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?

No.

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!

33 Responses to Spotify From a Musician’s Perspective

  1. David Rose says:

    All strong points Cameron. Nicely done!

    If the rumors that the major labels receive a higher per stream royalty rate than indies turn out to be true I think that’s very hard for Spotify to justify this approach.

    I’d love to hear some clarity from the executives at Spotify on the topic of royalty payout parity between the indies and majors.

  2. Jerry Jean says:

    Thanks for this article Cameron. Lots of valuable info. Do you know if the payouts to artists for streams on Pandora are similarly paltry?

    • Pandora and Spotify are different types of services.

      Spotify is on demand streaming, which I think is pretty self explanatory.

      Pandora is internet radio. You can’t choose which songs you hear. Artists whose songs are played on Pandora are paid performance royalties via SoundExchange.

  3. Ulysses says:

    According to Nielsen Soundscan, 221.5M albums were sold in 1st half of 2011. So, Americans bought less that 1 album ($10) in 6 months. To me it looks like an improvement if they spend $10/month on Spotify. Sounds bad? But we’re already in a worse situation.

    In another word, CD or iTunes didn’t make people spend more than $1.5/month on recorded music, Spotify has the potential to do better.

    Spotify might not be the final answer, but CD & iTunes seems even less so right now.

    I wrote a blog post on this before: Why Classical Music Needs Spotify

    http://www.spotifyclassical.com/2011/08/why-classical-music-needs-spotify.html

    • You make a valid point, but it’s making the assumption that more people will want to pay for music. There are some people, like me, who buy new music almost every week. There are many more people that never buy music. If I spend $10/month on Spotify instead of $50/month buying music that pays more to my favorite artists, does that really help? Isn’t there also a possibility that revenues will stay the same or shrink?

      • Ulysses says:

        Spotify makes many people who never/seldom bought music start to pay for music. People’s demand for music is huge, Spotify lowered the price so a huge number of people will choose it as their music supplier. On the other hand, loyal supporters of music (like you) may also continue to buy recorded music in the old way. How many people spend $50/month on music? Maybe less than 1% of the population? And how many of the rest 99% may spend $5/10 for unlimited streaming? Maybe more than 10%?(a pathetic assumption, but maybe close to our reality) So I think there’s a good chance Spotify may actually grow the revenue for the music industry (like it did in Sweden and some other EU countries).

        And I support you and any other musician who asks questions and puts pressure on Spotify and the industry, so they may split the royalties more fairly.

      • Jan says:

        Are there studies that confirm that people listening to spotify buy less music? I’m not sure that this is true for myself — I have a spotify account, but still buy cd’s, too (I just like owning the physical cd, but I also like a more direct way of supporting an artist).

  4. JB says:

    “I’m not saying Spotify is a form of music piracy, but it’s awfully close.”

    So much negativity in your blog post and the above quote is just pure bullshit.

    Spotify has worked for years to get contracts with publishers, labels and collecting societies while your average pirate site couldn’t care less about that. Furthermore, artists and labels are free to remove music from Spotify as they wish (even though they piss off their fans in the process). Good luck with getting control of your music when uploaded to the pirate bay or any other pirate site.

    You talk about no returns and you are just plain wrong.

    I’ve checked with some indie labels in Europe and Spotify is their number two source of digital revenue after iTunes. For some labels Spotify is even the number one source beating out the mighty iTunes.

    Two years ago this wasn’t the case, but now as Spotify has 2 million subscribers (they essentially have more subscribers than all other streaming sites put together) payments have increased. You can only try to imagine what happens with 10 million subscribers, or even 50 million subscribers. It’s all about scale. And with scale streaming will be a great option even for the very few niche artists complaining now.

    • I appreciate your comments, but would love more specifics.

      What indie labels did you talk to in Europe?

      Have their iTunes revenues dropped? Stayed the same? Increased?

      If their revenues from downloads dropped, or even stopped growing, is there any correlation between that and an increase in Spotify plays? After all, paying fans might just be moving from one platform to another.

      I’ve read those Spotify press releases, too. Is that where you’re getting your information or did you actually check in with those labels?

      I’m not angry or complaining or being negative, I’m just not drinking the Kool-Aid, either.

      I’ve been trying to imagine what happens when there are 50 million subscribers, and I’d be thrilled to see a sustainable business model that generates fair compensation for all parties involved.

