How Sia Lost Millions to Spotify With One Stupid Decision

Sia <3 Spotify

Sia Furler is one of those artists with a heartwarming success story.  You can’t help but root for her!  But Sia’s ‘overnight success’ actually involved more than two decades of struggle, and dedicated fans have known about her long before she broke into the mainstream.  You see, Sia (pronounced like ‘see ya’ later) has been toughing it out since the 90s from her native Adelaide, Australia.

Now, Sia is a worldwide sensation, and one of the biggest artists on the musical map today.  In fact, her top single, the super-catchy ‘Chandelier,’ has more than 1.1 billion views on YouTube, one of just a handful of music videos to ever achieve this incredible feat.  Her next-biggest vid, ‘Elastic Heart’ featuring Shia LaBeouf, just crossed 500 million views.

Which means that Sia’s top two YouTube videos alone have more than 1.5 billion views, something very few artists will ever achieve in their lifetimes.  Now, after all that hard work, it’s time to cash in.

So why is Sia sacrificing millions of dollars by directing fans from YouTube to one of the lowest revenue-producing platforms, Spotify?

Yes, Spotify is definitely among the worst when it comes to paying artists.  If you’re lucky, you might get half-a-penny per stream (but usually less according to actual royalty statements published on DMN).  But if you’re locked into a label deal (major or indie), you run the risk of NEVER getting paid.  Because if Lady Gaga couldn’t even get paid by Spotify, chances are you’re going to have problems as well.

+ Digital Music News, September 25th, 2015: “Universal Music Stole Streaming Royalties from Lady Gaga, Ex-Manager Says

Actually, there are platforms that pay even worse than Spotify (assuming Spotify pays).  That list includes YouTube, which is barely better than that other low-paying ‘platform,’ BitTorrent piracy.  SoundCloud is probably somewhere in-between.  But if YouTube is abysmal when it comes to royalty payments, at least YouTube is creating more than 1.5 billion sales opportunities for this artist.

So why is Sia squandering every single one of those opportunities, and capturing only a fraction of the real revenue potential?

 

Pray to the Spotify Gods

What could Sia be doing differently? Here are some better-paying formats and opportunities that need to be prioritized, from best-paying to worst:

(1) In-person ‘Experiences’: Tickets to shows, high-priced appearances, etc.

(2) Merchandise.

(3) Physical formats: Vinyl and CDs.

(4) Downloads: (a) direct downloads (powered by yourself, Bandcamp, CD Baby, etc.), then (b) stores like iTunes and Amazon.

…and don’t forget:

(5) Wildcards: Crowdfunding campaigns, diversified products, etc.

(6) Sponsorship opportunities:  If I’m a Nike executive looking for a brand ambassador, who should I contact to start that discussion?  There’s ample room to place that information, even if it’s just an agency name.

 

Now, let’s move on to the crappiest formats that contribute very little monetarily to the artist, starting with the worst.  At best, these formats are generating exposure for better-paying revenue opportunities, like live shows and vinyl.  At worst, these formats are draining fans away from those higher-paying formats (which is why you see big artists like Adele and Taylor Swift refusing to participate in them, because these artists already have the exposure they need):

(1) Piracy: BitTorrent, Grooveshark clones, etc.

(2) Free on-demand streaming: SoundCloud

(3) Ad-supported on-demand streaming: YouTube/VEVO

(4) Mix of ad-supported and paid streaming: Spotify, Deezer

(5) Ad-supported, internet radio: Pandora, iHeartRadio

(6) Paid-only streaming: Apple Music, Rhapsody, TIDAL

 

But this gets even worse.  Sadly, Sia is not only pointing fans to Spotify, but re-circulating traffic back into YouTube (just look below the ‘Chandelier’ video).  Effectively, this artist is helping to promote large amounts of revenue and growth for these tech giants (and their executives and investors), while gaining very little for herself.

That’s absolutely not the attitude of another YouTube billion-plus artist, Adele, who is constantly prioritizing platforms that pay better.

 

Adele vs. Sia on YouTube

 

So, let’s review: if you’re lucky enough to be getting tons of attention on a streaming platform like YouTube, work very, very hard to migrate those fans to better-paying platforms and experiences.

 

And please do NOT recirculate those fans to platforms that pay horribly, especially when you have fans that are more than willing to give you real money.

 

38 Responses

  1. GGG

    I mean, you can still do opps 1-6 while you champion streaming/YT views.

    Also, the link you iTunes is literally the next text line down.

    Reply
  2. DavidB

    Patience has its limits. I’ve seen some stupid stories on DMN, but this takes the biscuit. Simple question: does a play on YouTube bring an artist more money than a play on Spotify or vice versa? The article assumes that it does, but I know of no evidence whatever to support this, and common sense is against it. YouTube is to all intents and purposes entirely ad-funded, whereas Spotify has a significant proportion of paid subscriptions, and we know that paid subscriptions generate a higher revenue per play than ads. How this revenue is divided among the various interested parties is another matter, but we have no reason to suppose that the division is more favourable to artists in the case of YouTube than Spotify.

