Labels Dropping Out Of Spotify Are Totally Missing The Point
from the it-ain't-about-direct-revenue dept
We recently reposted a blog post by the indie band Uniform Motion discussing how much money they make from various music platforms. A bunch of other blogs reported on it too and it created some misguided controversy. First, however, in our post, we included the band's Bandcamp streaming widget and are going to do so again here, because it's fun and the music is good. So click play as you read the rest of the post:Spotify tried to stem the criticism by noting that users don't pay per stream, and that it's just selling access, and thus "it does not make sense to look at revenues from Spotify from a per stream or other music unit-based point of view," and later that Spotify is generating significant revenue for labels. To be honest, this response is a bit tone deaf. Even if Spotify isn't a per-unit business, it's always going to be how musicians view the service. Of course, the bigger point, made by Jay Frank, is that if indie bands don't make much money, it's not Spotify's fault -- it's the fact that not many people listen to their music.
And that actually gets to the bigger point, and shows why it's short-sighted (bordering on braindead) for labels to drop out of Spotify, claiming the payments aren't high enough. We noted in our original post that depending solely on direct payments for music is simply a bad (or, at least, incomplete) business model for musicians. But, making it more difficult for anyone to hear you doesn't help you get any money either. As Frank notes in his piece:
The issue is that you then encounter the one thing worse than getting paid peanuts and that’s obscurity. People want to be entertained by music, not have to hunt things down. It has to be easy, which is why Spotify has gained so much traction. If you manage to get an average music fan’s attention on your band (out of the THREE THOUSAND others that released something that week) for 2 seconds and they look on Spotify and it’s not there, do you know what they do? They move on to another song. And you’ve lost your chance of gaining a fan. And the royalty. The number of people who would then spend time searching for alternative listening methods is miniscule.So taking yourself out of Spotify means you get no royalties, which seems worse than little royalties, and you make it harder for fans to find you, learn about you... and decide to support you in other ways. So, how does it benefit artists to not be in Spotify? I don't get it... Complain about Spotify's royalty rates all you want, but you can still leverage the platform to make money in other ways (direct to fan, shows, merch, etc.). And then laugh as Spotify gets none of that revenue, despite helping you build your fanbase.
In fact, some competing indie labels have already noted that Spotify has helped other parts of their business. The label Earache recently noted that Spotify appears to have increased their iTunes revenue:
While none of us have a crystal ball to see exactly which way the future of this business is going to turn, we have been actively embracing all possible legal outlets for our artists and their music. We have given away free album downloads by both Gama Bomb and Wormrot and like to think we keep an open mind on the latest ways people “consume” their music.Exactly. That's a record label who understands the bigger point. Those leaving Spotify in protest aren't doing themselves or their artists any favors.
I do not believe for one minute the record industry is dying but evolving (as it always has) and it is up to us as record labels to find, develop and build careers for our artists utilizing our accumulative years of experience.
I think it is no coincidence that when Spotify launched here in the USA, we also had our best ever month of sales on iTunes. Spotify is just one of the many new ways that fans can find and listen to new music by our recording artists and should be seen as that and nothing more.”
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Further, this is a guy who thinks that giving stuff away for free and praying for sales is a valid business model.
Spotify clearly also has a signal to noise problem. With 3000 new releases a week, the chance that a band's song even gets any exposure at all (without some sort of external push) is all but nil. It's probably not the best platform.
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Of course, Spotify's not a perfect solution and it's a format that's currently in flux. But, the real mistake here is assuming that all those people paying small amounts to listen to your music will even know you exist without Spotify, let alone follow you to higher royalty formats.
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That signal to noise ration is going to grow. There are currently 5 million bands on myspace and facebook with more appearing everyday. Eventually it is going to drown out the artists of the record labels, as more streaming occurs and less radio is listened to. We are already heading towards streaming car radios. The next generation will include music caching to reduce bandwidth usage. And when streaming car radio takes off, it will signal the long slow death of broadcast radio stations and the record labels.
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I think the opposite is more true. As the noise level rises, what actually sticks out above it looks even more impressive. Thing of the difference between an empty field with a few humps in it, and that same field flooded with water until only the humps are visible. You don't tend to look at the water very much, your eye is attracted to the humps that still stick up.
