Why Video Streaming Can be Much More Profitable Than Music Streaming (for Distributors)

Even if there are similarities for distributors in the streaming video and streaming music businesses, for most entities, if there was a choice, you’d probably choose to be in the video business, not music. 

Music streaming is good for copyright holders but pretty difficult for distributors, while video streaming is better for distributors at scale, and less favorable for copyright holders. 

Both types of streaming share core digital economics: high upfront fixed costs for content creation or licensing, followed by near-zero marginal costs for additional distribution.

But they diverge sharply in how revenue flows to copyright holders (artists/labels/studios) and distributors. 

The marginal cost of streaming additional songs is linear: play a stream, pay a fee. Video streaming is different: content is typically licensed for a flat, fixed fee covering unlimited streams.

So video streamers can reach higher margins as additional subscribers are added: the marginal cost comes mostly in the form of marketing or acquisition cost, not content rights payments. 

Music streamers, on the other hand, pay 70 percent of revenue to copyright holders, at the margin. Volume helps, but only so much. 

source: Joel Goveia 

Platforms such as Spotify pay out 70 percent of revenue to rights holders (roughly 55 percent to 60 percent to labels/masters and 10 percent to 15 percent to publishers). So distributor costs are variable with scale. 

More streams mean higher payouts.

Video streamers pay flat fees for licensing content, so digital scale economies work. 

For a video streamer, there is no per-view royalty. Netflix’s costs, for example,  are largely fixed upfront (production or licensing deals), so additional views do not increase payments to rights holders.

Video streaming licensing also means differentiation is possible. Virtually all music streamers have access to the same content.

Video licensing is restricted: content can be supplied uniquely on a single platform. Also, some video streamers (such as Netflix) can create original content and own it. 

Aspect	Similarities	Music Streaming – Copyright Holders	Music Streaming – Distributors (e.g., Spotify)	Video Streaming – Copyright Holders	Video Streaming – Distributors (e.g., Netflix)
Primary Revenue to Holders	Subscription-driven platform access	Revenue share (~55-60% masters, 10-15% publishing from platform revenue)	Pays ~70% of revenue to holders (variable)	Fixed lump-sum licensing fees or IP ownership	Fixed licensing or owns originals (no per-view royalties)
Marginal Cost Structure	Near-zero for delivery (bandwidth/storage)	Proportional to streams (recurring royalties)	Variable costs rise with usage/revenue	Upfront fixed fee (unlimited plays)	Fixed after acquisition; bandwidth only
Content Ownership	Holders license access rather than sell copies	Retain rights; perpetual licensing	No ownership; pure licensing	Retain/sell licensing rights; strong IP control	Increasingly owns originals for future value
Consumption Incentive	Scales with catalog size and user engagement	`` ++	Wants high engagement but pays more for it	Favors binge/complete viewing	Benefits from high consumption of sunk-cost content
Risk & Profit Model	High fixed costs; economies of scale at large user base	Stable but diluted per-stream payouts	Thin margins; freemium helps acquisition	Front-loaded, predictable fees	Higher margins possible; originals drive differentiation
Business Model Type	Platform economy with low marginal costs	Per-stream / pro-rata royalties	Revenue-share licensing	Flat-fee licensing or ownership	Fixed-cost licensing + owned content

The bottom line is that if an entity has a choice, it will want to be in the video streaming business rather than music streaming. 

The caveat is that some entities use music and/or video streaming as a “loss leader” to add value for some other product feature that actually drives the direct profits and profit margins. Amazon Prime video and music provide a good example.

Sometimes "New Technology" is Not Better than the Existing Alternatives

The “heads up” display on a car’s windshield is quite the novelty. Whether it is useful is not so much the issue. Whether it is usable is the issue. 

If you are wearing polarized sunglasses while driving, the display is blocked. So now you have to make a technology decision: wear only non-polarized sunglasses; have two types of sunglasses or simply realize you aren’t going to be using the heads-up display. 

Interface	Strength	Weakness
Smartphone	Full control, rich apps	Requires attention + hands
Smart glasses	Hands-free, contextual AR	Limited display, battery
HUD (cars, aviation, AR overlays)	Immediate situational awareness	Narrow information bandwidth
Audio (voice assistants, earbuds)	Zero visual load, ambient	Low precision, ambiguity

Sometimes the cool and novel technology might not be transparent or easy to use, though designed that way. 

