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Why Spotify Pays So Little

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Re: Why Spotify Pays So Little

#41

Post by pjc50 »

nicpottier wrote: post #30
kochthesecond wrote: post #17

Earlier quoted context omitted.

Spotify has me and all I know spending 9x12=108 per year on just music. If anyone expected any of us to ever spend more than this, they are very wrong. Even if we go back to the golden days of CD sales, I doubt the average consumer spent more than this, but I might be terribly wrong. I'm sure I wouldn't.

Agreed, I finally admitted last year that I was tired of maintaining my own MP3 library and that $9/mo was a fair enough price to listen to whomever I want. But ya, that sure seems like that should be fair enough and profitable enough for the artists I listen to, so if Spotify isn't doing a good job of making sure that is the case then I hope someone else arrives on the scene who does. After all, switching costs are…

What I suspect happens is that most Spotify consumers are undiscerning and use it as either a radio substitute or for playing whatever their friends are listening to (which is going to be "Top 40" almost by definition). So like everything else it's profitable for the big acts and not for anyone else.

Re: Why Spotify Pays So Little

#42

Post by mbesto »

Two things:

1) I think Ek is right - there isn't much money in the consumption of music. I do believe music is extremely effective at getting people's attention, but outside of that, it's value is much lower than we currently give it credit for.

2) I'm reminded of the TED Talk by Clay Shirky on institutions vs collaboration[0] where he explains power law distribution (watch from 6:01 onward specifically) with regard to photos of Iraq on Flickr. He says (paraphrased) "that figure at the bottom at 10 photos per photographer is a lie. it doesn't matter...the top 10% of the most prolific photographers account for almost 75% of the photos. 80% of the contributors are below the average amount of contributions" This is Spotify in a nutshell. People wan't access to all of the rap music in the world even if they are only going to actually consume 20% of it, so that in the rare chance they listen to one song of the other 80% that it's still made available. In other words, the overall utility of Spotify's system is only valid when it's whole, but the individuals who are necessary for it to be whole are unevenly distributed (in this case number of plays). So the argument then becomes who needs who more?

[0] - https://www.youtube.com/watch?v=sPQViNNOAkw&t=361

Re: Why Spotify Pays So Little

#43

Post by vinceguidry »

nicpottier wrote: post #30
kochthesecond wrote: post #17

Earlier quoted context omitted.

Spotify has me and all I know spending 9x12=108 per year on just music. If anyone expected any of us to ever spend more than this, they are very wrong. Even if we go back to the golden days of CD sales, I doubt the average consumer spent more than this, but I might be terribly wrong. I'm sure I wouldn't.

Agreed, I finally admitted last year that I was tired of maintaining my own MP3 library and that $9/mo was a fair enough price to listen to whomever I want. But ya, that sure seems like that should be fair enough and profitable enough for the artists I listen to, so if Spotify isn't doing a good job of making sure that is the case then I hope someone else arrives on the scene who does. After all, switching costs are…

> Agreed, I finally admitted last year that I was tired of maintaining my own MP3 library.

If a subscription service could get me out of that chore, I'd do it in a heartbeat. But the music I listen to is crazy all over the place, and if the service doesn't have even one of the songs I want, then it's worthless. Even if I can upload mp3s, now I'm back to maintaining an mp3 library. If I switch services, I have to either pull out my mp3s or hold on to them, and if I'm holding on to them, why not hold on to all of them.

Re: Why Spotify Pays So Little

#44

Post by tpeaton »

adventured wrote: post #39
tpeaton wrote: post #6

Spotify has been villified since the beginning, and I certainly want a more fair system to exist for artists. That said, has there EVER been a business model in the US that was profitable for artists? I don't think there was ever money in music for artists from album sales. The cost of distributing and promoting music is just more expensive than making an album.

Sure, touring and sponsorships are extraordinarily profitable for artists. Those able to attract an audience or fill venues. The Eagles made $100 million last year; Springsteen $81 million; Bon Jovi $81 million; Calvin Harris $66 million; Toby Keith $65m; Taylor Swift $64m; Bruno Mars $60m; Pink $52m; Roger Waters $46m; ... Muse $34m, Gaga $30m, this list just keeps going. Michael Buble made $1+ million per tour date…

Yes, but that represents a very small minority of artists. Most lose a lot of money or break even if they're lucky. Check out this article by Pomplamoose, who are a relatively successful band.

https://medium.com/@jackconte/pomplamoose-2014-tour-profits-...

Re: Why Spotify Pays So Little

#45

Post by kfor »

djloche wrote: post #32
kfor wrote: post #25

Earlier quoted context omitted.

