Why Classical Music Can’t Make Money from Streaming

As Apple Music nears its launch date of June 30, a lot of attention is being paid to the way streaming music subscription income is shared among record labels, artists, and songwriters. One thorny issue was the fact that Apple wasn’t going to pay labels during the three-month trial period they are offering (which the major labels had agreed to), in exchange for a slightly higher long-term payout. But Apple has backtracked on this, after a popular singer penned a missive to the company threatening to withhold one of her albums from Apple Music.

But what about classical music? How does this type of music fare with streaming services? Streaming payouts are calculated based on albums of songs, on average with about ten tracks each. Most songs are from about three to five minutes long, and a listener can stream a dozen songs in an hour.

With classical music, the timings are very different. Take a simple example, Beethoven’s 9th symphony. With five movements, this symphony generally lasts for about 70 to 80 minutes. Streaming this symphony leads to a payout, for a record label, of five tracks, as though it was five songs. Those five songs, on a pop album, would be about 20 to 25 minutes at most. As such, the same time period, which leads to five classical streams, results in about a dozen pop songs.

(The above is simplistic, and doesn’t only affect western classical music. Much Indian classical music has pieces that last from 30 to 60 minutes or more; much improvised jazz has tracks that are 20 minutes or longer; and any Grateful Dead concert has a couple of tracks that are in the same range.)

But it’s not just the length of the tracks. Klaus Heyman, head of Naxos Records, told me:

That’s the other problem; we don’t get the multiple listens pop tracks get: a teenager may listen to his favourite track hundreds of times. Classical music lovers listen to the same recording perhaps only three or four times.?

Many classical label see streaming as a serious threat to their future. Brian Brandt of Mode Records, a label specializing in 20th century and contemporary music, told me:

Streaming is surely the death of classical music, and most music in general. Income from it is a pittance.

Mr Brandt also said:

I’ve often thought of pulling Mode from streaming services. It yields only about $300-400 a month for the entire catalog. But, yes, I can use and need that $300. And, as my distributor advises me, not having the titles on streaming might increase the chance of piracy. Some Spotify fans begged me not to pull Mode from the service because it is a way for them to “sample” and hear music they don’t know. It’s a dilemma.

Mode Records makes recordings of niche music; not just “classical,” as such, but composers like John Cage, Morton Feldman, Alvin Lucier, and others. Mr Brandt originally founded the label with a goal of recording all of John Cage’s music. This is a label that is unlikely to ever have a best-selling album, and which is run by a man with a mission.

Klaus Heyman of Naxos Records said:

Unless services like Spotify change the method of payment where the labels actually get paid? a share of what consumers of classical music pay instead of throwing their money into the big pop/rock pot, streaming is not a viable business model for our industry. If we got three cents per track (which is what the current classical consumer pays) instead of the 0.3 cents per track paid by the pop/rock people, streaming would be a viable business model for us. Obviously, as it is, it will become almost impossible to produce new recordings.

Another label head, who wishes to remain anonymous, highlighted one oddity of the way streaming is paid for classical recordings. Streaming services like to say that they pay out around 70% of their income to record labels and artists. (Though they obfuscate this payment, because they don’t pay artists directly; record labels pay artists.)

Streams are paid in two different ways. One payment, of about 12-13%, is made to a publishing rights clearinghouse, to pay the songwriters or composers. Another payment, around 58%, is made to record labels. Yet for classical recordings whose compositions are in the public domain, only that 58% is paid out; labels don’t get the full 70% (average payment) if there are no rights to pay. Since much classical music is in the public domain, one needs to take the aggregate amount and reduce it to see how much a label gets when its recordings are streamed.

The above actually means that public domain classical music is more profitable for streaming services than pop, rock, or rap. So perhaps the streaming companies should improve their classical offerings, to attract more classical listeners (assuming they pay the labels more)?

Not everyone sees streaming as a negative. A consultant to classical labels and artists told me :

From a consumer’s standpoint, anything that makes it easier to hear music is a good thing, and after a slow start, the market has enthusiastically embraced streaming audio.

For the labels, this means more changes. Streaming subscriptions are a great deal for users who like to listen to lots of things once or twice. Conversely, they’re bad news for labels who made all their money selling recordings to people who didn’t listen to them very often. Provided you’re in the business of making recordings people want to hear, streaming needn’t be anything to be afraid of.

Klaus Heyman echoed this in a 2011 interview on New Music Box. He said:

Yes, there’s too much repertoire chasing the same very limited circle of specialist collectors. There’s pretty much a consensus in the industry that there’s maybe a million [classical music] collectors in the world when you define a collector as someone who buys at least 10 CDs a year. That means 10 million [classical] CDs are sold every year.

So, part of the problem is the classical music industry in general. There are only so many recordings of a given symphony or opera that anyone can own.

For classical labels to be on a level playing field, their streams need to be paid differently from “songs.” But the real problems go much deeper. The classical music industry is suffering for a number of reasons, and streaming is just another factor making their business more fragile. But as the shift to streaming continues, it’s a good idea to not penalize these labels because of the nature of their recordings.