If you haven’t yet heard of Spotify, it’s a music streaming service that’s been making headlines in music industry blogs over the last year. Initially launched in select European countries in 2008, Spotify hit the US in July, 2011 and ever since has sparked a debate over whether or not their business model is healthy for the future of the recorded music business.
I recently shared some of my thoughts with David Rose of KnowTheMusicBiz.com. We decided to take our discussion online and each write our opinions of the service. For my part, I’ve been exploring how a service like Spotify can help me as a musician, but can’t ignore the potential detriment this convenient, inexpensive music service can have on my career and the careers of future generations of musicians.
How Spotify Helps Me as a Musician
As a freelance guitarist, huge part of my job is to learn songs and be familiar with as much music as possible. Spotify is a useful tool to this effect. When I need to learn cover songs for a gig, I can usually find it on Spotify. When I’m booked for a recording session and the producer tells me he needs a guitar sound ala David Lindley circa his mid-’70s work with Warren Zevon, I can find those recordings and familiarize myself with that particular guitar tone. In many ways, Spotify makes my homework a little easier.
Spotify also helps me nurture my own artistic development. When I want to explore a particular song, artist, or genre, I try to be as thorough as possible.
For example, I’ve been working on my slide guitar chops. In my opinion, there are few better than Ry Cooder, so I’ve been listening to a lot of his music on Spotify. His version of Blind Willie Johnson’s “Dark Was The Night, Cold Was The Ground” especially piqued my interest, so I followed that tangent and explored more music by Blind Willie Jefferson as well as every version of “Dark Was The Night” I could find. There are 15 versions by different artists on Spotify. Needless to say, I now have an intimate understanding of that song.
This type of exploring is incredibly important for anybody that wants to be a professional musician. Whatever instrument or type of music you play, you’ll play better if you understand its roots. That’s how you develop your musicality and personal voice.
How Spotify Doesn’t Help Me as a Musician
While Spotify makes it easier to listen to more music, it’s little more than a convenience. All the musicians I mention above, the musicians worthy of study, achieved their level of artistry and skill without the internet. That point bears repeating:
You don’t need the internet to become a great musician.
I’m not trying to sound like a dusty old timer telling “back in the day” stories; I use the internet as much as anybody. It’s a great way to find tools and resources that can point you in the right direction, but that’s only where the work begins. When I really think about my development as a musician so far, the lessons that took the most effort to learn have paid the greatest dividends.
Music is a communal, social activity. To be a better musician, to really learn about the craft, we must engage with other musicians.
One of my fondest memories of freshman year of college was getting together to listen to music with new friends. After class we’d have one of those “Oh, have you ever really listened to McCoy Tyner’s playing on Coltrane Live at Birdland?” conversations and make plans to bring a few CDs over to somebody’s dorm room. If we were lucky, somebody would score us some beer. We’d sit there listening in silence, and then geek out about what we heard and try to figure it out together.
We all went to great lengths to acquire and share music that was important to us, that we felt should be important to our friends, and because we had to borrow each other’s CDs, that listening time was valuable.
When virtually all the music you want to hear is freely available, how do you really know what’s important to hear? What’s the motivation to use each other as a resource for sharing music and our ideas about music?
Spotify is a helpful tool for working musicians, but it’s not a replacement for music discovery in the truest sense.
How Spotify Affects My Bottom Line
My music, like that of many independent artists, is available on Spotify via my digital distribution agreement with CD Baby. Every time somebody listens to one of my tracks, I make a little less than half a penny. Sometimes much less.
Scrolling through the 1,000+ rows of Spotify payments in my account, I found one instance from July 2010, a year before Spotify launched in the US, where one of my original songs was streamed 305 times. Total earnings for 305 streams? Twelve cents ($0.12), or $0.0004 per stream. In more recent reports, some streams have paid up to an entire penny!
Sarcasm aside, I’m happy to see my tune garner so many listens on one report in a country where I’ve never performed. However, at some point it would be nice to leverage that exposure into some sort of income.
Overall, revenue from Spotify has been less than a drop in the bucket of my recorded music earnings, which are still an important part of my monthly income.
If you’d like to see a comparison of revenue from recorded music, check out this recent “Release Day Economics” post by Uniform Motion. Their numbers very similar to the margins I see for my own releases, and those of countless independent musicians.
