Saturday, April 17, 2010

Information Is Beautiful: Life on the minimum wage

Information Is Beautiful - the site that takes numbers and makes them pretty has pulled together a graphic which shows the activity a musician would need to do each month in order to make the US minimum wage.

It runs from selling own-produced CDs (143 at $9.99 a piece) to plays on Spotify (4,549,020 plays at $0.00043 a play).

Unusually for an Information Is Beautiful graphic, it actually obscures the facts rather than makes them clearer. For a start, there's a muddle between units - physical albums, single downloads and single streams is a bit like comparing the sales of cups of Starbucks coffee, packets of ground coffee and jars of Nescafe. An album is a bunch of songs, a single track is a single track, and to compare like with like perhaps the graphic should start from the premise 'how many songs must an artist shift' to make minimum wage.

There's also the problem of the way the data is portrayed - a massive circle for streaming, which makes it look like it takes a lot more effort than just selling a dozen CDs each month.

But that's a bit of a misrepresentation - it's hugely unlikely that any one person is going to buy your album more than once. If they love your song, they may stream it every day.

If someone in Arkansas likes one of your songs, they might tell a friend in Ohio about it. If you're using a business model based on selling self-produced CDs, you're going to struggle to be able to convert that into an instant sale. If your model has Spotify streaming, a link could be sent via email, and a stream play racked up there and then. (Assuming Spotify ever get round to launching in the US.) In effect, you're earning money as soon as someone says 'I think you'd like this artist' in a way that you don't get if you're only using physical sales.

There's also the marginal costs of production. It would be unfair to expect the graphic to show this clearly, but to sell 100 albums takes investment in producing 100 albums. Each extra album you want to sell costs a little bit. If you're incredibly lucky, you might get your stock levels spot on. If you're not, you'll either spend money on records you cant sell - and wind up like Alan McGee, hiding Legend! discs under the bed, eating into your profit margins - or you'll have demand you can't satisfy and lose money you could have earned. Streaming, once you're on the system, there's no marginal cost of production.

It's interesting in itself, but it only tells a portion of the story. It'd be nice to see a similar image with, say, the promotional costs needed to achieve these figures factored in.

[Thanks to Michael M, who suggested this would be interesting]