Spotify's dangerous game

8 points by dgurney 12 years ago | 6 comments

DigitalSea 12 years ago |

I think it's unfair to blame Spotify in this situation. The labels set the asking price and Spotify either chooses to pay it or have no music to legally stream. As a service Spotify is a fantastic service, since it debuted here in Australia I've barely downloaded music in part because I pay $12 per month for on-demand music and don't need to download.

If Spotify were benefiting from the extremely low royalty payments, then maybe I'd side with the argument Spotify is taking artists for a ride, but the matter of the fact is Spotify are not profitable whatsoever. This amazing service is operating at a loss and has been for years now. If artists want better payouts maybe they should lobby their labels to do so.

A service like Spotify costs a lot of money in terms of bandwidth and infrastructure to operate. Storing and streaming music isn't a trivial thing, the costs of operating the service are a massive percentage of Spotify's monthly expenditure fees. It's not costing the artist money to put their music on Spotify, it's costing Spotify money to put an artists music on their platform and allow others to listen to it. The royalty amount might be low, but make no mistake, the artist is still getting a better deal than Spotify currently is.

The only people currently winning out in the online music space are Apple and music labels. Services like Spotify and artists themselves are being shafted and have more in common than they think.

ewzimm 12 years ago | |

I think the problem is that people are looking at Spotify as a replacement for album sales, when realistically Spotify is a replacement for listening to music from torrents, YouTube, or Grooveshark. Album sales are a lost cause. If Spotify disappeared, the situation for musicians would not change. Right now, Spotify makes a convenient scapegoat because they are popular and don't pay much, but they are not the cause of the problem. I'm sure many people at Spotify want to help musicians get exposure.

To put this in perspective, $20 is a ridiculous amount of money compared to traditional record contracts, but after administrative and promotional fees were extracted, the classical record contract could often cost musicians money. The recording industry has been preying on musicians for years, but music fanss have been more than willing to pay their favorite bands for merch or buy expensive concert tickets for a live event. Ticket scalping is booming.

There are legitimate revenue streams available to musicians, but pay-per-listen is not going to be profitable.

dgurney 12 years ago | | |

It's not true that album sales are a lost cause. Look at Bandcamp -- musicians made $2.5 million via Bandcamp over the last 30 days. What's changing is the model. No longer is it "pay a set fee to listen." Now it's "support the musician directly."

dgurney 12 years ago | |

I agree that the problem is primarily with the record labels. If they didn't exist, Spotify would be able to pay out to musicians on a level playing field. That said, given how closely intertwined Spotify and the labels are, musicians can't depend on either party to look out for their interests.

ewzimm 12 years ago | | |

Yes the record labels need to go. They have been preying on musicians for a long time and will continue to do so. I'm sure that Sootify could pay more without them, but that wouldn't allow their model to completely support musicians. If every music listener paid a total of $9.99 per month or agreed to listen to ads, when you take out administrative, equipment, and bandwidth costs, there's just not enough money to split up. It makes a good promotional tool but needs to link to other ways to support musicians. They need to make it easy to buy concert tickets, mercy, Flattr, or other forms of support without being intrusive.