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Spotify – Are They The Bad Guys?

August 18th, 2009 | No Comments | Categories: Geek · New Music Strategies |

[EDIT – this post is a couple of years out of date – for a more recent appraisal of where I stand with Spotify, see Why I’ve Taken My Music Off Spotify]

There’s been loads of discussion of late about what Spotify are up to – in connection with both their extraordinary growth, and the prospect of an iPhone app in the near future.

Much has been made of the fact that, as the calculations stand, no artists are going to make any sensible money out of it at all. They’ve done an insane deal with the major record labels, giving them an 11% share in the platform, as an incentive to sign up their catalogues. Clearly no-one here is really thinking about the artists on those labels making any money…

So does this mean that Spotify are bastards? (we already know the major record labels are all bastards – that doesn’t even need discussing 😉 ) – no, it means that they are a business – they had a plan for a service, no apparent pre-arranged funding model beyond trying to make it work – ad-funded music has been touted for a long time, no-one else had yet come up with either

  • a deal that was appealing enough to the companies or
  • a UI that was pleasant enough for users.

Spotify solved both of those. So what of the not getting paid thing.

Here’s the deal – the internet is not divided into clear-cut heroes and villains. Yes it would be great if there were app-developing caped crusaders coding til their fingers bleed to make the web a more profitable place for indie artists. And it would be great if we could all agree that Sony/News Corp/RIAA etc. were such monoliths of evil intention that everyone but the kind of acts that were happy to play Sun City in Apartheid-era South Africa would refuse to have anything to do with them.

But it’s not like that, and we’re pragamatists. Before we start making money, we need an audience. And to find an audience we need to get heard. And to be heard, our music needs to be out there where people are listening to it. So right now, we have the choice to make it available on Spotify/Myspace/Reverb Nation/iLike/Facebook etc for no meaningful financial compensation (ReverbNation currently owe me $22 as my part of their revenue sharing scheme! Yay!), or we stick with the old school route and

  • co-ordinate a combined radio and press campaign,
  • getting pluggers,
  • designers,
  • ad agents,
  • distributors
  • oh go on, throw in video directors as well

…and we’re back to being a hundred grand in debt before the records out.

That Spotify isn’t paying us is a pain in the arse. Yes, the guy that started it is probably going to get rich. But right now, I’m not losing anything through it. The people listening to me on Spotify are almost all doing so cos I sent them the link. They are people I’d previously sent last.fm or Myspace links to but Spotify is easier, it’s familiar, it’s where they are listening right now. And my music needs to be where their ears are.

So I’m glad it’s not costing me anything. When something better comes along, I’ll happily jump ship. Til then, I’ll keep hassling CDBaby to get my other 3 solo albums onto there,  joining Not Dancing For Chicken and the Calamateur Vs Steve Lawson album which are already there.

What is more interesting is what mechanisms are going to be developed for turning Spotify into a music discovery platform. It does have an API, so other people can build things on top of it… What would you like to see possible with Spotify’s music library?

Similar Posts elsewhere in this blog:

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No Comments so far ↓

  • adam

    this is possibly about as realistic as getting paid but wouldn’t it be nice at least to get hold of data – who’s listening, where and when?

  • Chris

    True true.

    Rest assured, without you on Spotify + link on Twitter about this blog I’d never ever listened to your music.

  • Jez Collins

    Steve, good post but I think missing the point of the original articles abit.
    No one seriously thinks that Spotify wasn’t devised as anything other than a revenue generating business. It did sell itself as a forward thinking, music loving company though and attracted like-minded people to it. However, jumping quickly into bed with the majors, offering a huge amount of the pie to them, in addition to the already numerous revenue making ventures the majors have their claws in, is just a bit deflating, again it is independent, boutique, labels and musicians who miss out while the rich get richer…

  • Dan Foley

    It’s probably more realistic to expect to earn a living out of creating a music distribution service such as Spotify than to survive as a professional musician – it’s certainly more likely to make you rich, and I doubt Spotify (or any other such service) is fuelled by altrusim. Musicians should look to leverage such platforms, but they will never become your own personal financial goldmine/nannny…!

  • FIL JONES

    Hi Steve,

    Regarding the whole internet and royalties thing.. I thought you may be interested in this, Wally Badarou is working with the French Goverment to try to bring about a change in the law to make ISP’s pay royalties on all digital art forms transmitted through their networks.
    http://www.wallybadarou.com/ZUS.F/Sub-Pages/Cre/DigitizableArt-12.F.html

    I think he may have something here… He gets my vote!!

  • Dubber

    Very nicely put. There’s more to it, of course – not the least of which is that it artificially supports the existing record businesses and the status quo of their power relationship with music production and distribution, despite a changed environment – but those are the key objections to the music-like-water internet tax.

    Will be quoting you extensively, and pretending it’s my own knowledge… 🙂

  • rubken

    The act of giving your music away for free only has meaning if it impacts on the listener. In the case of Spotify everyone listens to the ads whether the musicians you are listening to wish it or not. If the revenue is being collected it should be distributed fairly.
    I don’t think you need to track individual listeners to do this only overall play counts in the Spotify library. Black box (unattributable) royalties have been one of the major inequities of the music industry for a long time. It should be possible to use services like Spotify and even torrent sites as a means to reduce this. If the majors aren’t hoovering up these funds they might have to change their ways sooner rather than later.
    That said, the most important thing to me is being able to listen to more music from more different artists.

  • Colie Brice

    Bottom line? Very few people care about whether or not independent musicians can earn a living or not.. Sad but true..

    Everyone loves music and have varied tastes, but its damn near impossible to compete with free..

  • Jim

    First, Spotify needs to hurry up and get to the USA. I keep hearing all these great things but cannot get to check out spotify for the life of me.

    Second, really interesting perspective in that whether we get paid or not Indie artists still need to be where the people are. You are right, but how is this any different from when the majors teamed up with myspace while butting the indies out (only difference is myspace is more established)? I am fine with someone creating a community, allowing music to be discovered and getting paid for doing so. Spotify, from my view, deserves to get paid. It is just unfortunate that some get paid, some don’t. I’d rather no one get paid.

    My solution is that since the labels own stock in spotify, the artists on those labels should own stock in the majors. Won’t really happen, but I think it would work.

    And also, I disagree that similar sites before this failed because of poor setup. Some certainly did for that reason, but there are plenty of sites like Muxtape who were sued into shutting down because they wouldn’t play ball with the majors. Just because the majors, 7 years or so too late, finally decide to support newer online methods of distribution does not mean that Spotify has discovered the holy grail business model.

  • Colie Brice

    Well I hear that Steve, but it ain’t easy is it? It seems to me that those who are pulling it together aren’t trying to be all things to all people, the “riches” are indeed in niches – esoteric, well defined genres or styles that appeal to a specific sub set of dedicated music patrons. Sometimes its the media format itself – such as audiophiles and vinyl freaks.

    I used to be the VP of Marketing for Mobile Fidelity Sound Lab and it was the label iself that had a cult following. People admired our remastering and QC standards to such a degree that they were actually “subscribers” of the releases..

  • Daryl Shawn

    Haven’t gotten to check out Spotify yet – being in the US (mostly) and all – but I was really hoping the Rhapsody model is what would win out. I get paid one cent for each track streamed through Rhapsody, which isn’t bad and does add up. As a listener, I pay only $12 a month for unlimited streaming audio, which is an incredible deal.

    If they improved their interface, and more importantly, put together an iPhone app that worked well, it seems like the ideal way for everyone. I didn’t realize Spotify didn’t reimburse artists – really, there is no payment whatsoever?

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