I think that rather than making it harder on big bands, it actually makes it easier. They are already the most commonly discussed musical acts, and it is likely that they remain the only "lingo franco" that exists between people. You may like the latest musings from the seemingly talentless schmuck Marcus Carab, but most people won't know, won't care, and won't want to spend the time to find out how bad he is.
Faced with an endless sea of water, people will talk about the island. Faced with an endless deluge of Talentless Marcus Carab wannabes, we will be more likely to want to discuss the latest Coldplay album, the latest Jay-Z song, or what happened at the last U2 concert.
There is only a limited amount of airtime on radio. They play what they feel the largest majority of people will either want to hear, or will at least put up with. They aren't going to waste time on the seemingly talentless smucks of the world, so Marcus Carab has no chance of getting airplay outside of maybe college radios that are forced by license in his native Canada not to play hit music.
The noise will go up and down like the tide, but the signal remains what people will see, IMHO.
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About the giving stuff away for free, it worked for radio stations didn't?
It also worked for TV stations, so what is your point again?
Why can't musicians just go play live gigs and get their money from there?
That would be honest work unlike trying to enforce imaginary property rights, that will be just a waste of time and everybody just prove it to them everyday.
Do you want proof, I can record a song right now from VEVO, and it will be undetectable, yay isn't piracy fun?
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And if that is not enough for ya here in China they can search for MP3 directly from the search engine.
http://www.baidu.com/baidu?tn=baidu&cl=3&word=jay-z+-+young+forever+mp3&fr=mp 30000
True musicians play to crowds that is how they should make a living, not by trying to enforce something that can't be enforced.
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Baidu even rips off Google LoL
http://www.chinainternetwatch.com/499/baidu-promotes-google-translate/
Top 10 most searched words in China.
http://www.chinainternetwatch.com/485/top-10-keywords-in-china-2009-baidu-v-s-google/
Q Q (It is just incredible what you can watch with QQ despite all the malware it comes with it)
Xunlei (It is P2P)
Youku
Oh look the Chinese can whatch more movies for free than Americans can LoL
http://translate.googleusercontent.com/translate_c?hl=en&ie=UTF8&prev=_t&rurl=tra nslate.google.com&sl=zh-CN&tl=en&u=http://ent.qq.com/movie/&usg=ALkJrhiMfVvvfJ3D8Dqm eAilIZWYViVlyQ
How did a dictatorship become more open than the "freeworld"?
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That last section seems to highlight and dare i say, praise, a record label. I thought Mike wanted all of them to die in a fire, and have them give everything away for free. That's the impression I get from some of the posters around here.
But here he is pointing out a way that people are getting the music for free, but then, *grasp* still paying for it again. So really, who wrote this post?
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That is why he is praising that label, because they are understanding how to use a service like Spotify rather than try to kill it.
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*gasp* a fate worse than death...
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It isn't one of the dreaded, dangerous, RIAA labels. No, it's a Tardian label, I guess!
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The label he is praising is an indie label that is willing to adapt to changing market conditions, not one of the RIAA companies who think they can use a Wayback Machine to turn back time to the 1970's when the big labels had life easy.
It isn't accurate to say we want the big labels to die. Most of the RIAA critics here are in fact big music fans, as is Mike himself. I think most of us here would like to see the big labels adapt to marketplace realities rather than trying to get the government to artificially prop them up. That would be good for music.
I think there is one main group that is trying to kill off the major labels. That group is the RIAA. The RIAA is dedicated to making sure that the major labels remain united in their drive to commit group suicide.
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Otherwise I just want them to die quickly and get it over with so the rest of us can move on.
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Leaving Spotify cuts them off as grifters.
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Re: Leaving Spotify cuts them off as grifters.
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Radio worked in its era because new and rare! -- You're still using the premise of "rare", when right above here it says "THREE THOUSAND" a week! It's difficult to get noticed in that.
You guys keep proving that you DON'T understand this newfangled internet thing, and the incredible profusion now available. -- Remember, new bands are competing with essentially EVERY bit of music EVER recorded, plus other entertainments.
So, keep living in last century and wondering why Mike's notions just ain't working NOW, dinosaur.
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My guess is you'll find that user-ranking systems will eventually tackle this problem. At some point, there will be a working system for folks that are on a service like spotify to up-rank bands/music they like, which will put them on more people's radar.