  5. Alex Mallett says:

    Regarding the last point on artist payment from Spotify, I think a paradigm shift is needed here and Spotify can be used as a marketing tool rather than a revenue generator.
    Small scale independent artists do not (by and large) make money from music sales. How many musicians do you know who have 850 CD’s of their first album collecting dust in a closet and spent 5,000$ to make it?
    Having a record is a necessity, but it is a calling card–a tease to attract fans to performances and spend money in other ways. I think coming up with more creative merch will be a much more effective way for a current indie artist.
    Let’s say your song is shared all over Spotify and through it’s social features goes viral–1,000,000 listens. Of those, 10,000 people come to your website to learn more about you and realize that you’re selling really swell like hand made vinyl packages for 50$ or drawings for 40$ or playing cards or bobble heads or watches etc. Or they see you’re coming to their city and see the show. Fans need options that aren’t just CD’s. (Of course teh risk is having 1,000 bobbleheads in the closet instead of 1,000 CD’s…)

    As a small act, we have to view streaming as free marketing. Meanwhile, we can enjoy a really awesome service–almost every song at our fingertips.

    • My wife and I call my boxes of unsold CDs “cat furniture” because… well, you can imagine.

      I’ve never had a problem with my music being available for free. I give some away myself so I can learn something about the people downloading it. That information is worth more than the small royalties I see from Spotify, and Spotify doesn’t tell you who listens to your music.

      (I wrote an article called Making Free Downloads Work For You that you might find interesting.)

      I think the creative merch thing isn’t quite right for most bands. Musicians should play music and not worry about setting up a boutique next to the stage at every show. Have you ever priced out vinyl and supplies for hand made packaging? Bobbleheads? It’s not cheap. For my last album I ordered custom label bottles of hot sauce. I bundled them with my CDs and t-shirts for a premium package, but in reality, all my profit margin was still on the CDs and a few dollars on the shirts.

      • Geoff says:

        I still think you are missing the social aspect of Spotify. With the Facebook integration and the fact that everything is in a playlist, Spotify is locking people into the service because you make all these playlists that would be a pain to make elsewhere. Then with Facebook integration, many people see what their friends are playing, which is basically free advertising for you.

        • I’m aware of the social aspect of Spotify, but I think it’s a much better deal for Spotify and Facebook than it is for musicians.

          I really don’t think people are necessarily discovering more music these days because of Spotify. Before Spotify you could use YouTube links on Facebook, share iMixes, make a mix tape… People have always found ways to share music they love with their friends.

          • Pedro Figueiredo says:

            Well I can guarantee you I am :) I mean typically the most “mainstream” way to find/hear new music WAS radio+videoclips. I mean I have not seen a lot of people from “my circles” sharing new music they found… but more commenting on music they were “put to listen” (this before Spotify).

            So dumping my opinion here…

            First of all there is an oscillating amount of money consumers are willing to put monthly approx. into music or media content more in general (and yes, piracy oscillates that willingness towards lower levels).

            Secondly, in previous value chain models the greatest majority of artists could not make a living out of their work (even if they considered themselves professionals who dedicated their life to it) because if nobody wants to listen to them then their product has no value. I have the feeling that Spotify, with the social factor, will pull out of the darkness a lot of musicians to be heard and appreciated countless times for decades to come, in a larger factor.

            However the initial amount of money is merely oscillating… so obviously it can’t be taken for granted that an artist will or should be able to make a living out of his/her art. I mean I am IT project manager and if my work results in something nobody wants to pay for then my services are worth nothing. The cost of making can only guide the eventual price… but it’s what people are willing to pay for a good that makes it worth that much.

            I have been asked many times “but don’t you think that an artist that spends his life into his art should be able to live from it?” well… obviously not “should”… as it is a risky gamble. Just like football players, where only few get the luck of playing for $millions whereas the rest 99.999% who tried to get a carrier there remains “amateur” for their lives.

            So to be honest Spotify will only bring a chance of “fairer” share of the oscillating balance… and that is… if they do fight for fairer. To be honest the artists greatest enemy is not the distribution entities… it’s not the downloading mobs… it’s their own labels and discographies and promoters.