Unleveling the Playing Field
Leveling the playing field. That phrase has been used time and time again to describe the shift in the music industry over the past decade, especially since independent musicians were able to distribute their music on iTunes in 2004. No longer did the little guys have to compete for physical shelf space or bulk pricing. If you could get people to buy your music online, retailers would pay you just as much as they’d pay U2 or Jay-Z.
With streaming services like Spotify, payouts with this many zeros to the right of the decimal point only add up when you deal in bulk. This is advantageous to record labels with large catalogs.
Major labels’ catalogs are so important to the success of Spotify that the labels required Spotify to make large up front payments, in excess of $100 million. Therefore if they never saw a dime from streams of their music, they still made money. If Spotify went out of business a week later, they still made money.
Additionally, the four major labels (Sony, UMG, Warner, EMI) and the independent label group Merlin have all been reported to have an 18% stake in the company, meaning they not only make money from the streaming of their music, but also from Spotify’s revenue. If Spotify stays in business and turns profits, that’s just more money for the major labels.
How much of that money actually makes it to the artists? While artist deals vary, the consensus so far is not much. Not that that’s a surprise, though. I can’t imagine Spotify’s ad revenue and $5 or $10 subscription fees generate that much to distribute. However, unlike iTunes where every artist knows that Apple keeps $0.29 per $0.99 download, we really have no idea how much Spotify keeps before paying the content owners.
Finally, major labels have been rumored to use their large catalogs as leverage to earn higher rates per stream. This moves the music industry in the opposite direction of the past decade, possibly to a much worse, unbalanced landscape.
For example, let’s say two songs are each streamed 100 times one day on Spotify. For all intents and purposes, they are of equal popularity. One of them is mine, and I make $1.00 for all those streams. The other song is by an artist on a major record label and they earn $2.00 for their streams. Where does the extra dollar come from? Is $0.50 skimmed off the top of my streams and given to labels with more favorable deals?
I can’t say for sure, but neither will Spotify who has yet to be clear about how they pay artists and labels. This isn’t fair to independent and niche artists, but it’s also unfair to fans who believe they are supporting their favorite artists by listening to their music.
For another artist’s perspective on how this unfair distribution is harmful to successful independent musicians, read cellist Zoe Keating’s post about Spotify on Hypebot.
Debunking the “It’s Better Than Nothing” Argument
It’s estimated that 95% of the music downloaded is done so illegally. In other words, the entire recorded music industry’s digital sales revenue comes from just one out of every twenty songs downloaded. A decade after Napster, to say file sharing and peer to peer networks has not had an impact on the music industry is to ignore the facts. Today, most people do not want to pay for music.
For those who want free music, Spotify is an alternative to illegal options, but you’ll be served ads and there will be limits to how much music you can play. For those willing to pay a $10 monthly subscription, you can listen to as much music as you’d like and even transfer it to your mobile device. It’s not quite like owning the music, but it’s close.
Meanwhile, the content owners are getting paid. Not much, but hey, it’s better than nothing, right?
The term piracy is often misused in the free downloading debate. Music pirates make money off of other people’s content. The majority of people that share copyrighted content illegally typically have nothing to gain for themselves other than free music. Spotify makes money off other people’s content, and there hasn’t been much return for the content owners. I’m not saying Spotify is a form of music piracy, but it’s awfully close. If this is the wave of the future, we’re all in for some problems.
My concern, though, really has nothing to do with money. I’m well aware of the fact that selling music is not a viable way to support myself in the future. Should Spotify prove to be a successful business model, it will pretty much put a dam in that stream of revenue.
My concern is that once we collectively agree that all of our recorded music is worth less than $10/month, regardless of how little the artists are paid, we’ll start to believe that artists don’t deserve to earn a living wage for their work. This sentiment already exists, and it shows disrespect to our fellow human beings. If something is valued enough to consume in limitless amounts, then at some point we have to nurture its creation and support its creators.
Spotify Will Not Save The Music Industry
I admit that Spotify is trying to create a huge change in the music industry, and I believe that their mission to offer an inexpensive alternative to free is well intentioned, at least initially. The offer a service that truly gives fans access to a huge amount of music for free.
Unfortunately, to do that they had to partner too closely with companies inept at creating a sustainable music business in the current climate. They fail to give an acceptable explanation of how artists are supposed to be paid.
If Spotify has a sustainable, long term goal, why don’t they clue us in?
Also be sure to also read David Rose’s article on Spotify over at KnowTheMusicBiz.com. Have your own opinions? Please share them below!