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How DO Musicians Earn Online?

April 14th, 2010 · 23 Comments

Social web has been buzzing these last couple of days with a visualisation by Information Is Beautiful, entitled “How Much Do Musicians Earn Online?” Click here to see it.

In case you’re not able to see the list, it’s a visual representation of how many instances of a range of online ‘music payment events’ you’d require to make a living wage solely from that service.

Not surprisingly, streaming services come out of it badly, especially when compared to sales of CDs.

However, the problem with presenting data in this way is that implicit within the list itself is the assumption of linearity: the list itself says “these are distinct events between which there is at least conceptual parity when comparing how many instances of that payment event are required to meet a particular sum.” [Read more →]

Tags: New Music Strategies · tips for musicians

Spotify Is Broken: The Lie Of ‘Feels Like Free’

April 12th, 2010 · 49 Comments

One of the big questions hanging over Spotify for me has been ‘do premium plays pay more than Spotify Lite plays?’ – I.E., do I get paid more if someone with a premium account plays my tunes vs. someone using the ad-funded version.

It stands to reason that the person with the premium account is paying more to listen, so surely you’d imagine that’d be reflected in the royalties?

At SXSW this year, the CEO of Spotify was giving a talk, I asked the question about royalty rates via Hugh Garry and apparently they are distributed evenly.

This is, as far as I can see, Spotify’s MASSIVE mistake. A deal-breaking, game-not-changing, screw-up of gargantuan proportions.

Here’s why.

The people best placed to promote Spotify are artists. We can link to it from our sites, we can provide links to it when we release new music, we can blog about how great it is and share music by our peers via the links.

If we push it, it becomes the place to find our music.

Spotify needs premium accounts for it to work. At the moment, their strategy for getting people signed up is to annoy the shit out of you with adverts until you capitulate. So you get irrelevant adverts that provide no value at all to the user, and therefor no value to the advertiser. Ergo, the amount paid per advert is likely to go down not up, killing the ad funded model. If I was an advertiser there’s no way I’d bother with Spotify. ‘Can you pay to produce an advert that we’re going to use to annoy people into paying not to hear it?’ no thanks.

So what would work? Spotify’s (and the other streaming services) best chance of success is if artists see it as a viable alternative to selling individual albums and tracks digitally. If it becomes that, the amount of traffic will go up and all that listening will be happening in a discovery environment, so more music will be heard by more people.

They could also make way more if the ads were something other than anti-value annoyances to be got rid of. There are loads of ways of making ads work in this setting – referrals, targeting, favouriting, user-profiles, profit-share, in-browser special offers… all kinds of stuff that would make the ad-side of the site self-supporting. If it isn’t currently viable, then the solution is to up the level of the ads even further til it is viable. The listener needs to FEEL what their listening is actually costing.

Why? Well, contrary to what Gerd Leonard has been telling us for years, ‘Feels Like Free’ is not the answer. It never has been and never will be. Free is, in fact, better than ‘feels like free’. I’d rather make my music free to download, no strings, and be rewarded in gratitude than have some weird filtered, taxation-based payment mechanism for it where people are left thinking music has neither cost nor value because there’s no tiered pricing, no opportunity to ‘pay what you like’, no thought about the value over and above the experience that access is via a portal and detached from the artist…

Listening to ads is a form of payment. We all know that. If the ads don’t cover it, then it’s a lie to keep that system going by subsidising those listens from people who are actually paying – people who are quite explicitly paying a subscription rate that puts a distinct value on their listening time. To not divide those up is to say that the value of both listens is the same. It isn’t.

  • Spotify Lite is a limited but hugely useful discovery platform. If you have the kind of life where Spotify Lite is ‘enough’, then you weren’t about to pay £10 an album for CDs anyway. You’re probably the kind of person who listens to the radio and buys the occasional compilation. Certainly not the kind of person for whom £120 a year for Spotify premium is workable.
  • Spotify Premium is an alternative to buying music. It’s also, when you look at how long people spend listening to music, a great model for paying a sensible amount per listen. If – and only if – it’s not being used to prop up a broken ad-funded ‘feels like free’ bullshit model.

If you want me to pay £10 a month for music, let me allocate where that £10 goes by choosing what I listen to. Make that £10 count, make it mean something. Cos otherwise, I’m going to stick with eMusic, where I know that my monthly sub goes to the people whose music I’m downloading. I know they get a set amount per track, that they wouldn’t get if I wasn’t paying for it. Real end to end value.

‘Til then, there’s no way on earth I’ll be paying for Spotify premium, and I won’t be encouraging anyone else to either.

If this feels like a deal-breaker to you, and you already have a premium account, you might want to consider cancelling it, and emailing Spotify to tell them why. Or better yet, blogging about why. Let’s have this discussion in public where possible.