            And I say that based on the following belief that I have:
            The ultimate goal will be a platform where the interaction is “Artist” “Consumer” with no intermediate entities other than a digital distribution system with an embedded sustainable business model towards BOTH the artist and consumer. We have seen that phenomenon (supply chain shortening) in various other industries, and this industry is only delayed because its drivers are greedy old fools.

            Spotify is cutting the deals with the evil promoters and such but just wait until the promoters realize spotify has stolen their capacity to promote into the hands of the consumers by social means, as well as the capacity to control mainstream artists due to how easy it is to find new music using Spotify apps or Radio and of course easy sharing.

            In sum, my guess, is: more artists will get less than when less artists were getting more, sounds more fair. However, that means less artists will be able to make a living just out of their art… is that bad? Not really… in Portugal I know people that have 3 jobs because if they would dedicate just to one they wouldn’t pay rent and food. Artists obviously don’t have more rights than people that don’t dedicate themselves to forms of art.

            And if you want my ultimate opinion… I have seen my brother and his band of 4 which is still in a garage band stage make nice quality music and they do it on their free time because they like it, they give shows for free and they get the little money they make from working here and there to record demos which are shared freely on facebook and such. They are artists. They are not paid. They love what they do. They do it because they love it. Art is a form and a tool for expression. If an artist can live out of his art… good for him, but that can’t be taken for granted.

  6. Interesting discussion, but I think at the end of the day spotify and the like need to give artists a fairer deal and I think it is hard to argue against that, I mean .0000whatever is a joke, and with the integration with Facebook, who is gonna buy music from an artist music page on facebook when they can get it all for more or less free???? another possible source of income gone it would seem..

  7. dj_jammer@att.net says:

    I remind you mister that radio stations world wide play music free and you still do not know who is listening to your music ! I bet the revenue from that is not much more than spotify and pnadora combined! Music is a expression not a income!

    • Nick Rosaci says:

      I just had to chime in on this one:

      If you feel the need to have an unrelated day gig and only play music as a hobby, great. However, you stumbled on a site with the motto “the website for the working musician.” If you feel that you need to be in a vocation that you hate to make your bread, fine. But some of us actually believe that you should be doing exactly what you want to be doing and use the income from it to keep that roof over your head. Pro musicians resent that last sentence, because it’s the same people that think they can stiff us on our gigs.

      If you hate your day job, then maybe you ought to look at that. I love getting up every day and going to my “job”. I do not know what radio stations pay the composers for their works, but the fact is that Pandora and Spotify don’t pay enough. At the end of the day, though, I want to know that I have been given my dues for the work I’ve done.

    • Well, mister, I actually receive checks from commercial and college radio, Pandora, and Spotify. Radio pays the most, then Pandora, and Spotify a distant third. If you would like to show me your royalty statements as basis for an argument, I’d be happy to listen.

      • Pedro Figueiredo says:

        “At the end of the day, though, I want to know that I have been given my dues for the work I’ve done.”

        Just wanted to state that “if the done work” is only “wanted a little” then “a little” is what is worth. Being an artist is just like any other profession… it’s not the “work” that gives value and hence dues… it’s the result of the work (at least in the system we live in… I am not supporting anything… just stating facts)

  8. dj_jammer@att.net says:

    One more thing. I debunk your claim of unfair pay. If your music totally stinks you will never see the same pay as music that totally rocks the charts! Its risky industry either your good or not. pay or no pay little IS BETTER than nothing Spotify is only extra tip for you and not a mortgage payment!

    • Are you saying my music stinks?

      Can you elaborate on how that has anything to do with the millions of dollars Spotify has paid major labels while almost none of that money makes it to the actual artists who create the music?

      Also, how is “no pay” “better than nothing?” Seems like the same thing to me. I believe your [sic] mistaken.

  9. kevin jones says:

    Right is right. Wrong is wrong. Whenever you produce a product(in this case music)and you can’t benefit from the sell of that product and a much larger entity can(Spotify via streaming…regardless of the amount…no doubt lucrative after 100s of millions of streams), something is wrong.

  10. LW says:

    In a five-month period shortly after the service launched, Spotify users enjoyed more than 1m plays of Lady Gaga’s song Poker Face – which earned Her Gaganess the sum of $167.

  11. It’s worth reporting that the average pay per stream has increased over the last 18 months. While I previously reported an average of about $0.0004 per stream, my most recent payments from Spotify averaged about $0.004 per stream. We’re almost to half a penny.

