“Spotify’s CEO Would Rather Fold the Company Than Give Up Free…”

Daniel Ek, CEO of Spotify

Just how expensive is free?  According to a pair of sources with close knowledge of Spotify’s ongoing major label renewal, preserving an unlimited free tier is worth everything to Spotify and its CEO, Daniel Ek.  Yes, all $8 billion of it.

“Daniel Ek is fighting this, they’re fighting it really hard. [Ek] would rather fold the company than cut free,” one source relayed.

Enter some very tense renegotiations with all three major labels – Warner Music Group, Universal Music Group, and Sony Music Group – all of whom have deals expiring in October, according to both sources to Digital Music News.  That is laying the groundwork for a very stressful summer, especially given the extreme stress now being applied by Sony Music Entertainment CEO Doug Morris and Universal Music Group CEO Lucien Grainge to “fix the free problem” (more on complications surrounding Grainge, Vivendi, and the ghost of fired UMG executive Rob Wells next week…)

This was almost the perfect standoff.  Earlier, sources pointed to heavy pressure from the majors on Spotify to limit free access to just three months, instead of the open-ended, ad-supported ‘freemium’ currently in place.  That would align Spotify with Apple Music, which launches June 30th, and theoretically place a lot more pressure on music fans to pay.  But according to separate sources, coordinated label pressure on Spotify inadvertently re-stoked governmental investigations from state attorneys general in both New York and Connecticut, effectively kiboshing the squeeze-play.

Spotify flatly denied that any restrictions to three-months were ahead, and it looks like they’re right.

Meanwhile, Ek’s frustrations over Spotify’s role in the free-access debate is intensifying.  “Spotify is paying for free, they’re paying for this,” one source emphasized.  That includes Taylor Swift, who magically appeared on Apple Music during a demonstration earlier this month*. “Oh ok,” Ek tweeted-the-erased.

“SoundCloud isn’t paying, YouTube is paying almost nothing, and [Spotify]’s the bad guy?”

All of which brings us to a slightly different version of Spotify, coming this fall.  Looking ahead to October, one source pointed to a conditional, one-year renewal of terms with all three majors, with a once very interesting compromise on the table…

Stay tuned!

*update: Sat., Jun 20th: Nina Ulloa just pointed out that 1989 isn’t available on Apple Music.

 

 

74 Responses

  1. Anonymous

    Swift says she doesn’t like and won’t license free music. Yet she won’t get paid for 3 months by Apple. Funny how her stance changes by which way the wind blows.

    Reply
          • FarePlay

            Paul was that picture of EK intentional? It sure reminds me of another super villain.

          • Anonymous

            “It sure reminds me of another super villain”

            Haha…

          • Message from Taylor Swift

            A message from Taylor Swift:

            “I write this to explain why I’ll be holding back my album, 1989, from the new streaming service, Apple Music […] Three months is a long time to go unpaid, and it is unfair to ask anyone to work for nothing [I find it to be shocking, disappointing]

            This is not about me […] This is about the new artist or band that has just released their first single and will not be paid for its success. This is about the young songwriter who just got his or her first cut and thought that the royalties from that would get them out of debt “

            Read the rest on her tumblr.

          • Anonymous

            …also, what about the rest of Apple’s staff?

            Will they be paid this summer?

            If so, why?

          • Anonymous

            Also from Taylor Swift’s message to Apple:

            These are not the complaints of a spoiled, petulant child. These are the echoed sentiments of every artist, writer and producer in my social circles who are afraid to speak up publicly because we admire and respect Apple so much. We simply do not respect this particular call.”

            Thank you, Ms. Swift!

          • Anonymous

            …and more from Taylor Swift’s message to Apple today:

            “We don’t ask you for free iPhones. Please don’t ask us to provide you with our music for no compensation.”

          • Anonymous

            …and people love her for it!

            Even Slate calls her letter ‘awesome’!

          • Anonymous

            And since this is a Spotify article, it’s relevant to add that 1989 isn’t available on Spotify, either.

            Here’s what Ms. Swift said last year:

            “I’m not willing to contribute my life’s work to an experiment that I don’t feel fairly compensates the writers, producers, artists, and creators of this music,” Swift told Yahoo! in an interview last November. “And I just don’t agree with perpetuating the perception that music has no value and should be free.”