HUDs face calibration issues, glare in sunlight, and the tendency to clutter your field of vision rather than simplify it.

Gesture controls (BMW, Volvo) require precise, unnatural hand movements; accidental triggers are common; much slower than just pressing a button.

Voice assistants in cars often struggle with accents, road noise, and complex commands and might require you to memorize specific phrasing. 

Smartwatch notifications are easy but replying on a tiny screen, managing apps or navigating menus are clunky.

Smart glasses (Google Glass, Ray-Ban Meta) might be socially awkward to use in public. It can be hard to view the display in bright light and voice commands might feel unnatural. 

Interacting with a fitness tracker with a small display can be challenging. 

Touch-panel light switches that replace a simple tactile switch with a glass panel that you have to look at and press just right can be more work than the original interface.

Smart locks with keypads or apps can mean fumbling with your phone in the dark or cold and is arguably worse than using a key. 

Voice-controlled TVs can be convenient, but it might still be easier to just pick up the remote. 

And some audiovisual enhancements just never seem to catch on, such as 3D TVs or spatial audio headphones with head tracking. The effect is impressive for some  minutes, but then the constant recalibration and lag can become annoying. 

The point is, there typically are multiple ways to satisfy some need, and not all the ways are equally compelling, all the time. 

Use Case / Problem	Smartphone (handheld apps)	Smart Glasses (AR / wearable)	HUD (fixed display, e.g., car windshield)	Audio Interface (voice / earbuds)	Key Tradeoff
Navigation / directions	Map app, turn-by-turn directions	Directions overlaid in field of view	Turn arrows projected on windshield	Spoken directions only	Visual vs. distraction vs. convenience
Messaging / communication	Typing, reading full threads	Glanceable notifications, voice reply	Minimal alerts (e.g., incoming call)	Dictation + read-aloud messages	Precision vs. speed
Translation / language help	App-based translation (camera or text)	Real-time subtitles in view	Rare / limited	Real-time spoken translation	Latency vs. immersion (Alibaba)
Photography / recording	Manual capture via camera	First-person, hands-free capture	Not typical	Voice-triggered capture (via phone)	Control vs. immediacy
Work instructions (field work, repair)	Manuals, videos, checklists	Step-by-step AR overlays on real objects	Industrial HUDs for critical info	Audio instructions	Hands-free advantage is decisive (MDPI)
Fitness / health tracking	Apps + wearable sync	Real-time biometrics in view	Heads-up metrics (cycling, driving)	Spoken coaching feedback	Attention vs. safety
Search / information lookup	Browser or app search	Contextual info about what you see	Limited contextual prompts	Voice queries + answers	Speed vs. depth
Entertainment / media	Video, games, social media	Private AR screens / lightweight viewing	Minimal (music info, etc.)	Music, podcasts	Immersion vs. mobility
Notifications / alerts	Full notification center	Peripheral, glanceable alerts	Critical alerts only	Spoken alerts	Cognitive load management
Meetings / collaboration	Video calls, chat apps	AR annotations, shared view	Limited	Voice-only participation	Richness vs. friction
Accessibility (vision/hearing)	Accessibility apps	Real-time captions, object recognition	Limited	Screen readers, voice control	Continuous assistance advantage (MDPI)
Shopping / product info	Apps, scanning barcodes	Overlay product info in-store	Rare	Voice search	Contextual relevance
Driving / safety	Phone navigation (unsafe to handle)	Experimental (not widely used)	Core use case (speed, nav, alerts)	Voice navigation	Safety-critical context favors HUD
Daily task management	Calendars, reminders	Subtle prompts in field of view	Minimal	Voice reminders	Interrupt vs. ambient nudges

What changes is how and when you access those capabilities using hands, eyes, voice, or passive display. 

Smartphones arguably remain the “general-purpose hub,” while smart glasses, heads-up displays (HUDs), and audio interfaces specialize in reducing friction in specific contexts (hands-free work, real-time awareness, ambient computing).

The point is that the usefulness of any approach is rarely limited to one mode, one device or physical solution, and some “advanced” solutions do not always provide a better user experience.