Since its creation in October 2008, Swedish music streaming platform Spotify has at the last count, in 2010 over ten million users and one can only presume that this figure has ballooned substantially in the last few years. Last week it was announced Spotify had reached a rather healthy four million paying subscribers. Little wonder combining a easy user interface popularised by the likes of Itunes and combining it with limitless archive of streaming, playlists(I currently have ten down the left hand side of my Spotify menu screaming play me’) and charts: a feature originally pioneered by Last.fm. Spotify has become a go too platform for many music fans. Indeed I have it’s cute green icon open now and am currently delving gleefully into the back catalogue of one Tom Waits.
For a brief period upon its launch Spotify was free, but that was before the big labels got involved now it carries adverts in much the same way as a commercial station would, accept they’re for cheesy things like CAR-E-OKE as proffered by some stereotypical Welsh accented buffooon. Spotify’s ultimate goal is to get you to subscribe to it’s service and for just £9.99 you can exploit its limitless streaming potential. A friend of mine has got rid of all of his records, cds, vinyls the lot he now uses a Spotify subscription for all of his musical needs. Sure it’s a great space saving idea but I do wonder does he miss the crackle and warmth of vinyl and the delightful gatefold artwork and those linear notes? But it’s down to logic, why clog up your room with hundreds of bits of plastic when Spotify , but despite the illusion just because you have a Spotify subscription the truth is you own none of the tracks(unless you download them of course) thus if your laptop gave up tomorrow you would (gulp) own NO MUSIC! So whilst we accept that Spotify has given the user the keys to a whole vast library of music at your finger tips, and made Spotify a shed load of cash, what has it meant for the business?
But how does Spotify’s model work and is it sustainable in the long term(a question raised by the NME a few years back) plus independent labels and artists complain the royalties they receive from spotify are minimal at best. Plus that ‘Streams’ simply cut into digital sales and thus the royalties of both the artist and labels. Who is getting the fair end of this deal?
“Advertisers pay Spotify to play their adverts on the free service; subscribers pay Spotify a tenner or so a month to use it advert-free; Spotify pays record companies to stream their music; and the record companies pay their artists royalties.”
“The British Academy of Songwriters, Composers and Authors has complained that Spotify’s payments to songwriters are “tiny”, their most striking point to emerge in 2010 was the (out of date?) claim that, in a five-month period shortly after the service launched, Spotify users enjoyed more than 1m plays of Lady Gaga’s song Poker Face – which allegedly earned Ga Ga the princely sum of $167. A spokesman for the body that collects songwriters’ royalties has boasted that it sets a minimum rate of 0.085p per stream (or, to put it another way, £0.00085). So with a quick bit of adding up a song played 1m times would net its author £850.” http://www.guardian.co.uk/music/2010/apr/18/sam-leith-downloading-money-spotify
The subject of royalties or lack of them gained from Spotify plays has been a hot talking point in the last few years. Brooklyn’s independent label Projekt Records had a spat with Spotify, over its practises “In the world I want to live in, I envision artists fairly compensated for their creations, because we (the audience) believe in the value of what artists create. The artist’s passion, dedication and expression is respected and rewarded. Spotify is NOT a service that does this. Projekt will not be part of this unprincipled concept.” (Quote from: http://en.wikipedia.org/wiki/Spotify)
It’s a subject raised by David Lowry’s letter to Emily White upon her assertion upon NPR that she had 11,000 songs in her music library, she’s only paid for 15 CDs in her life. ‘http://www.godisinthetvzine.co.uk/2012/07/05/going-skint-for-a-living-everything-is-free-now-more-reflections-on-david-lowrys-letter/ in which he suggestes that instead of ripping all of their music to ipods or itunes Emily White and the rest of her generation of ‘entitlement’ should pay for the unlimited, on-demand music service MOG because it’s “legitimate”.
Earlier on he takes on Spotify, because “the internet is full of stories from artists detailing just how little they receive from Spotify.”
Whilst Lowry’s piece makes some wonderful points evidence from a report that details just how much Spotify pays to labels disputes this assertion to an extent and is backed up by the opinions of Charles Caldas on this blog (Source of quotes: http://evolver.fm/2012/06/21/david-lowery-might-be-right-about-some-things-but-hes-wrong-about-streaming-money-and-artists/), the CEO of Merlin, which represents over 10,000 independent labels and helps them negotiate good deals from these services.
Caldas claims that Merlin’s thousands of independent labels, and by extension their artists, are pretty happy with what Spotify is paying them — and happier still about big increases in those payouts. Those increases should be good news for the record industry, because Emily White says she wants ”one massive Spotify-like catalog of music that will sync to my phone and various home entertainment devices.” Eventually, she would consider paying for it at some point down the line.
Spotify’s payouts to Merlin’s 10,000-plus indie labels rose 250 percent from the year ending March 2011 to the year ending March 2012. More importantly, the revenue per user (RPU) “has grown significantly alongside the overall revenue growth and is currently the highest it has been since the launch of the service,” says Caldas “The thing about ‘Spotify doesn’t pay artists enough’ — Spotify doesn’t pay artists,” clarified Caldas. “They pay labels.” “That Lady Gaga thing was about publishing, not recording rights, and it was a single territory,” said Caldas. “It was refuted at some point, but that story’s had way too much air, and it’s just ridiculous.”