          • Anonymous

            That’s all nice. Except here’s the thing. 1989 isn’t licensed to ANY streaming music service. Paid or not. Clearly the fact that Apple isn’t paying for 3 months is irrelevant in her decision. Meanwhile all her other music she pulled from Spotify because “she doesn’t believe music should be free” IS going to be available on Apple Music despite supposedly not getting paid for 3 months.

            She’s not watching out for the little guy. She’s doing what she has been doing all along. Watching out for herself and taking any publicity she can get.

          • Anonymous

            “She’s doing what she has been doing all along. Watching out for herself and taking any publicity she can get.”

            Yeah, she really needs the attention. People never talk about her.

            So sad. 🙁

          • Anonymous

            Apple doesn’t have a choice any longer, it’s over.

        • Anonymous

          “everything else will be”

          Um, yes. That’s called “windowing”. It sounds like you’re not yet familiar with the concept so please allow me to repeat my little crash course:

          Most acts sell most of their music during the first weeks and months after release.

          Now, if you give your songs away during this critical period, you will suffer a certain amount of cannibalization (people don’t buy your music because they can get it for free without breaking any laws). Nobody knows the exact ratio, but you would lose money even if it were as low as 1 to 100 (it takes 100-140 Spotify streams to balance the loss of 1 sold song). And nobody claims the ratio is that low.

          So a lot of smart people thought about this for a while and the smartest among them — people like Beyoncé, Adele, Coldplay, Black Keys, Taylor Swift, Daft Punk, etc. — realized that windowing was the way to go:

          Windowing comes in all shapes and sizes, but it generally means that you keep your property away from Spotify, Apple Music, or similar services, during the most critical period in the lifespan of a record — and that you make it available on these services as soon as sales begin to drop.

          That’s how artists make money today.

          Reply
  2. Name2

    THIS JUST IN! MUST CREDIT DMN!!!!!

    DMN declines to compare free streaming to George Wallace and segregation the day after a massacre in a black church. Dozens exhale in relief.

    Reply
  3. Casey

    It seems Ek knows what’s really up. Spotify without Free is nothing exceptional. Their library is still smaller than some of their competitors. They have less features. Crappier interface. Average pricing. And really sucky radio.

    If Spotify has to go without free they really may as well shut it down now. It’s really too bad. They have had ample time to get their shit together.

    Reply
    • Anonymous

      Spotify has missed its opportunity for a successful IPO. It may be a few more years but Spotify is already dead.

      Reply
  4. Anon

    Spotify pays nothing at all .0000001 per stream or whatever is nothing.

    Pull your music off it.

    Streaming is killing real music much faster than torrenting ever did.

    The majors love it because they can montize crap going back to 1900 or whatever, and pay no one anything

    Reply
    • Anonymous

      “Streaming is killing real music much faster than torrenting ever did”

      That is indeed an interesting fact (assuming ‘real music’ refers to iTunes dl’s).

      Reply
  5. Just Say No To Streaming

    Streaming is extortion, which is worse than torrenting which is theft.

    Have the guts to pull it off.

    Reply
    • smg77

      Streaming is the future. Consumers are never going back to paying $18 for a CD with only one or two tracks they actually want.

      Reply
      • Anonymous

        Dammit! WE WANT $18 CD’S! 🙂

        Seriously — wake up, dude! Nobody has talked like that for decades.

        Kinda funny when old-timers like you try to predict the future…

        Reply
        • FarePlay

          Can we give this $18 CD a rest? I buy CDs every month and the average price is around $11. Two of the latest, The War On Drugs and My Morning Jacket were both filled with great songs. So go fuck off.

          Reply
          • Name2

            CDs are $11 today and not $18 thanks to consumer resistance and (I hate to say it) Wal-Mart. It takes giant retail behemoths (first Wal-Mart, now Apple) to slap you people in the face and send the wake-up call: your precioussss is not worth, in dollars and cents, what you think it is.

            But the usual suspects kicked and screamed the whole way.

            But yeah, CDs have pretty much been cheaper than lossy digital albums for years now. And your customer doesn’t have to worry about a hard drive crash. Your customers’ data backup arrives already done. Not sure what’s not to like from a consumer standpoint, if someone has decided they want to buy the music. (You remember customers, right?)

