'Donda 2' Loses Potential $8.6 Million: Kanye's Expensive 'Liberation' From Streaming

Kanye West's Donda 2 has created headlines around the world for its unique distribution method as Ye's fight against streaming services intensifies. Available only by pre-ordering a $200 Stem player, the unpredictable rapper is calling the album's distribution a win for artists who should be able to "set their own price" for their art. On the weekend, West claimed that the album had made $2.2 million in its first 24 hours and that 'nobody can pay me to be disrespected'. 

"Donda 2 will only be available on my own platform, the Stem Player. Not on Apple, Amazon, Spotify or YouTube," he said. "Today artists get 12% of the money the industry makes. It's time to free music from this oppressive system. It's time to take control and build our own."

This is not the first time an artist has jumped into hardware to sell their music. No stranger to streaming hate, Neil Young created the Pono player in 2012, launching it as the first digital music player to support lossless audio and claiming it as a liberation for artists. The product was finally launched onto the market via crowdfunding in 2014 but struggled with capitalisation, at one point seeking the financial backing of one-time Ye fan Donald Trump. The Pono player and digital store were quietly taken out the back and shot in 2016 when public passion for lossless audio didn't match Neil Young's. 

Kanye also jumped into the digital music space as a key shareholder in Tidal along with many other big-name artists. Despite the star power and reach of the artists, the streaming platform struggled for many years before being acquired by Square, ironically beginning its path to recovery post its artist-led ownership. 

In a pivot away from his 'if you can't beat 'em, join 'em' jump into today, his latest play is closer to a direct channelling of Young's Pono, creating a 'unique' hardware option that allows users to break down the elements of the music, in effect re-mixing songs on the go. The player allows users to isolate or alter vocals, drums and bass using touch-sensitive controls. Time will tell whether it's what the general public want, but in the meantime, it is a huge gamble for West. The album's debut at a live event at Miami's LoanDepot Park did not sell out. Far from the headlines of making more money and liberating artists from the clutches of streaming, we break down the numbers to see just what kind of financial risk Kanye is taking. If you're reading this Ye, you can thank us later. 

THE INCOME

Kanye claims that the player has made $2.2 million in its first 24 hours. At $200 per device, that suggests that around 11,000 devices were sold. According to Digital Music News, Kano Computing, the hardware startup partnering with West, claims there were 67,000 players available on launch with around 3,000 manufactured daily to keep up with demand. Without having access to the books it is hard to know, but the initial numbers suggest the Gold Digger rapper might struggle to shift his initial order. To calculate the income though, we need to consider the cost of manufacture for the player. With margins on hardware at anywhere from 10-100%, we'll give Kanye the benefit of the doubt and assume a 50% margin, which is quite generous, particularly for a startup. 

Assuming a 50% margin and assuming West DOES sell all 67,000 initial order players, then the income from the album is $6.7 million which would then be shared with the startup (of which West is not the only shareholder). We won't guess at what that arrangement looks like, suffice to say it is probably not more generous than what West could extract from a record company. But we digress. 

WHAT HE'S GIVEN UP

The live event to premiere the album was due to be streamed on Apple Music for a sponsorship fee of $2 million+ which Apple has now withdrawn, given the album will no longer be available on Apple Music. With the album not being available for streaming, Ye will also likely miss the Billboard charts, with streaming being a major contributor to the lists. Ye has hit #1 with every album he has released since his second record (his debut The College Dropout reached #2), so while charts don't mean as much in 2022, it's an unbroken record that will likely no longer stand. 

To look at income he is giving up from streaming, we'll do some back-of-the-envelope maths. Every platform is different, but let's take an average of $0.004 per stream and use the global market share figure of 31%. 

Donda (the first volume) at the time of writing this article was sitting at 1,517,004,958 streams on Spotify. Using the 31% method, we will add 69% for other platforms, giving us a total number of 3,332,859,892. This indicates via our assumptions a revenue of around $13.33 million if he were to have the same streaming success for Donda 2. 

Add to this the $2 million+ withdrawn by Apple Music and the amount hypothetically lost comes to $15.33 million. 

Assume that all 67,000 of the initial Stem players sell (at a generous 50% hardware margin, and a sales projection that is itself doubtful based on Kanye's quoted first-day sales), then the income from the album and player combined will be $6.7 million, creating a deficit of $8.6 million. 

This is of course open to many variables -- what if West can't sell 67,000 players? What if Donda 2 just isn't as good as Donda 1 and wouldn't have streamed as many anyway? What other marketing dividends like the Apple sponsorship are also going begging? What long-term impact does the album's unavailability have on his fan base and piracy? 

But the main variable we'll be watching is an old trick from the Life Of Pablo playbook, when West announced with great fanfare that the album would be exclusive to Tidal. Two months later, fans on Spotify, Apple Music and the rest were able to hear the 'exclusive' album as Ye discovered that even King Kanye can't make the Tidal go out on streaming platforms the public want to use. 

History and the numbers tell us that Donda 2 shouldn't be exclusive to a $200 electronic device for long.