Agreed that having fans play your music on mute would be just as - if not more - effective, and would work without creating a prime target for banning. But I think in this case it made for a very effective "statement", even if it could've been a more efficient hack.

At least for the desktop software, they detect if you turn the volume down quickly, and pause the commercial. Spotify has pretty rude behavior towards their free users, but I suppose they want to push everyone to subscribe.

I don't use Spotify so I was unaware of that - really interesting (and clever/dastardly).

Re: Why Spotify Pays So Little

#46

Post by 6stringmerc »

tpeaton wrote: post #6

Spotify has been villified since the beginning, and I certainly want a more fair system to exist for artists. That said, has there EVER been a business model in the US that was profitable for artists? I don't think there was ever money in music for artists from album sales. The cost of distributing and promoting music is just more expensive than making an album.

In my experience, while Spotify pays little outright, it is one of the few services that genuinely provides exposure in a beneficial way, one that may actually correlate to iTunes sales. That mentioned, Spotify deserves credit for paying anything, rather than sitting around and saying that exposure itself is a tangible payment form (e.g. McDonalds & SXSW). As Spotify expands, I can genuinely see new nations discovering my music, and that's quite interesting and appreciated.

I think it's important to remember that I'm speaking as an "unsigned" and independent artist. My income is not noteworthy from digital sales, and frankly does not even recoup the amount that I spend on distribution. However, unlike the majority of "signed" artists, I have extensive rights management avenues, very little overhead, and if I ever do make a lot of money through digital channels, it will not subsidize a system that I utterly dislike on practical and ethical grounds (ex: no health insurance for signed artists). YMMV.

Re: Why Spotify Pays So Little

#47

Post by baristaGeek »

It's incredible that there's no money in a thing that has been a need for the human being for centuries. Actually entertainment in general, has been a need since the origin of our species.

The indie music industry as a whole is already selling more than the 3 major record labels together in the US. Once that 20th century model is 100% over, we will see technology doing really cool things in collaboration with music.

Re: Why Spotify Pays So Little

#48

Post by pjc50 »

mortenjorck wrote: post #35

Like others in this thread, I naively assumed this was how Spotify already worked, and wondered why the payouts tended to be so low. Now it makes sense, and puts the numbers here ( http://www.spotifyartists.com/spotify-explained/ ) in context. Realistically, it would be both hard to change structurally and a hard sell for major labels to give up what is effectively a subsidy of popular music by indie fans. Let’s take…

But there's an impedance mismatch here. The copyright holders are being paid per-play but the users are paying all-you-can-eat. That's always going to be an imbalance. The only way to "fix" that would be to charge "Terry" a cent per listen like a jukebox.

This is a bit like being a vegetarian at a buffet and complaining about your admission fee paying for steak which all those other people are eating. It's true, but you came to the buffet because it was much cheaper than a la carte with better service.

Re: Why Spotify Pays So Little

#49

Post by 6stringmerc »

mortenjorck wrote: post #35

Like others in this thread, I naively assumed this was how Spotify already worked, and wondered why the payouts tended to be so low. Now it makes sense, and puts the numbers here ( http://www.spotifyartists.com/spotify-explained/ ) in context. Realistically, it would be both hard to change structurally and a hard sell for major labels to give up what is effectively a subsidy of popular music by indie fans. Let’s take…

Well put. I'd like to further the notion that major labels / legacy businesses do their best to eat all the pie and only leave crumbs for the rest of the community. Put in a metaphor, when gorillas fight, nobody cares about the ants until enough of them start stinging together. Not perfect, but hopefully you get the point.

My source is the following article over at Complete Music Update, which elaborates on the tactics employed by YouTube in their goal of competing with Spotify:

http://www.completemusicupdate.com/article/independent-label...

Re: Why Spotify Pays So Little

#50

Post by rodly »

pjc50 wrote: post #34

I'm not clear on what the difference would be, from his explanation. Is he splitting by "artists listened to ignoring count of times streamed"? (So someone who listens to only vulfpeck 1000 times and Daft Punk once pays each $5) Or is it "for each user, divide their $10 by the number of streams they played and pay that to the copyright holder of the streams played?" So the more streams you listen to the less artists…

> Or is it "for each user, divide their $10 by the number of streams they played and pay that to the copyright holder of the streams played?" So the more streams you listen to the less artists get paid for that?

I think his solution works like this:

Lets say you listen to Beck for 50 times, Beyonce 50 times, and Drake 100 times. That gives you 200 total streams, which a respective stream distribution of 25%, 25% and 50%. We can assume you enjoyed Drake more since you listened to him more so he should get more money obviously. So Beck and Beyonce each get $7 * (0.25) = $1.75 and Drake gets $3.50 for the month.

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