            Of course, the new gimmick is “deluxe editions” for new releases, and those reissues where you have to buy the old album again and never listen to it for a premium to get the supplemental material. Every major artist uses these gimmicks to keep the $18-$23 CD dream alive. (Even Taylor Swift does the “deluxe edition” bullshit.) so the poster you’re responding to is not without merit and doesn’t deserve the dismissiveness.

          • FarePlay

            It is called the ‘record business’.

            I do buy some of that stuff. I like it, I’m a collector. I’ve been repurchasing stuff on vinyl, too. i just like it.

            I bought the tri-fold of the first Dave Mason Record, love it. I bought Fragile by Yes for the cover. Love Roger Dean’s Art.

            Photography used to be an important part of branding a release. Abbey Road’s a good example as are lots of them. For those of us from another time, we saw value in that stuff. Somethings missing in the streaming interface for me. It feels remote and disconnected……..to me.

      • DavidB

        Name me one album – just one – for which that has ever been the case. I have put this challenge before now, without getting an answer, so here is your chance to make your mark. Remember, the challenge is to name one full-price album containing only one track which you would be willing to pay for on its own, and which was not available separately at a much lower price, for example as a single, as a track on a compilation album, or as a separate download.

        Reply
        • FarePlay

          Love this question and the fact that you’ve had no answers. It can go either way. Either no one has ever bought an album with just one song they like on it or were willing to pay full price for an album for one song.

          I can and will answer that. Mine is so extreme and obscure that you will not be able to disqualify my answer.

          Nous Sommes du Soleil on the Yes double album, Tales From Topographic Oceans. Paid full price to get that one song. I know because I bought the LP in 1973. It’s a four minute segment embedded in a 21 minute song.

          Thanks by the way. I’m listening to it right now. It’s gorgeous.

          Reply
      • Anonymous

        Streaming is just a delivery method. Eventually (whether in 5 or 50 years) that will change. If you think any particular delivery method is the future, you’re looking at this the wrong way.

        The future is a demanding consumer market that cares about more than just the end product: they insist on convenience, ease, and responsiveness to their desires (whatever those happen to be at the time) and they have sufficient control and choice to reject businesses that don’t listen to them.

        The future is flexibility, responsiveness, and rapid adaptation. It’s a way of being and thinking, rather than a delivery method or product – and most of the existing players are going to have a hell of a time keeping up with that future. If you tie yourself or your business to a particular delivery method, product, or feature, your success has an expiration date.

        Reply
        • Edu Camargo

          Plus three for this incredible comment. In fact people will still want to pay for songs that they really value. My experience with streaming says that it is just a method of discovering things and picking ones that really have relevance to your heart as a music listener. I also can see streaming not as a music ownership replacer, but instead a more personal version of the radio, where all that metters is the things you really appreciate. Those who pay for music and for any other artistic work, actually, has always been a big minority.

          Reply
      • superduper

        Why does this argument for the return to $18 for an album come up so often? Seriously, NOBODY wants $18 CDs to be the norm; but what about $12 or $10 or even $8? The point is not to undervalue it or overvalue CDs, but rather sell them at a fair price point: one that is low enough for consumers will agree with but high enough so that they are not sold at a loss. So, no I honestly have not seen any argument for the return to $18 CDs, but maybe $9 would be better?

        Also, there are several albums with more than one tracks that are good. And even so, you can still buy them individually as a digital download. And if you don’t know whether or not an entire album is good, then streaming will help you make that decision (I will admit to using YouTube for finding a lot of my songs). Of course streaming should be limited and capped so that they don’t cannibalize sales, but as a means of sampling songs and discovering new material it is pretty good. In other words, it’s only good as a temporary rental, not a long-term solution for listening to music. So, because you can KNOW whether a not a full album is good ahead of time, and because you have the OPTION to either buy the WHOLE ALBUM (only if it is good throughout) or INDIVIDUAL SONGS (if it is not), then I would say that your argument is completely outdated and irrelevant because it is not 1997 anymore, when you HAD to buy the whole album, because, well, iTunes didn’t exist back then and you only were able to find songs through the radio, or MTV or Rolling Stone.

