How much is a song worth?
22 May, 2017
Being successful in the music business comes down to a very simple thing: writing the ultimate songs. But how much are these songs actually worth?
Fanvestory allows fans to buy shares in songs' future royalties and earn long-term revenue, while supporting the artists (songwriters). The first two campaigns have ended successfully and the next campaigns will be launched shortly. But how can we actually estimate the projected value of these songs in the given period, usually 10 years? It is possible to track down the earnings of the previous songs by the same authors and provide some sort of formula, but it would still not be an adequate method for predicting the future value of the newly released songs. There is always going to be uncertainty involved, at least to a certain degree (the "X factor"): some songs make it big, others don't. However, I will provide some examples just to give you an idea, how much a song can be worth.
It is important to consider what exactly is included in the calculation and what is not. The song-related revenues can come from:
1) compositions (e.g. public performances, mechanical royalties, radio and TV broadcasts, music downloads, music streaming, etc.),
2) sound recordings (e.g. mechanical royalties, recorded live concerts, radio and TV broadcast, digital distribution, etc.) and
3) synchronisation deals (e.g. licensing to film, television show, game, commercial, web platform, etc.).
Mechanical royalty essentially means money from the sales of songs (both physical and digital). Performance royalty means money from public performances in various settings, such as concerts, sports arenas, bars, radio, TV, etc. Synchronization royalty means money from licensing the song to a film, TV show, commercial, video game, or any other similar content.
Based on my personal experiences and discussions with different artists and songwriters in Estonia, the song-related revenues could be something like this (in the table below). Please note that it is solely based on my personal opinion and there might be significant differences when it comes to other markets!
| Type of artist (songwriter) | Total revenues related to a single song for 10 years (including the composition, the phonogram and other sources) |
|---|---|
| Relatively unknown niche artist | 100-1,000 EUR |
| Average band (has 10-20 concerts per year, a couple of thousand fans, some radio airplay) | 1,000-2,000 EUR |
| Established artist (20-30 concerts per year, including some festivals, over 20 000 fans, notable traction in social media and in various digital channels, considerable radio airplay, some TV performances) | 2,000-6,000 EUR |
| Top 20 artists in Estonia (~50 concerts per year, including bigger festivals, tens of thousands of fans, considerable following in social media and digital channels, constant radio airplay, TV performances, etc) | 6,000-20,000 EUR |
| Exceptional artists (known by the majority of Estonians, over 50 000 fans, ~50 concerts per year, including domestic and foreign festivals or big events, constant radio airplay and TV performances, exceptional traction in social media and digital channels) | 20,000-100,000 EUR |
Table 1. Estimated payouts for different kinds of artists over the period of 10 years. Source: author.
To base my arguments on some official data, here is the excerpt from the Estonian Authors' Society's payouts report from 2016. Please remember that it does not include all song-related revenues, such as phonogram producers' or performers' royalties, various digital channels, etc.
| EUR | Number of authors | Royalty payout (EUR) | Average (EUR) |
|---|---|---|---|
| Over 20,000 | 9 | 259,827 | 28,870 |
| 10,001-20,000 | 15 | 209,260 | 13,951 |
| 5,001-10,000 | 32 | 215,815 | 6,744 |
| 1,001-5,000 | 277 | 595,404 | 2,149 |
Table 2. Royalty payouts for the Estonian authors in 2016. Source: Estonian Authors' Society (2017).
You might be interested in how much money a single stream can generate money for the rights-holders in Spotify and YouTube. In late 2013, Spotify disclosed an average per-stream payout, which was “between $0.006 and $0.0084,” or less than a penny per play. According to Resnikoff (2015), here is the official data from 2013 about a label-less EDM niche artist.
| Total number of streams / views | Total revenue | Average per-stream payout |
|---|---|---|
| $1,023,501 | $4,955.90 | $0.004891 |
Table 3. Payots from Spotify to an EDM niche artist in 2013. Source: Resnikoff (2015).
As far as YouTube is concerned, you can find a calculator by Social Blade here: www.socialblade.com/youtube/youtube-money-calculator According to Quora, advertisers in YouTube only pay when someone clicks an ad or watches for 30 seconds. This is why you can't tie your channel views to dollars. Razvan Balanescu (Quora) argues that on average, YouTube can pay you around $1.5 - $4/1,000 views.