  12. J Dickson says:

    Obviously, musicians are in it for the music, but there comes a time when you need to protect your income. I recently did a small experiment to see for myself if it was actually beneficial to be on spotify. I recommend you do a similar thing so that you will know for yourself. i.e. It might be different for different styles of music. Or even different territories.

    Over the course of around a year, I uploaded two albums available for sale on the usual outlets. I chose spotify for only one of them with no other streaming sites for both.

    It’s perhaps important to point out that it’s an indie artist/band who’s been on smaller indie labels for years.
    Plus, the albums are (in my opinion) of equal quality musically and sonically. There would be not much point in the experiment if this was not the case.

    The overall outcome is not too much of a surprise, but I wanted to know actual stats. The sales difference was an eye opener to say the least.

    The album that wasn’t on spotify made more money from downloads via itunes/amazon etc. No surprise there, but I’d estimate it sold around 6 or 7 times more downloads. If it was around even, I could see spotify not doing any real harm, but that difference is quite high.

    The revenue from spotify did gradually increase over the course of the year. This could be down to more territories becoming available. I don’t know, but in terms of actual monies received compared to downloads, it is way smaller.

    I thought about whether or not the album on spotify was advertising the album that’s not on the site to stream? Thus helping to generate sales? Probably not was my conclusion because it still doesn’t show signs of both albums selling reasonably evenly which is what I wanted to know in the first place. i.e. was spotify harming sales or good for promotion to help generate sales.

    Anyway, If you are happy to use spotify, that’s cool. I’ve shared this experiment to help other people make up their minds, but do an experiment to see for yourself if it is good for your music in terms of income (and even exposure). Have a serious think if it is really helping or harming you.

    Majors are happy to use it and push it (for now) because they are directly making money while keeping in the good books of the listening public. Do they pass a percentage of that earning onto the artist? fuggetaboutit.

  13. Nick says:

    Royalties on streaming service are never going to pay a fair wage, so I don’t see much sense in complaining about it.

    However, there really is a serious lack of ability to leverage those plays into some kind of real revenue.

    Artists should be petitioning spotify for ways to do that – expanded social tools to connect with fans, direct links to buy physical product when fans are streaming your music, notifications when an artist in your library is on tour, email list opt-in feature, etc.

    “Direct-to-fan” is not that new of a concept these days… Bandcamp and Topspin have proven the model and the technology. This is what artists should be asking spotify for, not higher royalties, and I’m not convinced their “app finder” and platform for third party developers will do the trick yet because it is all so fractured there is no way an artist can effectively manage their content.

  14. John Swanson says:

    I found your article informative, well-researched and interesting. Screw the haters. The author offered HIS OPINIONS on something he clearly knows more than the most of us about. Thanks for the good work!

  15. jeremy says:

    I hate to have to say this, but the public at large has made very clear what they are willing to pay for music, and the answer is not much.

    No system, or platform, or software is going to change the will of the people- they never wish to repeat the 90′s and earlier when they paid ridiculous sums of money to purchase recorded music.

    Much like we are no longer interested in paying $0.10 cents a minute for “long distance” phone calls. The fact that for a handful of decades musicians were able to make absurd amounts of money for playing and selling their music was a sharp rise in the value of music during that time.

    Those times are over, much like baseball cards and many other things that used to be valued much higher than they are today.

    Welcome to 2012. Playing music for a living is not what it used to be, and it never will be again, but only because the people at large simply will not pay what it costs to provide musicians with that kind of income.

  16. Obstinate says:

    Jeremy, I agree!

    Artists clearly deserve to earn a living so they can continue to enrich our lives with their music. However, making obscene amounts of money from their music is morally wrong. Just how much money do you expect to make from one song being listened to 305 times?

    Spare a thought for people working just as important and less glamorous jobs. Why should a musician live the high life while a nurse struggles to make ends meet?

    • I don’t understand where the idea of fair compensation gets confused with being obscenely rich. Do you know who is far wealthier than virtually every musician with music on Spotify? The CEO of Spotify. Why do we, as a society, value his job more than the musicians that make his service possible? That’s really the dilemma here.

  17. Nick Rosaci says:

    I still just find it interesting that people who see music to be something little more than a hobby coming onto this site and trolling this thread.

