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[EDIT – this post is a couple of years out of date – for a more recent appraisal of where I stand with Spotify, see Why I’ve Taken My Music Off Spotify]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

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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?

  • More on Spotify « Some Kind of Genius

    […] an extension on the Spotify debate that I posted about previously, Interesting angle from Steve Lawson on Spotify, to summarize he sees it that regardless of wheter he makes money or not from spotify, […]

  • steve

    Hi Jez,

    that’s pretty much the point I was getting at – Spotify are pretty much doing nothing for independent music, intentionally – they are in bed with the scum of the music world, have given them a massive cut in order to get them to acquiesce to the scheme in the first place.

    there’s loads that Spotify could do to aide the discovery of new music. Instead, they seem to be just trying to court the major labels. Perhaps that’s where the money to keep them going lives. Perhaps that’s the only way to get the ad-funding. Or perhaps they’re just greedy scumbags who weren’t remotely happy with making a sustainable, art-centred platform but instead wanted their own stab at being rapacious Big Media oligarchs.

    Who knows? Right now, none of us. The complaints are all valid – especially Helienne’s in the Guardian (will write more about her soon – she’s a really important voice in all this, but not for obvious reasons) – what IS measurable is how useful it is to be listened to, how important that is for artists and their audience, how vital sharing at zero cos to the artist is as a mechanism for grass roots promotion. And that is something that we can do with Spotify really well. :)

  • steve

    Hi Fil,

    nice to see you here.

    A few issues with Wally’s suggestion.

    1, who gets paid, and how? ‘Collection agencies’ are only as good as the data they are supplied with and their ability to process it. Tracking every file that travels on the internet would be a MASSIVE intrusion into people’s privacy – are we going to scan every email in case it contains a book chapter?

    It’s tough enough to get paid when one’s music is paid on a radio station that are already paying royalties, within the country you live, to a non-profit collection agency like the PRS. Multiply that across national and international borders, to a ‘product’ that has no definite way of identifying it… proper trouble…

    2. How do artists opt out? what if I WANT to give my work away for free, don’t want the ISP or the end user to be charged? I’m forced into a commercial agreement with a collection agency, who are collecting on my behalf… Who would this worldwide agency be? Google? Yahoo? I really don’t want to fund them collecting on my behalf, and I can’t see any way of setting up a ‘toll-booth’ through which files move where those that are exempt get let through. It’s technologically impossible.

    3. In order to advance the cause of digital inclusion worldwide, internet usage costs need to come down, not go up – anything that makes the web more expensive through license-fees levied on ISPs will disproportionately affect the poor. And I mean the REAL poor – those living in situations close to actual poverty, and dealing with social and digital exclusion – not the pretend poor starving musicians…

    Wally’s psuedo-mayoral language (it reads a lot like the mayor of Santa Cruz’s proclamation that I have on my wall from when a gig I was playing at was declared ‘International Live Looping Day’ :) ) doesn’t change the fact that he’s addressing a very specific and relatively small part of the world of art – that of music makers who have enough representation to actually collect on these payments, and a big enough (distorted?) sense of the value of their back catalogue that they feel making the web an ever more monitored, tracked, snooped and expensive place to be is a small price to pay for them getting the royalities they deserve. While up and coming artists who will fall under the radar of the agencies, and be struggling to pay the bandwidth costs to even upload their own music in the first place, will miss out on an audience because the web environment will become hostile to discovery…

    At least, that’s how it looks to me :)

  • steve

    fortunately my ISP will see that you’re quoting me, and bill you accordingly 😉

    See you in Wales! x

  • FIL JONES

    Well I don’t speak for Wally, but I think he has a valid point, and that is that ISP’s make a hugh amount of money selling and transmitting data that they do not own.

    FIL

  • steve

    got any numbers for that Colie? define ‘very few’. How few is still ‘enough’.

    I think what’s great is that this doesn’t have to be about ‘independent musicians’ but is about whether I want to support Miriam Jones making music, or Susan Enan, Michael Manring, Jonatha Brooke, Ryan Scott, Yvonne Lyon… they aren’t ‘independent musicians’ when I’m thinking about paying for their music, they’re people who make music, whose stories I know (to varying degrees) and who’s music I’m grateful for.

    The relationship between me and any member of my audience is bi-lateral. They aren’t some amorphous blob, and I’m not ‘independent music’. They care about it to varying degrees and for a panoply of reasons.

    This weekend I was told by a friend that she played my music in the delivery room while giving birth. Her and her hubby now want to book a house concert. Most of their friends haven’t heard of me, so having already bought my CDs, they are still ‘more’ grateful for the music that the cost of the CDs allowed them to express, so they are willing to risk inviting their friends to a gig in their house, one they’ll have to explain time and time again, out of their sense of the ‘value’ in what I do. And as a result, I’ll make a few hundred quid. Sounds like a win to me. I don’t need that many gigs like that a year to make my music career sustainable, profitable and entirely independent from the machine of the music industry. :)

  • rubken

    The point that you are not independent music is well made Steve. Does the same way of thinking work for the concept “music industry”?

    I’m not sure that any involvement with rights organisations has to be feeding yourself to the machine. Now that a significant portion of sales and plays happen via the intertubes it should be possible to track them.

    Plays on services like Spotify, Last.fm and so forth could be attributed and a slice, or at least a few crumbs, or the pie shared. The PRS could do this if it would lift it’s head up and embrace the changes digital distribution have wrought.

    As you say, it doesn’t take much to make a small business or individual’s music career sustainable.