“Chances are, you [the artist] are getting reporting quarterly, or six-monthly, on sales that happened six months ago, so what you’re seeing in your royalty statements could be a year old,” said Caldas. “You’re not seeing the service the way it looks today.”
Of course these figures could be inaccurate anyway many American artists have yet to feel any benefit yet and it’s not just because of those ‘evil’ big labels and Spotify divvying up the majority of the share between themselves, just a year ago Spotify hadn’t even launched over the U.S. — the world’s biggest music market.
Sony Music UK chief Nick Gatfield said: “It’s a hot debate for a number of artists and I think it’s largely down to ignorance – and I have to say, ignorance from some of the rights holders and major record companies as well. We’re all familiar with headlines about Lady Gaga getting streamed x million times and getting a cheque for £3.60, but the reality is that, when you look at the model, the life-span of a piece of music tends to be much more on Spotify – you can monetise it over a longer period of time and ultimately that will benefit us”.
I remember when you used to listen to Steve Lamacq on the Evening Session for the latest world premier of a ‘new track’. There was the giddy anticipation as the new song from Idlewild or Hefner kicked into gear and the strange delight at realising that you weren’t sure about it. Now tracks get premiered via ‘streams’ on websites like Pitchfork or youtube and Spotify and Itunes have been at the head of ‘premiering‘ changing the way people listen to new records for the first time. In an era where torrents were often leaking way before release this is probably a wise move, raising awareness of a record and hooking the listener in before they even think about searching for some dodgy (sometimes fake?) leak or illegal torrent site.
For major label artists like Coldplay it has seen them block streaming of their last album ‘Mylo Xyloto’ until it’s release for fear that it would affect their sales. But apart from hard numbers, it also means that the anticaption of heading down to the record store on the day of release has gone for many, and again shifted our habits as consumers, which has both benefits and draw backs for everyone, shifting the way we view music and continuing the trend towards non physical platforms of consumption.
Some labels also dispute the claims from artists that Spotify is necessarily a ‘Bad thing’ for their bottom line in the long run, arguing that rather like mp3 blogs, Spotify isn’t just about the bottom line it can be about creating awareness for artists, records, and back catalogues and then tapping into it via those hungry, veracious Spotify users. Martin Mills has said that some Beggars Group artists are now receiving significantly higher revenues from streaming services than traditional radio, reports Music Week.
Speaking at UKTI’s Global Business Summit On Creative Content, where Spotify’s Ken Parks also revealed that the company now has four million paying subscribers, Beggars chief Mills said: “I’m finding that some of our artists, particularly the more catalogue artists, are opening their royalty statements and earning more [from streaming] than from any other source on some individual tracks. [For Beggars] it pays many, many more times than radio play. We’re big supporters”. (http://www.thecmuwebsite.com/article/streaming-pays-better-than-radio-says-beggars-martin-mills/)
Whatever you stand on it Spotify has certainly added to the uncertainty about the future of the music industry and thrown more questions up in the air, yeah you can access all of this music and create playlists to share with your friends on facebook but what about the artist?
There are conflicting reports but there is one thing that seems certain if you don’t have anyone fighting your corner and unlike Last.fm that orginally allowed a platform for unsigned and small label artists and seemed to work at a grass roots level allowing users to stream many tracks, Last.fm lost its way when the labels cut down on the amount of full tracks it allowed. But unless you’re a major player or on that handy ‘new release’ wagon wheel the chances are that your record may just get ignored on Spotify anyway? So what’s the point for you? Also with the sheer dizzing amount of music on the platform does it dilute the quality? Spotify has changed the goal posts for everyone and as the question of its sustainability moves into the distance the question still hangs in the air ‘what is in it for the artist and label? Well maybe the shift to ‘awareness spreading’ may be a shaft of light for the independent artist who will be ‘found’ alongside your Lady Ga Gas, Kanye Wests and your Frank Oceans. All existing upon this easy to use platform is utilized by a generation for whom buying music from quaint outlets like shops, will be a strange hardship and for whom Itunes is considered a ‘waste of time and money’ when your Spotify subscription is still unlimited and insufficient to bring together a database large enough to satisfy the veraciously listening habits of the Spotify generation. Also the increase in catalogue sales is heartening for artists who may have felt their time had been and gone, it gives you a warm feeling to think of some cult musician from the 70s receiving a small cheque in the post.
Spotify’s growth may just be the start of the next evolution in terms of consumption of music online. As we have seen of Internet platforms in the past they can quickly be usurped, last year’s Myspace is today’s Facebook, Bandcamp, Twitter and Soundcloud so maybe soon a new platform with a fairer model may emerge for everyone?! Maybe that’s where crowd funding comes in but the question still remains if you don’t have the platform or fanbase (like say Radiohead) to harness your music and propel it toward a larger audience will these initiatives fall into obscurity too ? (direct fan interaction is the way forward for the DIY artist/label whilst utilizing bandcamp or other direct streaming platforms as a way of monetizing their music).
While we rush headlong into a celebration of increased access and availability of a whole universe of ‘new music’ has this process really improved the quality of our listening? Or simply led to a gluttonous thirst for the shuffling the new, with all the impacts upon the strength of music, the turnover of artists and the quality of albums, as the need for artists to ‘hit’ you between the ears within the first minute becomes more important than developing their craft over multiple albums.
Image courtesy of http://theoatmeal.com/comics/music_industry