    I wonder if they would be upset if someone decides later that their day gig is suddenly worth less than it is right now.

  18. Allen Watts says:

    I’m behind the curve, I only just started using Spotify. Several of my musician friends were talking about how frustrated they are with it, which made me curious. I found this article looking to understand what musicians think of it. I appreciate you writing this, it’s definitely helpful.

    At the risk of sounding preachy, I think it’s important to differentiate between problems we can fix v/s being upset about the way the world is. We can get angry all we want about how we think the world ought to be, but there are some battles we can’t win.

    For example: people stealing music. There will always be dishonest people. We can lament it, we can even join law enforcement and try to bring consequences to bear, but the fact is that in the privacy of their own home, many people will steal something they don’t think is worth much. Police use this rule of thumb: 10% of people will not steal regardless of circumstances. 10% of people will steal every chance they get. 80% of people will only steal under certain circumstances given the right opportunity. Technology makes it easy, privacy makes detection unlikely, and opportunities abound. This applies to other industries too, however. The music industry is just one of many.

    My first point: Value.
    I think everyone agrees that we ought to be able to make a living doing what we love; but for most of us that’s not how the world works. Unless you’re living on the barter system, making a living equals making money. If we want someone to give us their money, we need to exchange it for something. It has to be worth the work they had to do to earn that money. That’s the basis of an economy.

    The economic problem however is full of opportunity. People will pay to be entertained, we all know that. It’s easier to make money playing cover songs at weddings than it is to sell our original music. You may want to shoot yourself in the face after the 500th rendition of Paradise by the Dashboard Lights, but they are willing to pay you to entertain their family and friends. There are people who inherently value music, but the general public usually places a higher value on entertainment.

    A side point: Blame
    To take a quick sidetrack, if we are placing blame for the public’s lack of perceived value, I suggest that broadcast radio is the culprit. We are conditioned from birth that music is readily available wherever we are whenever we want it (via radio). Napster is just the logical conclusion. I think it is a rude awakening for the public to learn that music isn’t free, and it’s hard to re-program the entire population’s values.

    That disconnect comes when the public isn’t footing the bill. The public is providing a service to the company footing the bill. Radio, television, magazines and newspaper industries are built around the public sitting through an advertisement in exchange for entertainment. That’s where the value is determined. I’m willing to listen to (read: “ignore”) a few minutes of fluff to hear music on my ride to work. If you think about it, you could almost say that I’m being paid (with entertainment) to listen to ads. Am I willing to pay $15 of my hard earned money to own an album? Economically, that’s an entirely different question. It’s a big swing from me sitting on my butt having music delivered to me, to getting off my butt and going to work to earn money to have that same music. I might only make $15 an hour at work. After taxes, I have to put up with two hours of my job to buy an album… It better be a really good album.

    My goal in saying this is to recognize the ugly economic truth of the situation. Once we see what the real problems are, then we can get creative about how to solve them.

    My third point: Artist’s love & Consumer’s money
    So what is the real value of music? Just because you love your music doesn’t mean it’s worth anything to me. That means it is worth something to you. Simply, the value of anything is the amount someone is willing to pay for it. Making music because you love to make music should by definition make you happy, not rich. Making music people will pay for will make you a living. The ultimate goal is to do both at the same time.

    It is important to remember though, people will only pay what they will pay. No matter how much you think it’s worth, if I don’t have the money or if I don’t think it’s worth it, I’m not going to give it to you. That’s a lose-lose. You spent the effort to create it without making money, and I don’t get to enjoy the music. At that point, just get a job at a bank and buy all the guitars you want… if it’s a lose-lose, you’re not making a living.

    My fourth point: Legacy industry is expensive
    For argument’s sake, lets assume we all make music that we love, that is also good/entertaining enough that people will pay for it. Now you’ve got a widget to sell, how do you take it to market? Big record companies are full of employees who do this. Those employees have managers, and break rooms, and health insurance, and labor unions, etc. All those costs are added in to the price of the song. So now the value doesn’t just include the inherent quality of the song, but also the cost of the industry to deliver the song. Is the song still good enough to warrant the extra money? (keep in mind the consumer is conditioned to believe the song should be free)

    My fifth point: Creative solutions
    What if you could strip out most of that old industry fat, and put your song right in front of the customer… how much would they pay? Assuming they could find your song, and assuming they liked your song how much is it worth? A typical CD would sell for around twelve to fifteen bucks, and typically had around eight to ten songs on it. We know that some people will pay that much, but there’s still a huge chunk of people out there who don’t buy much music.