        Finally, streaming is not the future. The model for streaming is completely broken and – i think – unfixable because the revenues made from streaming is embarrassingly low, and because it cannot compete with digital downloads in terms of value. Let me just put it this way: there is a lot of wishy-washy talk when it comes to streaming.
        “It will EVENTUALLY pay artists” “They just need to be PATIENT” “PIRACY is the only other option” “It’s ‘INESCAPABLE'”
        in my mind these aren’t strong arguments for streaming, because the fact of the matter is that with every artist added and with every song added, streaming services lose money. Not ONE streaming service has made money yet, and it is continuing to be that way. And yet artists still make barely anything off of streaming services. (and do not mention touring because that argument is not exactly true in all cases and to be honest it’s getting kind of old).
        So streaming? Future? Nah.

        Reply
        • Anonymous

          The point is not to undervalue it or overvalue CDs, but rather sell them at a fair price point: one that is low enough for consumers will agree with but high enough so that they are not sold at a loss.

          Yes, but the only way to properly price something is to experiment in an open market and find out what works instead of trying to guess and dictate – the one thing that most everyone seems to refuse to even consider.

          The logical response here is: “okay, we know that what we’re currently doing doesn’t work; let’s consider the problems and possible solutions and then experiment with all of the reasonable options to discover what in fact works the best.”

          Instead, the common response is: “we know that what we’re currently doing doesn’t work; let’s pick a single different solution and commit everything to it, and we’ll hope really hard that the new thing works out.”

          Here’s why this attitude is actually the biggest threat to artists:

          “A” doesn’t work – the evidence shows that. It’s necessary to find something different (and hopefully better) than “A.”

          If you then embark on a period of experimentation, pursuing a wide range of different solutions and testing everything reasonable, you don’t know what the outcome will be but it’s reasonably likely that you’ll learn what the best option (at that point in time) is and start implementing it within a few years. You’ll probably have something sustainable, for the industry, within 3-6 years.

          If you then decide to just switch everything from A to “B” (where “B” is any other specific solution), you need to actually implement and test B. This process will take a few years (as we’ve seen with the streaming subscriptions). If you’re lucky and your first attempt (B) in fact works well, then you’re done – you mostly just stick with B. But if you’re not lucky (chances are you won’t be – again, see streaming subscriptions), you have to move on to another solution – C. Each attempt to explore a single new solution will likely take a year minimum, more likely 3-5 years on average. So if you have to get to D or E before you find the optimal solution, you’re easily looking at up to 15-20 years before an acceptable model is implemented. If indies and artists can go broke in 3 months, how many do you think can tolerate a 15-20 year series of isolated experiments?

          Experimentation, or guessing and trying one guess at a time? Experimentation is likely to be the more affordable and expedient route to reaching a sustainable model for the industry.

          Also, experimentation is inevitable, whether you have a period of diverse experimentation or test new models primarily in isolation – the only question is how long it takes, and how much you have to lose, to get there.

          Reply
          • Versus

            “Yes, but the only way to properly price something is to experiment in an open market and find out what works instead of trying to guess and dictate – the one thing that most everyone seems to refuse to even consider.”

            This only works in an ethical and legal open market; it is impossible to come to a fair price when there is the black market option of free/stolen, and buyers have no conscience or remorse. In such a situation, no price is low enough to compete against free.

          • Sarah

            If you’re correct, then that is unfortunate for everyone – but I don’t think you are. Hopefully your own experiences with people in everyday life have led you to conclude that most people like to do the right thing most of the time. The industry should spend its energy and resources on that clear majority, not on the relative minority who are genuinely remorseless thieves. If you’re constantly on the defensive, that doesn’t leave you much time to pursue growth – the best you can do is maintain (and even that isn’t working out so well).

            All I propose is experimenting and finding out for certain, rather than assuming and guessing.

            If you’re right, you’re right and nothing changes; if you’re wrong, you might wind up much better off.

          • superduper

            I agree, experimentation is crucial, but at some point you have to find the right solution, so I guess the question is what would plans C or D or E be. In my view a better solution is to use streaming to promote albums AND tours, not streaming killing albums, and only promoting tours.

            Also, what Versus said was interesting in how chaotic and unstable the situation is. It’s pretty sad to see the music industry come to the point where consumers actually BELIEVE that music should be free or at an unreasonably low price, which is nonsense. And yes, it’s true: not even $9.99/month is enough for the amount of music you are getting, because, remember: you are not paying for individual artists, you are paying for everyone on the service, so it really has to be split amongst everybody else, and that is why the value is always diminishing.

