Concentration risk: what the store breakdown on your statements is telling you

Open a royalty statement, total the earnings by store, and sort. The top row's share of the total is the most important number on the statement, and almost nobody looks at it.

What the number is

It is the proportion of your income that one company controls. Not your streams — your money. If Spotify is seventy percent of earnings, then a playlist removal, a change to how the pool is divided, a change to the threshold below which tracks are not paid, or an enforcement action against your account, at one company, moves seventy percent of your income.

That is concentration risk. It is the same idea as a business with one customer.

What the thresholds mean

There is no rule, but there are useful lines.

• Above sixty percent in one store. One company governs your income. Whatever that company does next is your biggest risk, and it is worth knowing exactly what its policies are — minimum stream thresholds, artificial-streaming enforcement, payout timing.
• Top two stores above eighty percent. Normal for a streaming-led catalog. The question becomes whether the second store is growing.
• A store under one percent. Part of the long tail. See below.

The long tail is worth more than it looks

Below the big stores there is usually a tail: a dozen services each under one percent. Individually they are rounding errors. Together they are often several percent, and they are the reason not to leave a distributor casually.

Distributors differ in which small stores they deliver to. If your tail is worth five percent of earnings and the distributor you are considering does not reach half of those stores, the switch costs you two or three percent before anything else happens. Look at the tail as one number before deciding.

Territory concentration is the same thing

The same breakdown by country tells you the same kind of thing. A catalog earning eighty percent in one country is exposed to that country's subscription pricing, that country's platform competition and that country's economy. A catalog earning across twenty territories is not — and that reach is an argument for a sync pitch and a touring plan, not only a statistic.

Recording concentration

And once more by track. If two recordings are three-quarters of everything, the catalog is earning like a catalog of two. The rest is either under-promoted or is simply what a back catalog looks like; the breakdown cannot tell you which, but it can tell you the question to ask.

What to do about it

You cannot make one store smaller. You can make the others bigger — by putting the second store first on your links where its share is growing, by pitching in the territories where you already have listeners, by making sure the tail is delivered everywhere it can be. And you can know, before a release, which single decision at which single company would hurt most.

What SNVRKOTICS does

The statement reader's breakdown page shows earnings by store, by country, by track and by distributor, sorted, with each row's share of the total. Its reading of the numbers cites the figure it came from: a store above sixty percent is named with its share and its money; a tail of stores under one percent is totalled and named; two tracks above seventy percent together are pointed out. It does not recommend a distributor — the moment it did, the reading would be an advertisement — and it never computes a per-stream rate.