Now let's move to the international scene. Paul Krugman has argued (Hogan 2015) that "successful musicians continue to make most of their money the centuries-old way: live performance" and that "the lion’s share of that income is increasingly going to only a tiny elite". Billboard (2016) data about the highest paid musicians in 2016 suggests that Krugman was right, with an exception of Adele.
| Artist | Sales | Streaming | Publishing | Touring | 2015 total revenue |
|---|---|---|---|---|---|
| Taylor Swift | $7.2M | $564.0K | $4.1M | $61.7M | $73.5M |
| Kenny Chesney | $1.1M | $239.6K | $313.2K | $38.1M | $39.8M |
| The Rolling Stones | $1.4M | $382.6K | $509.1K | $37.3M | $39.6M |
| Billy Joel | $801.2K | $339.4K | $453.2K | $30.1M | $31.7M |
| One Direction | $3.1M | $891.8K | $652.7K | $19.6M | $24.2M |
| Grateful Dead | $843.3K | $114.8K | $276.5K | $22.5M | $23.8M |
| Luke Bryan | $4.0M | $511.5K | $694.9K | $17.9M | $23.1M |
| U2 | $465.8K | $289.4K | $383.8K | $20.6M | $21.8M |
| Adele | $16.3M | $488.0K | $3.7M | $0.0M | $20.5M |
| Maroon 5 | $2.7M | $796.4K | $2.6M | $13.0M | $19.2M |
Table 4. The highest-paid musicians of the past 12 months. Source: Billboard (2016).
Regarding the relation between album and track sales with the songwriting royalties, Rolling Stone (2012) has provided the following chart about the top earning songs of in 2011.
| Author / songwriter | Status | Track sales | Album sales | Total songwriting royalties (USD) |
|---|---|---|---|---|
| Dan Wilson | Co-Writer of Adele's Someone Like You | 3.9 million | 5.8 million | $882,700 |
| Lady Gaga | Co-Writer of Poker Face | 6.5 million | 1.5 million | $728,700 |
| The-Dream | Co-Author of Rihanna's 'Umbrella' | 4 million | 2.72 million | $611,520 |
| Mark Foster | Writer of Foster the People's Pumped Up Kicks | 3.8 million | 671,000 | $406,861 |
| Dr. Luke, Max Martin and Bonnie McKee | Co-Writers, Katy Perry's California Gurls | 5.1 million | 2 million | $646,100 |
| Cee Lo Green | Co-Writer of 'Fuck You!' | 5.4 million | 458,000 | $533,078 |
| Taylor Swift | Writer of Speak Now | 485,000 | 3.8 million | $399,035 |
| Will.i.am | Co-Writer of Boom Boom Pow | 6.3 million | 3.15 million | $859,950 |
| Benny Blanco | Co-writer of Moves Like Jagger | 4.1 million | 928,000 | $457,548 |
| Eminem | Co-Writer of Love the Way You Lie | 5.3 million | 4.2 million | $864,500 |
Table 5. Top earning songwriters in 2011. Source: Rolling Stone (2012).
Finally, the table below (Sondell 2015) provides an overview how much the most valuable songs of all times could be worth.