[and before the inevitable ‘hey, I thought you loved Spotify!’ comments happen – I still think Spotify-lite is an awesome discovery tool. Spotify premium is, as yet, way too small a slice of anything to make me rethink my position on that. I don’t need to make money from Spotify-lite for its value to be realised. But the payment model that’s there doesn’t work, so the growth curve that Spotify needs to remain viable will be a seriously uphill struggle.]

Tags: New Music Strategies

Warner’s Mistakes

February 10th, 2010 · 10 Comments

So apparently Warner have decided that streaming services aren’t part of the future of music online after all.

From the BBC website article:

” Warner chief executive Edgar Bronfman Jr said: “Free streaming services are clearly not net positive for the industry and as far as Warner Music is concerned will not be licensed.
“The ‘get all your music you want for free, and then maybe with a few bells and whistles we can move you to a premium price’ strategy is not the kind of approach to business that we will be supporting in the future.” “

Now, that’s not a lot to go on, so please bear that in mind as I write.

However, here are a few mistakes that seem apparent from Warner’s position as expressed in the article.

  • ‘Listen to all the music you want for free’ is not the same as ‘get all the music you want for free’ – streaming ≠ ownership, and portability is a chargeable commodity. Hence the reason I describe Spotify Lite as on-demand radio.
  • ‘Net positive for the industry’ is an utterly spurious metric. Why should any one way of accessing music be ‘net positive for the industry?’ especially one that is an awesome discovery platform that costs neither side much at all. Spotify is all about discovery. And people can only be fans and therefor financially invested in music they listen to. If getting them to listen is free, the world is a much better place than it was when advertising dollars ruled the discovery game.
  • Warner are talking about Warner, not as Carl Morris pointed out on Twitter, what is best for artists, genres or regions. If streaming services could be proved to be having a detrimental effect on a particular artist’s career, then pulling their music from the service would perhaps be a decision worth discussing. Blanket judgements for an entire media empire – without considering how many artists are themselves active supporters of streaming as a concept, and who are able to directly attribute an increase in new listeners to the ability of their fans to share links to free streams with their friends – are worse than useless. They’re reckless.
  • There’s no mention here of whether or not sales have dropped across the board out of line with any projections of how the curve would be without streaming services. If streaming is a discovery mechanism, then the revenue would naturally be found elsewhere, as we saw with the Lady GaGa story of small payouts from Spotify, but still being able to sell 20 MILLION paid downloads in the same time-period.

People paying a tenner for Spotify is no better or worse for the industry than them paying a tenner to eMusic to buy the things they’ve found using Spotify, or spending ten quid a month on CDs or other downloads. And lets not forget that statistically, those who spend £120 a year on music are a pretty small minority of music consumers. They always have been. A tenner a month is a lot for yer average listener to fork out to rent some streams (if you stop paying, all the content and stored playlists you’ve created on your mobile device is lost. Any downloads happening via the Spotify interface are happening at 79p a track, via 7digital (more big industry stupidity – make them cheaper, you eejits!)

When I listen to music, whether free or paid, I’m not thinking about ‘the industry’. I’m not supporting ‘the industry’ when I buy music, I’m giving it to artists in exchange for them being awesome. Awesomeness is something I’m willing to put a cash value on. As are lots of people.

Discovery is something that benefits the person being discovered at least as much as the one doing the discovery – that’s the foundational principle of advertising, and is why record labels pay for adverts. They’re even willing to illegally pay for airtime.

Here, Warner are being retrogressive, making blanket decisions based on ‘the industry’ not artists, have no idea what streaming services actually provide to their users, and don’t appear considered how awesome free discovery mechanisms are for everyone along the chain outside of their old industry metrics that placed cash (from both sides) in front of the discovery process.

Another Major Label FAIL.

Meanwhile, here’s some awesome music you can have for free, or pay for if you want to thank Ben Walker for his awesomeness:

Tags: New Music Strategies

If Spotify Is The New Radio, The Artists Are Winning

November 25th, 2009 · 25 Comments

[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 were a few articles kicking around yesterday touting a figure that ‘Lady Gaga earned $167 from Spotify for over a million plays’ – I think the story originated on TorrentFreak.

Perhaps not surprisingly the writers at TorrentFreak aren’t too au fait with the way that payment systems work for artists. The figure quoted is a publishing royalty – it’s from STIM (The Swedish Performing Rights Society). It doesn’t reflect payments due to the performer direct from Spotify (outlined in somewhat confusing detail in this Guardian article) which, according to the CEO of We7, are roughly ten times the PRS-collected royalty payment. It’s this figure that may or may not have been negotiated downwards by Spotify with the major labels – the labels have pretty much no say over the rates that the PRS set (other than through lobbying). [Read more →]

Tags: New Music Strategies · tips for musicians

Spotify – Are They The Bad Guys?

August 18th, 2009 · Comments Off on Spotify – Are They The Bad Guys?

[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?

Tags: Geek · New Music Strategies