        • Anonymous

          streaming is not the future. The model for streaming is completely broken and – i think – unfixable because the revenues made from streaming is embarrassingly low, and because it cannot compete with digital downloads in terms of value”

          Correct.

          Reply
          • Name2

            Digital downloads are the single worst value in music in my 45 years of buying music on Planet Earth.

            Hope this helps.

        • Name2

          Why does this argument for the return to $18 for an album come up so often? Seriously, NOBODY wants $18 CDs to be the norm;

          Please explain “Special Edition” CD pricing. Thanks.

          Reply
          • superduper

            I can and I will explain special edition pricing. But first

            First of all, for anybody brining up special edition pricing, just remember that it is only a part of the market. A great deal of releases are NOT special editions or remasters, but rather new releases. It’s not as if it is not a valid point to critique special editions or that it is irrelevant; it is. However, it’s something to keep in mind, that it is not really the ‘norm’ in a general sense. In other words, most CDs are not $18 special editions.

            Secondly, you are right in a certain sense that special editions can be (NOT ALWAYS but SOMETIMES) overpriced and overinflated way to desperately cash in on old material. However, there are also several great special editions that are worth a good deal of money, even though there are also a lot that aren’t worth it. So, expensive special editions are not always bad, and they aren’t always overinflated, and in some cases they can be a revelatory relook at rediscovering a good album. For instance, Jethro Tull’s 40th Anniversary Edition of Thick as a Brick is a classic example of a great reissue.

            Now, to explain the pricing, the reason why they are generally speaking more expensive, is because they can be. They are offering you something that is more than the standard edition. Usually that is because they have extra tracks (usually), sound better than the original (at least claim to), enhanced packaging, extended liner notes, special features, sometimes even a DVD. Whether or not it is ACTUALLY worth that much in true value is debatable and it varies based on the album that is released and the quality of the reissue. What is true is that the PERCIEVED value is higher, and as such it would at least be reasonable if they charged an extra fee.

            But I think you are blowing it out of proportion by saying that deluxe editions are ways to ‘return to the $18 CD era’ because it is true that a lot of CDs are lower priced now, and are in the $8-$15 range, as opposed to the $17-$25 range. Remember, pricing new releases is different than pricing deluxe editions, because Deluxe Editions are “supposed” to be more expensive because they have more features (again, debatable but I hope you see my point), whereas standard new releases are generally cheaper. And just another thing to add, a lot of “deluxe editions” that come out with new releases are either 1) generally the same price or only marginally more expensive than their standard counterpart (like Taylor Swift’s “1989”) or 2) what would in essence be the standard release with the standard price (like Kendrick Lamar’s “good kid, m.A.A.d city” which I haven’t even seen the standard edition of in stores [the one with the family photo]; only the deluxe w/ the few bonus tracks [the one with the van]).

          • Name2

            Now, to explain the pricing, the reason why they are generally speaking more expensive, is because they can be.

            The exact same reason streaming can be the price it can be. Why is only one side allowed to play “Yay! Capitalism!”?

            But I think you are blowing it out of proportion by saying that deluxe editions are ways to ‘return to the $18 CD era’ because it is true that a lot of CDs are lower priced now, and are in the $8-$15 range, as opposed to the $17-$25 range.

            You act as if it was not the case that the $18 CD was the norm for years and years in mall stores and dedicated music retailers – the first to fall. You act as if this was not the standard practice when $18 was a lot of money (it’s still a lot of money.). You act as if it was el nino or solar flares that finally got us to $9 and $11 new releases after many many years.

            In fact, it was a retailer (Wal-Mart) with more muscle than its supplier – an exact flip-flop of the record business setup; it was new sectors (gaming and movies) which offered astoundingly better value for every $18 the consumer spent; it was the bottoming out of the demographic which could afford music at these insane prices (hint: they weren’t working for minimum wage) and had now bought everything twice.

            And just another thing to add, a lot of “deluxe editions” that come out with new releases are either 1) generally the same price or only marginally more expensive than their standard counterpart (like Taylor Swift’s “1989”)

            Swift’s actions devalued her own non-SpecialEd version. Like off-brand sneakers or homemade hamburgers, a tween with the time to worry about such things wouldn’t be caught dead with the sub-$10 Wal-Mart special. I just went on Amazon, and the only available “1989” Special Ed is $37. I presume this is because it is an import, but supply-demand rules still apply. Certainly, some Superfans-come-lately are going to be parting with $37 as the tour progresses.

