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Comment by jrm4 | Hacker News Reader

The intent is great, but this isn't going to happen. I'm a big Spotify hater, frankly -- but one thing they understand is that the marginal cost of streaming OR downloading a song is effectively zero. It's weird to pretend that it isn't -- and it's REALLY weird to promise that you're going to automatically lose more money the more you listen to a song.

I think there's legs in the idea of "hey, you've listened to this a bunch, would you like to pay more (and perhaps get something else)?" But this ain't it.

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"marginal cost of streaming OR downloading a song is effectively zero" - only if you don't consider royalties to be part of the marginal cost? What's weird to me is the seemingly pervasive idea that the cost of everything should be 100% directly related to its marginal cost + some small fixed percent. Things are priced based on what consumers will pay, which is related to how much value they derive from it.

Personally I'd be happy to pay $2 a month when I don't listen to much music and up to $30-40/month when I'm obsessed with album(s) and listening to them every day - how much that costs Spotify is somewhat irrelevant to me

No, royalties are objectively not part of the marginal cost, by definition. Marginal cost refers to things that must be paid for before the thing is made. This isn't a "should," it's essentially a principle of "the science of economics" (which isn't always much of a science, but this one holds up pretty well over time.)

The one that doesn't is the bit about "how much value they derive from it." All sorts of real-life experimentation/psychology, etc shows that people don't much know or understand or generally follow this thing of "a person develops a sense of how much something is worth to them and makes purchases accordingly," I mean, a moment's thought reveals that if this were true, advertising (and perhaps, google and facebook et als entire business models) wouldn't exist.

I have idiosyncratic music preferences like you, but we much don't matter.

I listen to music for at least 3 hours per day. Assuming two minute songs, that’s 2700 songs per month. Since my spotify subscription is $10/month, that’s about 0.3 cents per song. I’m curious if I listen to much more music than average or what. I often hear that spotify is underpaying artists with complaints like “less than a penny for stream” (google says the average is 0.4 cents), but it doesn’t seem like spotify could be taking a huge cut off the top

The problem is your $10 isn't split among artists you listen to. Your $10 is tossed into a pool with all the other $10s and split depending on deals made with Spotify, not based on listening. That means the vast majority goes to the most popular artists' labels, many (maybe most) you never listened to. Most artists make pennies at best because already successful artists have labels that negotiate better per-stream rates. And they still see very little of it once everyone after Spotify and before the artist takes their cut.

I think GPs point is, given their streaming habits and what Spotify charges, it’s not possible to pay 1cent per stream on average.

Though my math would be slightly different.

Assuming:

* 3 hours (180 minutes) per day

* 30 days in a month

* $10 subscription

* 3.5 minute average song length

180 * 30 / 3.5 = 1543 streams per month

$10 / 1543 = $0.0065 per stream

So for a listener listening on average 3 hours per day, if Spotify gave away 100% of what they charged the user, they’d still only be able to pay an average of little over 1/2 a cent per stream.

No matter how you distribute that money, unless you charge the user more, there isn’t a way to pass on an entire cent per stream to every artist from that users subscription.

Yeah, to achieve that you're looking at a minimum of $25+ per month, and probably more like $60 once you take in to account payment processing fees, the service overhead, label overhead, etc.

And despite all the virtue signalling, there is no way the majority of users would be happy to pay an average of $60+ a month to stream music.

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