    Reply
    • GGG

      No, I think the argument is that if the iTunes link was there instead of the Spotify link (and/or instead of being alllllll the way right below it) Sia would have sold 1 billion albums.

      Reply
    • Paul Resnikoff
      Paul Resnikoff

      Simple question: does a play on YouTube bring an artist more money than a play on Spotify or vice versa?

      In general, Spotify pays more than YouTube (see above)

      Reply
      • DavidB

        The article is headed ‘How Sia Lost Millions to Spotify With One Stupid Decision ‘ and you ask prominently in the article: ‘why is Sia sacrificing millions of dollars by directing fans from YouTube to one of the lowest revenue-producing platforms, Spotify? ‘ This only makes sense if Sia would get less money from Spotify than from YouTube. You do admit, less prominently, in the article, that in fact YouTube payouts are even worse than Spotify, but that just means the article is inconsistent as well as sensationalistic. You provide no evidence or argument at all to show that Sia is ‘sacrificing millions of dollars’.

        Reply
    • F Streaming

      One album sale is almost better than 1,000,000 streams.

      Well, not quite but it’s close.

      Reply
      • MB

        1,000,000 streams is about 500 albums. The we have the fact that the listener will keep listening to the record (more streams), so in a lifetime the listener will stream as much as buying several copies of the same album.

        Reply
      • Me

        1,000,000 Subscription Spotify Streams = about $7,000. 1,000,000 Ad-Supported Spotify Streams = a little over $1,000.

        Unless you’re the Wu Tang Clan, that’s definitely way more than one album.

        Reply
    • Me

      That’s the worst thing you could do. You’d be missing out on a significant income and at the same time blocking 20,000,000 people from accessing your music.

      Reply
  3. Versus

    She should be sending them to a site like BandCamp which actually pays fairly.

    I only wish Bandcamp allowed partial previews of tracks instead of insisting on full-track free streams.

    Reply
    • Digg

      “I only wish Bandcamp allowed partial previews of tracks instead of insisting on full-track free streams.”

      They do. It’s a paid option.

      Reply
  4. Anonymous

    I fail to see what the problem is. Maybe she just cares more about her fans and wants them to be able to access her music at their leisure by their method of choice. She and Adele are already making an obscene amount of money. Adele is just greedier.

    Reply
  5. Adam

    Maybe, just maybe she’d prefer the WIDEST audience possible. And is happy making a few hundred thousand or million or two less so that the she can spread her art as far as possible.

    Nah, that’s just crazy talk right?

    Reply
    • Me2

      That’s not crazy crazy talk. It may in fact be her decision. It’s different from Adele’s decision, which is a different decision than that of Skrillex, which is different from Bjork’s decision.

      The point is that it’s the artist and management, not some platform making the… decisions.

      Remember those?

      Reply
    • Paul Resnikoff
      Paul Resnikoff

      Getting widespread dissemination and also getting paid aren’t mutually exclusive goals. And in this case, Sia already has massive exposure (1.5 billion = massive in my book). The question is, why is she sending people over to Spotify, when a large percentage of people using Spotify already know about her?

      Strategically, how much more ‘wide’ does this artist go if she’s on more Spotify playlists?

      Or, is it better to start working up the revenue pyramid at this stage?

      Even better, what if people who purchase items like vinyl, or find out about tours and buy tickets, actually become more substantial, longer-term, more interested fans over time? More money, better fans.

      Reply
      • DavidB

        ‘why is she sending people over [from YouTube] to Spotify, when a large percentage of people using Spotify already know about her?’

        Maybe because Spotify pays on average maybe 5 times as much per play as YouTube?

        Reply
      • JRMat

        Perhaps for some, the world does not only revolve around money. After a point of comfort is reached, more money does not necessarily create any more satisfaction or fulfillment in one’s life. Sharing, with an intention of creating more joy for others, whether they wish to pay or not, could bring far more fulfillment for Sia than the Adele model. I would love to hear from Sia and have a deep philosophical discussion with her.

        Reply
  6. Rikki

    your kidding me what has America become dumbed down stupid & ignorant Mc Music with a speech impediment…………..

    Reply
  7. MarkH

    I’m a little confused.

    In this article you state: “Because if Lady Gaga couldn’t even get paid by Spotify…”

    And in the article you link to, it states: “So, Spotify is paying out a lot of money, it’s just not finding its way into the hands of the artists.”

    Reply
    • Paul Resnikoff

      There’s money generated and distributed, it’s just not distributed back to the artist properly. In the case of Lady Gaga, very bluntly, she was (and probably is still) getting screwed. Additionally, rates are forced into artificially low levels because of heavy advances and other non-per-stream payouts to label partners. These labels, in turn, contractually protect themselves from having to pay out on blanket-level payments (this is also documented).

      Reply
  8. R.P.

    If her management didn’t negotiate streaming control then they blanketed into her deal somewhere and the label manages her streaming dollars, as far as collecting and utilizing it as part of recoupment to themselves (the label). If so, then the label packaged her under one of the first big money transaction deals that Spotify made with the majors. Basically, they made a large chunk off of her already, which also went to recouping and probably new budgeting.

