Music royalties drying up due to streaming and subscription services

A New York Times article looks at the ever decreasing royalties being paid to musicians in light of the popularity of subscription and ad-supported streaming services like Rdio, Spotify, Pandora and more.

Musicians are increasingly seeing their royalties shrink despite increased plays. The article cites a musician who had 1.5 million Pandora plays translate into $1,652.74 which Spotify paid her just $54.71 for 131,000. Others, like Cliff Burnstein, whose company, Q Prime, manages Metallica and other large bands, says that even though streaming hurts sales, there is a break even point:

There is a point at which there could be 100 percent cannibalization, and we would make more money through subscriptions services. We calculate that point at approximately 20 million worldwide subscribers.

Spotify has about 5 million paid subscribers right now.

The article doesn't really look into whether these services are competing with music sales versus music piracy however. So it's not clear if these are royalties that would have been completely lost to illegal downloads as opposed to royalties that would have been earned from physical or download sales.