| Author | Song | Year | Additional info | Estimated revenue |
|---|---|---|---|---|
| The Hill sisters | Happy Birthday | 1893 | The ownership of the song has changed hands a few times throughout the years. In 1990, Warner Chappell, a music holding company, bought the rights to the song for $15 million. Today, Happy Birthday brings in a reported $5000 a day, $2 million a year in royalties. The cost of using the song in a movie or on TV is $25,000. | $50M |
| Irving Berlin | White Christmas | 1940 | Bing Crosby’s version of White Christmas is one of the best-selling versions in music history. It sold more than 100 million copies worldwide. The song remains one of the most popular and played Christmas songs in the world. | $36M |
| Barry Mann, Cynthia Weil and Phil Spector | You’ve Lost That Feeling | 1964 | You’ve Lost That Lovin’ Feelin became a massive hit after it was recorded by The Righteous Brothers. It also got a massive reboot in 1986 when it was included in the soundtrack for Top Gun, starring Tom Cruise. | $32M |
| John Lennon and Paul McCartney | Yesterday | 1965 | Yesterday would become the second most played song in the history of radio. It has been covered by more than 2200 different artists. | $30M |
| Alex North and Hy Zaret | Unchained Melody | 1955 | The song has been covered by more than 650 artists. The 1965 version by the Righteous Brothers was the most famous covering of the hit song. | $27.5M |
| Ben E. King, Jerry Leiber and Mike Stoller | Stand By Me | 1961 | So far, there have been more than 400 recorded versions of Stand by Me performed by a variety of artists. | $27M |
| Haven Gillespie and Fred J. Coots | Santa Claus Is Coming To Town | 1954 | The song has been covered by a wide range of artists from different music genres. The most notable singers to cover the 1954 song are Mariah Carey and Bruce Springsteen. | $27M |
| Sting | Every Breath You Take | 1983 | Puff Daddy’s version won a Grammy and went on to become one of the best-selling singles of all time, selling 7 million copies worldwide. | Today, the song produces ~$2000 a day ($730,000 per year) in royalties for Sting. |
| Roy Orbison and Bill Dees | Oh Pretty Woman | 1964 | Bill Dees did an interview in 2012, just before his death and stated that he was still earning $100-$200 thousand per year in royalties from Oh Pretty Woman, nearly 50 years after he penned it. | $19.75M |
| Mel Torme | The Christmas Song | 1944 | The song was first performed by Nat King Cole in 1946, and it became an instant hit on both the R & B and pop charts. | $19M |
| Elton John and Bernie Taupin | Candle In The Wind | 1973 | The song won Elton John a Grammy for Best Pop Vocal Performance in 1988. The song is listed as the second best-selling single of all time. | N/A |
| Dolly Parton | I Will Always Love You | 1973 | Whitney Houston covered it for her 1992 movie, The Bodyguard. Houston’s version quickly became one of the best-selling singles of all time. | N/A |
Table 7. Highest earning songs of all times. Source: Sondell (2015).
As you saw, the value of songs depends on very many different factors. It can literally range from zero to tens of millions of Euros. Our company Fanvestory strongly advises you not to buy any shares in any songs' future royalties, if you are looking for a quick and predictable ROI (Return On Investment). We cannot guarantee that the value of the songs is what we have estimated – it can be significantly more, it can be significantly less. However, if you decide to buy a share in the song's future royalties, we can guarantee that you will receive a fair share of the song's earnings during the period provided under the "Deal" section. This is a fair and potentially a very interesting offer, which has a long and positive effect on both the rights-holders and the fans.
References:
Billboard (2016) "Taylor Swift Tops Billboard's Top Money-Makers List of 2015". Billboard, May 5. Available here: http://www.billboard.com/articles/news/list/7356755/billboard-top-40-money-makers-rich-list
Estonian Authors' Society (2017) "Payouts to authors". Available here: http://www.eau.org/wp-content/uploads/2014/08/Väljamaksed-autoritele.pdf
Hogan, M. (2015) "How Much Is Music Really Worth?" Pitchfork, April 16. Available here: http://www.pitchfork.com/features/article/9628-how-much-is-music-really-worth/
Resnikoff, P. (2016) "My Band Has 1,000,000 Spotify Streams. Want to See Our Royalties?". Digital Music News, May 26. Available here: http://www.digitalmusicnews.com/2016/05/26/band-1-million-spotify-streams-royalties/
Rolling Stone (2012) "How 10 Major Songwriters Make Big Money". Available here: http://www.rollingstone.com/music/pictures/how-10-major-songwriters-make-big-money-20120119
Shondell (2015) "12 Of The Highest Earning Songs Of All Time". TheRichest, May 11. Available here: http://www.therichest.com/rich-list/the-biggest/12-highest-earning-songs-of-all-time/
Quora. "How much does a YouTuber with 1 million subscribers earn in a year?" Visited: May 22, 2017. Available here: http://www.quora.com/How-much-does-a-YouTuber-with-1-million-subscribers-earn-in-a-year