    Future artists should negotiate streaming (altogether) separately, the same way they would with publishing.

    Reply
  9. Danny

    I love this post. I think the smart artists/labels, especially DIY artitst, will window their releases to various platforms beginning with the ones that pay the most, to the ones that pay the least. You eventually need to be on all platforms. But if you are going to drive any traffic yourself, you obviously want to drive it to the platform that provides the highest margin. That would be Physical, followed by download, followed by streaming. Something like this:

    Vinyl
    CD

    ClearTracks
    Bandcamp
    CDbaby
    ITunes/Amazon/google play

    Google play streaming
    Tidal
    Beats
    Rhapsody
    Soundcloud (if available)
    Apple Music
    Deezer
    Spotify
    YouTube

    Reply
    • JRMat

      That is a great sounding self-serving strategy, but forgets about the listeners/fans. Making it difficult for them to get to your music, alienates and loses many potential followers that are needed by the indie artist.

      Reply
  10. Derek S.

    Perhaps Sia is an artist whose sole concern is not making a buck but pioneering for the future of music consumption, which is streaming in some way shape or form. Sure, maybe physical media generate the most profit per unit sold, but they will be obsolete soon if they aren’t already. Consumers crave convenience, and streaming is convenient, whether it is Spotify or YouTube or Apple Music and so on. It is time the music industry as a whole stopped clinging to the past and look for ways to make the streaming model work better for all involved. And certainly one of the big reasons streaming is basically terrible for artists from a financial standpoint is because the record labels, at least the majors, are taking all the profits. The music industry has many problems, but the streaming platform is not one of them, and one way or another streaming isn’t going away anytime soon.

    Reply
  11. Huh?

    “But if YouTube is abysmal when it comes to royalty payments, at least YouTube is creating more than 1.5 billion sales opportunities for this artist.”

    So, I can stream the song on YouTube on demand. I can also stream it on Spotify, on demand.

    But somehow, the complete on-demand availability on YouTube “is creating more than 1.5 billion sales opportunities for this artist” but the presence on Spotify isn’t?

    Reply
  12. steven corn

    So, Sia had 1.5 billion views on YT and ~0.8 billion plays on Spotify. Spotify pays 10x per stream what the average revenue per view is on Spotify.

    So, Paul, I don’t understand your math here. If “x” is spotify’s rate:

    Spotify = 800,000,000 * (x) = 800,000,000
    Youtube = 1,500,000,000 * (x/10) = 150,000,000

    The breakeven ratio would be for Youtube to be 1/2 of Spotify’s rate which is not the case.

    Reply
  13. JTVDigital

    Not sure what point you are trying to make here exactly.
    Do you think Sia should do like Adele, restricting streaming, windowing, etc?
    Where is this idea coming from?

    Artists have different profiles and different audiences, what works for Adele may not work for Sia (and definitely does not work for unknown indie artists with no audience).

    If her label is directing people to Spotify there must be a good reason for that. Sia is a clever songwriter and businesswoman, don’t take for granted she does not know what she’s doing here.
    And I’m sure they’re not dumb and make their decisions based on data, rather than a smokey strategy or “anti-streaming” posture.

    Her video description includes streaming AND download links, so what’s the problem here? That the streaming link appears above the download links? Who cares?
    Do you know anything about Sia’s audience demographics? I don’t, but I’d bet this is a younger audience (taking into account her collaborations with Guetta, etc) than Adele’s. So, what’s more appealing for a younger audience? Streaming. And YouTube.
    Also note that the video is not on YouTube but on VEVO, which pays more (it appears on her YouTubeVEVO channel since all VEVO video are syndicated to YouTube, amongst others distribution channels)

    Regarding the suggestions listed, well, you can’t compare these items, these are certainly valid revenue sources, but complementary to each other, not competing. Seriously, “experiences”? “Merchandise”?
    So let’s say you’re watching a video and want to listen more from her songs, “oh let’s see if the artist has some experience or t-shirts to sell”. I don’t buy it. Streaming and YouTube are not going away anytime soon. Deal with it 🙂

    Reply
  14. Anonymous

    Money isn’t what it’s all about. Sure she needs to get paid and make a living but it’s her art that she is proud of and wants to share. I praise her for the availability of her art and how it Is accessible to people who want to hear it on a plethora of channels and platforms.

    Reply
  15. kev

    By pushing her fans to spotify, the platform is more for music, allowing the songs to be added to playlists, favorited, ranked and shared. Spotify has the fastest growing subscription user base. Being on shared playlists etc, her music will be more exposed to new listeners. The growth of streaming on spotify hasn’t been realized yet. It’s becoming or has become the place to go for listening to your own music collection. The rest of her music will be effortless to listen to in spotify, and will increase as well.

    Reply

Leave a Reply

Your email address will not be published.

Verify Your Humanity * Time limit is exhausted. Please reload CAPTCHA.