Think of it like Twitter. I follow, for instance, one of our local sports reporters because I know he has good insight and the links he posts contain good information. Perhaps I would also follow on Spotify someone whose music taste align with my own and trust his ratings. Perhaps if enough people follow him, his rankings push A LOT of people to the music he's rating high.
This is one viable function labels have performed in the past, weeding out the (generally) good from the bad. I'm just not sure users themselves can't do that at this point and accomplish the same or better result....
"Remember, new bands are competing with essentially EVERY bit of music EVER recorded, plus other entertainments."
Well, yeah, but the solution to that is NOT cutting off access to your product/music. Then you go from struggling to be noticed in the crowd to being unnoticeable at all....
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we still haven't figured out will happen when you have an infinite number of monkeys listening to an infinite amount of music for an infinite amount of time.
what i do know however is that the path of least resistance will engage at some point and we will get our first unlabelled super-artist created only on the internet (killer app). when that happens all of the riaa and unprepared labels will collapse under their own weight.
if enacted all of these new ip laws will probably make this happen sooner rather than later.
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Priceless LoL
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They probably wouldn't. Which is why you don't use it in that way. Just as with radio, TV and every other form of promotion our there, you don't make your money from those sources. It's pretty clear by now that you lack the imagination to actually understand how business works, so it's not a surprise you don't grasp what's being said.
"Not adding value in "promoting", either, complete hooey to lure artists in."
I'll tell that to the artists I discovered through Spotify and then later bought their albums or merchandise. I'm sure they'll be glad to know that the money I paid them was a hallucination.
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Promotion is always a "risk return" discussion. How much does it cost, how much effort has to be put in, what do you get back, how much better is your profile and visibility as a result. Your personal purchase of an album from the seemingly talentless schmuck marcus carab doesn't suggest that anyone else would do it (they have taste, I think). Your individual actions don't indicate anything other than your own actions.
Once you get that concept down, you can some down off your high horse and remember that you are only a flea on the tail of the dog, and you certainly aren't wagging the dog.
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There is no such thing as an "average consumer". The power of the internet is that people can pursue their own interests. The typical marketing tactic of pushing to a certain demographic is breaking down as people are exposed to alternatives. I'm a horror fan who likes all kinds of music ranging from soul and reggae to metal and hardcore techno, as well as an avid reader and gamer with an almost unhealthy taste for movies. I'm not going to show up on any focus groups as a demographic to target, but I spend far more than the average on my entertainment budget.
I don't suggest that anyone build their business model around servicing me personally, but I see many, many cracks in the market where people aren't being serviced by the industry... but are serviced very well by "pirates". Your obsession with killing piracy without even trying to address consumers' needs is the real attitude that's killing the industry.
"Your personal purchase of an album from the seemingly talentless schmuck marcus carab"
Wow, you are truly pathetic! Is it possible for you to even formulate an argument without attacking someone?
"Once you get that concept down, you can some down off your high horse and remember that you are only a flea on the tail of the dog, and you certainly aren't wagging the dog."
Yet, I'm exactly the kind of person you morons are trying to convince to give you money... Sorry, no sale with that attitude. I do see some independents who are doing some good work, though. Hopefully they management aren't complete idiots who thing along your lines.
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Agreed...
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So let's look at the old business model: see, a label is functionally a bank. Sure, they might be a neighborhood knee-breaking kind of bank, but they take care of advertising and exposure and so forth. And *that* in turn opens up doors for bands that no one has heard of. That money doesn't magically appear, and therefore, no matter the model, an adequate sum of money must be garnered in order to keep the thing going. What you are suggesting is that bands need to simultaneously take in less money and do more work to get new fans on their own and be happy to give their music away for peanuts 'cause at least someone is listening to it. That isn't a defensible or, frankly, coherent position.
That enough bands and labels are basically saying "We don't think we're getting a reasonable chunk of the pie," and these are *independent labels* who tend to be far more flexible as far as profits and business models are concerned, then someone is getting screwed. And maybe this pressure will force Spotify to renegotiate something more equitable.
Personally, I hate the fact that anyone would make the popularity argument, because then you are going to neuter an already highly conservative music industry that is unwilling to sign experimental/extreme music in an environment where the only way to earn anything on it is to have some kind of lowest common denominator/plurality effect. Think pop music is vapid NOW!? Let that take ahold.