            Again: Good for Taylor Swift, but nobody else.

            Which is pretty much her M.O.

          • superduper

            I think the point you make is a little bit strange. I never said that more expensive CDs were not the norm in the late 90s/early 2000s. I also never proposed any reason for the price drop, although your reasons are probably true, so I can agree with you on that.

            Also, your example for the 1989 (non)-deluxe edition [you’re also right about that too! there’s not even any bonus tracks!] may not be a valid comparison because if it already that expensive and only available as an import on Amazon, then that means it is probably out of print and replaced with the standard edition.

      • Anonymous

        “Consumers are never going back to paying $18 for a CD with only one or two tracks they actually want.”

        Clown comment, bro. Stop living in 2003.

        Reply
  6. An Indie

    Unless and until the majors (and everyone else) has the solution that empowers creators against the DMCA safe harbor there is ALWAYS going to be legal, on-demand, free streaming music (i.e. YouTube, Soundcloud, etc.). Everything you hear/read leaked from the majors about “dealing with free” as it relates to Spotify is NOTHING more than negotiating strategy.

    Reply
    • Tim F.

      Nonsense. Musicians, since the dawn of time, have always had some forms of remuneration while also needing to allow for the fact that they won’t always be directly compensated, as they see fit for what they see as theirs. Whether that was someone humming a tune, another band playing their song, people sharing albums, listening to the radio together, recording the radio, making mixtapes, and on and on…

      If a musician’s success or failure is directly correlated to their ability to extract every last cent from every “performance” of their music, the odds are they either aren’t very good musicians and/or were never going to succeed anyway. It’s certainly not an easy career choice, but arguing that any ability to “leak” music guarantees the future existence and success of freemium streaming is pure nonsense.

      Reply
  7. Tim F.

    This is PRECISELY the value proposition posed by Apple’s 3-month royalty-free trial period. On one side a company that wants to pay producers a reasonable rate via a reasonable subscription fee and is completely against providing a completely free, ad-supported alternative but wants to draw in consumers used to free with a one-time, temporary free trial and on the other a company that would rather cease to exist (and likely would cease to exist, if so) than not offer more than 70% of its users a completely free service that remunerates producers thousandths of a penny for their content. And yet many are whining that a 3 month free trial will allegedly put hundreds of independent labels out of business? Ok.

    Reply
    • Anonymous

      Don’t try to create a contrast where there’s none.

      Apple (today) = YouTube = Spotify = trash.

      Reply
      • Tim F.

        I don’t see any logic to your comment whatsoever. The Apple of today staunched the damage of Napster and aided the music industry for more than a decade and the Apple of tomorrow is providing an alternative to Spotify. How does that make Apple equal to YouTube and Spotify and trash?

        Reply
        • Anonymous

          “How does that make Apple equal to YouTube and Spotify and trash?”

          You might want to read a few Apple Music stories if you really don’t know the answer.

          And yeah, we all loved Apple.

          Reply
        • Versus

          “The Apple of today staunched the damage of Napster”

          Evidence for this?
          It could just as well be argued that Apple encouraged piracy by doing away with DRM and selling a billion iPods which do not distinguish legal from stolen music.

          Reply
    • Anonymous

      Let’s just be honest. Most people here want consumers to pay $1.29 downloads AND $10 per month for streaming the same exact music AND a monthly surcharge on ISP bills. They want their cake, your cake, and everyone else’s cake.

      Reply
      • Tim F.

        …while claiming everyone else’s cake is actually a shit sandwich without even trying to bake a cake of their own.

        Lol

        Reply
  8. Anonymous

    Soooo….

    Daniel Ek will have to fold Spotify if the labels succeed in limiting a free offer – his threat will simply be jumping before he is pushed.

    Why? Because ‘freemium’ is cannibalising digital and physical revenues faster than it is replacing them. It is not ‘free’ that is killing music, it is ‘free on demand’. There is not enough jeopardy and scarcity to push consumers to upgrade to pay. We all know that a significant proportion of music purchasing was impulsive – what is driving the impulse to pay for premium if the full catalogue remains available, and worse still, fully searchable?

