times I googled for more information about the 1930s culture and economy that Steinbeck was so poetically describing. I also used the internet to find out more about Steinbeck himself. Incidentally, this also makes me think about the enduring value of search and serendipity, internet experiences that have in many ways been replaced by opaque, algorithm-controlled “feeds.”

  1. Netflix has now shipped 5 Billion DVDs to its members 📀

My take: I was surprised that Netflix still has a DVD business, but according to Variety Netflix has 2.4 million subscribers for this. It makes sense when you consider how many movies are still not available via streaming – and not just on Netflix, which (in my country at least) has a rather limited movie selection. Indeed, many of the movies I’d like to watch are not available on any of the streaming platforms – whether through geographic rights, or simply that the rights owners haven’t made them available online. Whereas with music, most of what I want to listen to is available now on Spotify. It shows just how far movie streaming has to go.

Data Points 📊

  • Leichtman Research Group: Either Netflix, Amazon or Hulu SVOD in 74% of U.S. Households 📺

  • Edison Research: How Americans Keep Up to Date with New Music 🎹

  • Newzoo: Cloud gaming’s serviceable obtainable market (SOM) will grow to 124.7 million users by 2022. 🎮

  • Marketing Charts: 1 in 4 US Adults Say They’re Likely to Shop with AR/VR in the Next Year. 🛍️

  • Billboard: Music labels are investing more than one-third of their global revenues (or $5.8 billion) each year in A&R and marketing for new artists. 💰

Tweet of the day 🐦

Area Man Cancels Netflix, Despite All Those DVD Memories

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