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What you miss is that in the modern world the number of people who are trying to make a living (or a partial living) from music has expanded enormously. The rest of us don't have enough spare cash to support everyone, sorry about that but we're not all millionaires either you know.
Systems like Spotify will never bring in significant direct income for anyone but the biggest names. For the rest they can act as advertising. I think today most musicians would be best to cultivate a relatively small - but more committed following. The core income will then be
1) Fund and release for recordings/composition.
2) Live concerts.
3) Teaching/workshops.
One committed fan will bring in $200-$500 per year in those activities - you don't need so many of them to make a living.
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"fans" aren't buying more music, and net they aren't paying more for the whole package (live, recorded, etc). The size of the pool of income isn't any larger than it was 10 years ago (which is scary, when you consider inflation in that period). Now you have thousand more acts trying to push out music, trying to sell music, trying to play live shows, etc. What is happening is that on average, the potential income for a band is lower today than it was years ago.
The mega bands are still making mega money. The lower end acts (the unknowns, the indies, the regionals) are left fighting over the last slice of pie, and there are so many more mouths to feed.
Further, I think that this situation opens them up for middleman abuse. Why should a club pay out 50% of ticket sales to a band, when they have a ton of acts willing to do it for 25%, just to get a place to play? Supply and demand says that they don't have to pay out 50% anymore. So what happens is that while live venue income might be good, the net getting to the bands goes down, as supply and demand dictates otherwise.
Even in trying to get a small but committed following, musicians are competing against so many other musicians for the same eyeballs. There is only so many workshops that can happen, only so many live shows that can be done, and only so many "crowd sourced" recordings that can be funded.
It's sort of self-defeating.
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What do you think could be done about it even in principle?
As you seem to agree, the reason that life is hard for musicians is mostly because of competition from other musicians.
The labels used to be able to operate a kind of closed shop - which shut a lot of wannabees out completely and made life a little easier for those who had a deal.
New technology has made this impossible - but here's the rub. Anything that makes life easier for musicians will simply attract more people to try their hand at it. So many people desire the life of a professional musician that there is no economic way to exhaust the supply. In the end the lower end will always struggle. That is as certain as death and taxes.
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My point only is that all of these "case studies" things on Techdirt are incredibly misleading because they ignore the new economic realities that have been created. More fish feeding on the same or less food basically makes for more hungry fish. Supply and demand says it will only get worse. Pumping people up and saying "you can do it, check out this case" is as misleading as the Pied Piper.
Worse things could be to come as well, as the entire music world could end up so fractured and so diluted that even music venues aren't able to book enough bands to interest their patrons, starting a spiral that takes the last of the money out the door and somewhere else.
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Bubbles form and burst and this is not going to be the first time and sure not the last.
You are all doom and gloom because right now in your area things are not looking good, but if you look at Asia people there don't care, the market is growing, wealth is being created at breakneck speeds and everything seems to be flourishing over there, maybe America will be the new Africa, but even in Africa there is a boom in entertainment, India has Bollywood and so forth and there seems no end to how much they can consume.
So you are just a stupid, to think that because things are bad right now they will continue to do so and it is because more people are sharing the pie that somehow comes across as "that is my pie, nobody can touch it" get over it and learn to compete, stop being self-centered and things may work out for you.
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"Pumping people up and saying "you can do it, check out this case" is as misleading as the Pied Piper."
Yeah, so all artists should just sign to major labels. We all know that no artist ever got ripped off or destroyed by that route, right?
"Worse things could be to come as well, as the entire music world could end up so fractured and so diluted that even music venues aren't able to book enough bands "
Erm, what? Diluted would suggest there's too many acts, but you claim it will lead to less? Another fantastically stupid argument from our favourite troll...
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Not sure what you mean by that - if you mean household disposable income - well that hasn't been going up quite so fast recently - but it is higher than 10 years ago. If you mean total spend on music - well I'd guess that is going up too though it is very hard to calculate - but I'd agree that the increased competition has made that somewhat moot for many.
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People are not cutting the cable because they have more disposable income, they are cutting because they simply don't have the money to pay for it anymore.