    I do have sympathy with Daniel Ek. He has tried his best, and has played a more honest broker with the industry than the other digital giants. Until the labels agree a consistent approach to all digital platforms, they will continue to lose revenue. Lets be absolutely clear, the labels have to do something – I think they will face a real battle to survive over the next 5-10 years if revenues continue to decline and the platforms increasingly own the relationship with the fans and the casual music audience. Why would artists choose to remain with labels if they could do direct rights deals with platforms and take a better share of relatively small digital royalties?

    Reply
  9. Paul Resnikoff
    Paul Resnikoff

    I’ll add something to this discussion while it’s getting started. So there’s a lot of intel I’m getting about Spotify’s IPO, specifically the complete inability to go public while everything is in this pre-licensing period. And even after the deals are renewed in Oct., which they most likely will be, you will probably see an altered Spotify (more on that later).

    Wall Street may decide to wait an entire year to see more stability in those relationships.

    Anyway, I’ve got a lot more on this Wall Street aspect, please add what you know!

    Written from Vegas, EDC day 2! paul.

    Reply
    • FarePlay

      Please no more EDM News. Out of respect to Nina and not wanting to be a complete pest I’ve held my tongue, er finger. I’m not a fan of Vegas either. So there.

      Reply
      • Paul Resnikoff
        Paul Resnikoff

        If you’ve never been to EDC, which had 130,000 people this weekend, you really can’t understand the power of this genre today. Everyone on my team was soaked in the experience this weekend, not to mention working with EDM-focused companies and initiatives. Naturally we’re going to mention it.

        Reply
    • FarePlay

      Paul you did see Spotify hired the former CFO from Netflix who took them through their IPO.

      It just occurred to me that EK coming from uTorrent probably has that whole piracy / exposure is king mentality. On some dillusional level feels like he’s doing something positive for paying anything something for music, Sadly, neither Spotify nor the artists can make a go of it from cash flow. My question is if Sotify borrows another billion, will their valuation go up $3 billion or is this really just fodder for their upcoming greater fool campaign.

      Sadly he never managed bands, worked in a record store or ran an indie label. I did all 3, so my sense of reality is much closer to reality.

      Reply
  10. Willis

    Is Spotify folded, it would be deja vu for the record industry a la Napster.

    Reply
    • Anonymous

      Oh, I didn’t know that. Guess everybody stole Taylor Swift’s 1989, then. I mean, it’s not on Spotify, so…

      [Phone ringing, it’s Taylor’s crew. “Dude, 1989 sold more than 4.6m copies in the US.“]

      Reply
      • Rickshaw

        You’re just a blabbering psycho. The original comment was correct – another example of how an industry (recorded music) doesn’t embrace tech and try to find ways to work with it. Way to stick to the old bury your head motto.

        Reply
  11. Anonymous

    This is a long term play for Spotify – eventually to make ALL of the music free – delusional stance of somebody who thinks that everything should be free. If you read/know about the actual breakdown of free vs paid for Spotify, and the fact that free brings in 9x less revenue, you’ll understand that the more users Spotify has, less per stream entire industry is bringing. Given that Spotify is now 23% of entire streaming revenue, they’re fairly visibly impacting the entire industry in very bad way – so the future is now and Spotify is a modern day evil of the music industry.

    Spotify’s successful extortion to make labels agree to this is also explainable – major labels owe something like 20% of Spotify and Spotify’s IPO should add nicely to their bottom line. Except that, once again, none of that will go to Artists.

    Reply
  12. Johan

    Commercial radio is free for listeners and generate almost nothing to the music industry. Commercial radio has a turnover of 14 billion dollars, in the US alone.
    If free streaming took 50 % of that market and gave 60 % of the revenues back to labels and artists that is 4,2 Billion dollars which is almost as much as the entire music business in the US today.

    Targeted streaming ads have a much higher income per listener than radio commercials in general and are normally listened to in smartphones so the potential to get higher CPM:s and also steal some of all the billions of Google ad revenue should also be possible.

    My conclusion is therefore that we should not push for freemium to end. We shall just demand higher pay for each stream so that the free streaming services gets better at selling ads and acquires more listeners from commercial radio.
    If this suceeds, we will be able to have a much bigger music industry than the amount that people are willing to spend on music today as we also receive some of the ad revenue from corporations.
    Paul, what do you think of this?

    Reply

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