    What if we could get the end price down just a little more, and a lot more people will buy it… the artist will make significantly more money. For something like music, where value is subjective, the general perceived value is low, and it is not a necessity or a commodity, there might be some price elasticity. So Apple tried $0.99. Maybe that was too low, maybe not. Time will tell. I think the bigger mistake is to say “my song is worth $.99.” That is to miss the whole point. The individual customer’s guilt-free entertainment is worth $.99; the song could be worth millions! Ask Coldplay what Viva La Vida is worth… I doubt they will answer “$.99.”

    Back to the earlier statement “assuming they could find your song.” You’ve made a song you love, it’s a song people will buy, you’ve researched the pricing sweet spot that the market will bear… how do people know about your song? I’m looking at my iTunes library, and I’ve purchased over 1,800 songs. There’s nothing in there I want to listen to right now. The radio stations in my area are terrible. How do I find new music? I’ve been very frustrated lately, because there is no good way to find new music.

    The same technology that makes it easy and tempting to steal, also makes it easier than ever before to share good music. Before I even began typing this (wordy) comment, I got on Spotify and found Ry Cooder to see how good a slide player he really is. I have friends that send me new music to check out, and I find myself on Spotify several days a week looking for good new music. I don’t buy it all, that’s for sure, but the stuff I like, I buy. So far, I like Spotify better than Pandora, iTunes, or even local radio for finding new music. That’s a value to me… Spotify helped me find new, good music. Is it worth $10 a month? I don’t know yet. I will tell you though, that the commercials, and pop-ups and ads and crap are so annoying that I’m almost willing to pay the $10 to not have to deal with it. Maybe in some small, albeit annoying way, Spotify is reminding me that music is not free.

    My last point: Making a living is hard.
    I don’t make a living on music. I couldn’t if I wanted to, I’m not talented enough. So take all my comments with a grain of salt; but is it possible to think of Spotify not as a source of revenue, but as a marketing expense? You have products to sell, and you need to get them in front of your potential customers. Some people are dishonest and steal, some people can’t afford music or don’t think it’s worth it. Those people aren’t your customers. Your target audience is honest music lovers who have disposable income. That is a small subset of the entire population, (factor out the people who don’t like your particular style, and the target gets even smaller) but if you want to make a living, you have to get your songs in front of them. This is like basic physics… if they don’t know about it, they won’t buy it.

    You’ve done the hard work of writing/recording the song. That’s the fun part, but it’s only half the battle. You still have to sell it if you want to make a living. To sell it, you’ve got to find a way to get it in front of your target market. Spotify seems like a pretty cool tool to accomplish that. What would you use without it? How would you differentiate yourself in an ocean of other musicians trying to get on radio, iTunes and TV?

    I don’t think you’re going to make a living on Spotify. However, I think you could use Spotify as an effective tool as you make a living. Even if they doubled, or tripled their payouts, it’s never going to be a decent revenue source. And it will never compare to a radio payout… one play on a decent radio station has thousands of listeners. One play on Spotify usually has one listener. Most of the successful musicians I know make money playing gigs, doing session work, selling songs to other artists, and on licenses… but not on licenses alone.

    I think we have a choice. We can be mad that Spotify doesn’t pay enough. We can be mad that the guy who invented Spotify is rich. (Although I think he saw an opportunity to provide a service that people valued. Is he taking advantage of musicians? Only to the point at which they are willing to accept the contract. If all the artists refused to participate, he’d have nothing to offer his customers.)

    Making a living is hard. Sometimes people steal, sometimes terrible musicians succeed, more often good musicians fail. It’s not always fair, and luck plays a huge part. We can choose to use the tools available, or we can choose to be upset that the world isn’t the way it ought to be. Let’s not be surprised that businesses try to make money, and let’s use technology in creative new ways to accomplish what we want. Then let’s write songs about all the BS and frustration… who knows? If all the starving artists out there bought our song, maybe we’d make a living!

  19. I got what you mean , appreciate it for putting up.Woh I am lucky to find this website through google. “Don’t be afraid of opposition. Remember, a kite rises against not with the wind.” by Hamilton Mabie.

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