Prices of everything have gone up, faster than the income of people can grow.
http://money.cnn.com/2011/09/21/pf/cost_raising_child/index.htm?source=yahoo_hosted
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Sorry - you misunderstand what I said. After allowing for inflation what you say is true - but I was talking in raw cash terms in order to anser the other A/C.
Incomes have gone up in cash tems - but as you say - not as fast as inflation.
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"fans" aren't buying more music, and net they aren't paying more for the whole package (live, recorded, etc). The size of the pool of income isn't any larger than it was 10 years ago
Wait, what? Are you crazy?
All of what you said is empirically false. Fans (and others) are paying more for the "whole package" - just not for recordings. But taken as a whole, consumer spending on music is increasing, not decreasing, and the "size of the pool of income" is much, much larger than it was ten years ago.
Of course, so is the pool of musicians who are competing for that pool. But this is not a bad thing, because it shows just how much easier - and cheaper - it is to be a musician nowadays.
Compared to the pre-digital era, it is trivially inexpensive to record an album. It is cheaper to master it. It is cheaper to put it onto a physical medium (if you choose). Due to services like CD Baby or Tunecore, it is And it costs nothing to distribute your music digitally.
I'll let Tunecore sum it up:
Rag on Spotify if you want, but don't think your Chicken Little version of reality is the truth.
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Uh, sorry, I was rephrasing that sentence before posting, and I didn't finish...
What I meant to say:
"Due to services like CD Baby or Tunecore, it is much, much cheaper to distribute your albums to retailers, both physically and digitally. And it costs nothing to digitally distribute your music yourself."
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Personally, I hate the fact that anyone would make the popularity argument, because then you are going to neuter an already highly conservative music industry that is unwilling to sign experimental/extreme music in an environment where the only way to earn anything on it is to have some kind of lowest common denominator/plurality effect. Think pop music is vapid NOW!? Let that take ahold.
Pop music is vapid because the economics of scale that used to rule the record pressing industry required lowest common denominator music to amortise fixed costs. The legacy recording industry continues with that model because it is the only thing they know - and so they carry on like a cartoon character that has run off a cliff but not yet looked down.
In the world we are transitioning to recorded music will be free at the point of listening (as it already is on radio etc).
Creation of new music will be funded not by the masses but by a relatively small (but still large in absolute terms) group of superfans - who will be prepared to support fund and release models. My take on this is that quality will be better in the new world because the economics of scale no longer rule.
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What you call "shotty town garage bands" can already have superfans.
but living on the charity of others is not a business model,
Has worked for the Monastery of St Macarius - for around 1500 years and also gave us Beethoven's 9th symphony.
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Because promotion its important so it is nothing like Wallmart.
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re: Newfangled radio thing
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Because then Spotify isn't making any money off them! As everybody knows, when someone who is not you makes money off your music ,that's like, umm.. theft, or something!
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How it works...
The first thing I did was to share Uniform Motion on Facebook on my gaming account. That means that song went out to about 50 actual friends and another 4500 people that I really don't know. Then I went on youtube and subscribed to Uniform Motion's page.
The record industry can keep attacking new services if they like, but they should be trying to harness this type of behavior and monetize it. The death of Limewire may have had an impact on file sharing, but I think file sharing is actually losing traction to streaming services.
Hope all you trolls are paying attention.
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From the Notebooks of Lazarus Long
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Stay updated on added material on Spotify
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Re: Stay updated on added material on Spotify
One of the advantages of the service is that its relatively open nature mens that services have sprung up all over the place to offer anything missing. This includes ways to discover new artists.
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-Very little understanding of how much musicians need to sell their music to make even MINIMUM WAGE.
-No right to support Spotify. The record labels aren't pulling out because there's no profit for them. It's because they're led by real people with respectable morals, not puppets to Greed and monetary gain.
I've been in multiple bands, and I have many musical friends who pursue the art as well. Everyone I've talked to who is on both iTunes and Spotify has seen a decrease in their already pitiful online wages.
So Shame on You. You're aiding continuance of a terrible thing.
A Compassionate Human/Struggling Musician
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Why sell music? That's the only part of the industry that's dropping. I'd go to one of your gigs, but I don't know who you are and whether you're any good - I use Spotify to preview bands like that.
"It's because they're led by real people with respectable morals, not puppets to Greed and monetary gain."
Translation: "I don't your money, but I'll whine about it when my active attempts to refuse it lose me money."
