From Of Two Minds via ZeroHedge:
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
This is the net result of commoditization: there's no premium for commoditized capital, labor, goods, services or content.
As I noted in Our New Robot Overlords & The Third Type of Capital, profits flow to whatever inputs are scarce. Unfortunately
for musicians, writers, filmmakers and others producing creative
content, creative content is no longer scarce: it's been commoditized
and is now available in unlimited quantities for $10/month.
The model is simple: unlimited content for a few bucks per month.This
is the model of music services such as Spotify and Pandora (which offer
advert-supported services for free) and iTunes Radio, Amazon Prime for
borrowing Kindle ebooks and various film/video distribution services.
The model effectively commoditizes all creative content. Commoditization
makes all inputs interchangeable. Global labor has been commoditized
because it no longer matters which workers assemble the goods, global
capital has been commoditized because it no longer matters where the
capital comes from, and globally produced goods, services and resources
have been commoditized because it no longer matters where they come from
or who produces them.
Services that offer unlimited streaming/borrowing commoditize
all content: the content is interchangeable to the buyer, and the
creator of the content earns next to nothing when the content is
streamed.
Digital
music sales recently fell for the first time ever, with the number of
digital songs purchased plummeting 13 percent to 594 million in the
first half of 2014, compared with the same period a year ago, according
to research firm Nielsen, which has tracked music sales since 1991.
Meanwhile, the amount of music streamed online rose 50 percent, the firm
said.
While streaming sites have helped big online music
spenders save money, they have also cut into the money that musical
artists make per song.
ITunes sells songs for 69 cents to $1.29 each. For a song
that costs $1.29, Apple takes 30 percent of the sale and the rest goes
to the record label and artist, Stewart said. If the artist is on a
record label, they would get a royalty of about 20 cents for that track,
she said.
That might not seem like a lot, but the money could be even less in streaming music for free with ads. In general, a
song must be streamed 75 to 80 times in order for a music label to make
the same amount of money as from a single online song purchase, according to MIDiA Research.
The unlimited-streaming/borrowing model is great for
consumers and the companies collecting the fees every month, but it's a
rocky road to serfdom for content creators. 80 downloads are needed
for the musicians to collect a lousy 20 cents for their creative
efforts? Let's be generous and note that self-produced/distributed
artists could collect as much as 50 cents of an iTunes purchase, and
presumably the same from 80 downloads.
So it only takes 8 million downloads to earn a median middle-class income of $50,000 a year. Musicians
(those signed to labels) who receive 20 cents from 80 downloads would
need 20 million downloads annually to earn $50,000--roughly the median
household income in the U.S.
How many musicians get 20 million downloads?
The distribution of creative-content rewards tends to follow a
power law, i.e. the Pareto Distribution, where the "vital few" (the
very apex of the pyramid) reap most of the rewards.
So a handful of artists, writers and independent filmmakers
collect most of the shrinking pool of money paid for creative content,
and the vast majority earn chump-change...
...
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