"Everyone I've talked to who is on both iTunes and Spotify has seen a decrease in their already pitiful online wages."
Such as? Oh, never mind, I never buy music nowadays without having previewed it in Spotify anyway, and I sure as hell don't buy CDs any more. With your attitude, you literally might as well not exist. You're also pretty poor at advertising yourself online, since you don't mention who you are. If only there were free ways available online to market yourself...
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I'm also a struggling musician, and I can tell you that I will never be putting my music on Spotify. It doesn't make any sense for an independent artist, period. It will never make up for the amount of potential revenue lost, will never be a fair rate per stream, and will never be a good method of discovery. People don't discover anything on Spotify. I certainly don't. I just listen to albums that I don't have from bands that I already like for free instead of paying for them. Who wouldn't? Most people discover music through blogs they follow, or people they know (someone whose taste they trust). This is not to say that Spotify doesn't have some share options; but so does facebook or any other form of human communication for that matter. All that happens on Spotify is that people who may have someday purchased something from you, take it instead for close to free from anywhere, at anytime they want to with a small chance of seeing your website or any show dates, photos, videos, or otherwise. I would actually rather pay fans to stream music from my website than have them listen to it on Spotify.
My favorite artists in my last.fm library have around 4,000 plays. At the latest maximum indie rate of $0.0056 per play, That's a whopping $22 from someone who is totally obsessed with you. Over about 10 years I might add. Take streaming out of the equation and I would have easily purchased their whole discography for perhaps nearly 4.5 times that. It's that simple. I can't believe anyone is even having this discussion. Spotify is brilliant for figuring out what consumers want...no doubt there. However, the artists that fall for bullshit streaming models are suckers.
It would take 1,783 streams per person to make up for purchasing my album once for 9.99. I would hope I could release more than 1 album in the 4.5 years it would take to get that many streams out of one fan like me.
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Re:
"I would have easily purchased their whole discography for perhaps nearly 4.5 times that."
You think that actually goes to the artist? What about people who don't buy CDs? Where do you get paid by them? What about the people who don't buy music but want to attend one of your gigs?
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Radio vs. Spotify
I would say that the big difference on radio verses spotify (or any streaming) comes down to two key words. On Demand.
With radio, you hear a song you like, and maybe wait around for it to be played again, or sometimes during a request hour get to hear it that way.
But if you wanted that song 'On Demand' you went and bought the album. (or single)
Now most people I know, (not all but most), simply pay spotify the monthly fee and utilize their phones as a portable music collection on demand. They've no need to purchase any album or song from any band simply because they can hear it whenever they want. This is highly different from radio for that particular reason in my opinion. It removes the necessity to purchase music from any given band, and makes it a "Well I like em so I want to support em and buy the album" type of thing.
Most people don't do that. Most people want something for nothing. Even folks that want to record radio and automatically cut out all those pesky commercials. (That pay the bills at the radio station FYI).
I think spotify had a great opportunity to become a new wave of delivery for new music. But I think it's model has become just another avenue that's been dominated by the major labels. If you want to make money on spotify then you better hope you can get with a Warner music, or something of that nature. Even then, the model is somewhat broken as big labels do still pay advertising, and promotions, but lack the 'huge' expenses of pressing and burning, packaging, and shipping hard copies of music.
Similar things are happening in books.
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Quality.
Um, not cool.. MP3's are not "quality", this isn't my opinion, it's a technical fact. It's maddening to me that people would readily accept this form of audio and not demand better.
Now it seems most music users are more inclined to go for convenience rather than something that might provide true musical experiences. Sucks to be you.
& If you call yourself a musician or audio professional and you can't tell the difference in perceivable quality between the best 320kb MP3 and vinyl, YOU REALLY DO NOT BELONG MAKING MUSIC...PERIOD! Go work in a kitchen and call yourself Chef but don't jackoff in audio and call yourself Maestro.
We have lost our way and no one will notice because they are distracted by the shiny keys of the latest tech fad.
Have fun with your disposable DJ-pop hits ala Capital Cities or Miley. Don't cry 10 years later when you revisit those "artists" and can't find anything redeeming about their "products"...I'll be listening to Roy Orbison, Pet Sounds, Pink Floyd and Bowie on my platter.
Later skaters
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