Totally agreed with this - and made this point earlier when viewing the killers page! 

So name a better way to distribute your music instantly legally online. Youtube? > Why is everyone OK with Youtube BTW?

What are the "strings and issues that Spotify present"?

And please, CDs? Vinyl? For real? Are you sure that your blog is called DIGITAL music news?

1) Talk to young people man.

2) Get out of your hipster bubble.

Soundcloud.

Does Soundcloud pay you royalties when someone listens to your track?

Just imaging someone hearing about your band, finding your website, listening to the tracks and then deciding it's not for them and move on. At least you'll get your half cent from Spotify for that person checking out your track. You don't get that from Soundcloud, nor from YouTube.

I often surf the net to find new music. I may listen to 100 tracks before I find one I like enough to want to buy. Do your maths on that one...

Spotify isn't going anywhere people. Embrace it or get out of the music industry. Artists won't make that much in the first couple months with this, but a couple years later you will see dividends. I manage an artist and on one of his youtube videos he has 100k+ views. He's not getting paid a dime for that. According to spotify he would of already made 400$. Better something than nothing...

"I manage an artist and on one of his youtube videos he has 100k+ views. He's not getting paid a dime for that. According to spotify he would of already made 400$. Better something than nothing..."

A good point but your artist's work is should be worth much more than that. Settling for 'something' rather than nothing won't sustain a career.

He should be signed up with us. Ifhe was he would be earning from every single youtube spin a pro rata share of ad $$.

To many artists look away from these things because they are still relatively speaking small amounts.

Thank you for this response. It is amazing that this blog is called digital music and yet most folks on here turn their noses up at the idea of moving forward in the music industry. 

I concur

Sorry, vinyl sales are great for many many artists. Not just hipsters. Vinyl pre-dates hipsters by almost 100 years. Loads of electronic music artists sell vinyl, and a lot of it.

The article wasn't about digital distribution (and I could rattle off 100 different aggregators that do it way better than Spotify). It's about maximizing digital profits. Spotify completely sucks in this aspect, and rapes musicians of shitloads of money.

You're welcome.

Like the famous line from Network, "I'm mad as hell and I'm not going to take it anymore", I think the creative community and musicians in particular are tired of years of abuse.

I love these guys who talk about the "new model" and dinosaurs clinging on to outdated methods; as if technology is the arbiter of what's right and what's wrong and eliminating somebody's ability to earn a living is just fine.  Ah,ah no touring, t-shirt, they're all wealthy drivel.

Why Spotify?  Well let's start with their 20% equity deal with the labels.  

"Right now the labels have the leverage, and Ek has wisely brought the big players into the tent—as part of the licensing deals, Spotify granted equity stakes to the four largest music labels (Warner, Universal, EMI and Sony) and Merlin. Industry sources put their collective cut at nearly 20%." Steve Bertoni, Forbes Magazine.

Am I the only one smelling something rotten here?  But let's not stop there.  Sean Parker is on their board and apparently Shawn Fanning is also involved.  So let's draw this conclusion, Napster introduces file sharing which begins a decade long slide in the devaluation of music, films and books through illegal downloading.  Now Spotify is vilified for getting a fire sale deal on licensing music.  

Is there something wrong with this picture?  

CDs are digital.

@ Versus. Touche!

Zing!

Is there not a chance that Spotify have done a promotional deal with some large artists to put the player on their sites?

I refuse to beleive that any product on any big artists site appears there voluntarily, without a deal being done. 

If that actually is the case, someone's missed a trick...

Why is that?

So the videos of big artists in Youtube have a special deal with Google?

Yes they do actually.  Video rev-share deals are very common now.

Good advice Paul. ALWAYS ALWAYS ALWAYS own your own system.

Yes! Only distribute CDs. It is the future.

I disagree with this IF THE SONG IS A SINGLE. I say promote your single, put it out for free and if its good enough people will buy the album. 

a bit of simple logic can never hurt :-)

awesome article

NOT

This is real information for real artists.  

Like the ones you advice with your "consulting services"?

http://www.ktcmgmt.com/faq

How much does your service cost?

$100 for one hour or $200 for two hour consultations by phone or Skype similar service.

Hot lines are cheaper!

Paul, DMN is so psychitzophrenic sometimes it's hard to keep up.

Just yesterday you're wailing away at how Pandora is getting gored by evil SoundExchange with crazy royalties.

Today you're telling artists not to use Spotify play buttons on their websites based solely on the paltry royalties that Spotify pays out.

You do know that on a per stream basis Pandora pays LESS than any on-demand streamer don't you? 

While Pandora's negotiated/settled rate with SoundExchange is a greater of percentage of revenue or per stream rate deal it's still absolutely a fact that a non-interactive service like Pandora would have a lower rate than an on-demand service.  To qualify for that lower rate the non-interactives have to comply with "performance compliments" and other regulations limiting how many songs they can play by one artist over a certain period, etc.  Compare that to on-demand services that allow a fan to play the same song over and over 1000 times if they like. With those greater use rights the on-demand services have to pay more.

So, what is it?  Is Pandora paying too much or is Spotify paying too little?  I understand good copy and drawing eyeballs to your site but I hope you care about not misleading your readers.

@Food For Thought,

I think you're steering me into a false and very flawed comparison here.  These are two separate issues, but perhaps I can better articulate and distinguish my arguments here.  

(1) Pandora

The fundamental question that is now appearing around Pandora is whether this company can survive under current non-interactive streaming rate structures.  The argument from SoundExchange would be that it's Pandora's responsibility to properly monetize its business, not the issue of SoundExchange (or any other licensing partner). 

Yet, Pandora is an incredibly successful product that has changed the face of music consumption in many ways, and its leaders - for example, Tim Westergren and Joe Kennedy - are incredibly smart guys that are trying and experimenting to figure this model out.  

And they are figuring a lot out, but I wonder if they are trying to meet a monetization goal that is simply unreachable, given external issues tied to consumer willingness to pay or broader media saturation, etc.?  

Perhaps the solution lies with a more relaxed and realistic rate structure - however, it seems that CRB rates on non-interactive streams are going up, not down.  And licensees like Sirius XM are making drastic moves to lower their royalty footprint and licensing flexibility through direct deals.  I'm not sure Sirius is just trying to 'steal from artists' or 'get a cheap discount' as many allege (including SoundExchange, most likely). Rather, I think they are trying to find a more equitable and flexible royalty structure, and at the least signalling dissatisfaction with the current system.

In both cases, I wonder if there's room in middle - so that SoundExchange gets paid and artists get paid, while companies like Pandora get to survive as profitable, stand-alone entities.

(2) Spotify

Back to Spotify, the above article is actually pretty specific - it pertains to whether artists should be embedding Spotify Play Buttons into their site.  That is based on the artist's portfolio of possible sales channels, and what they are likely to receive from those channels.

Spotify seems beneficial for discovery, but I'm not sure it makes sense to drive fans back to Spotify when far better monetization options exist.  

And, I'm not sure what that has to do with Pandora.

Eager to hear your response.

/paul

Where the hell do you consume music? In your walkman?

Who would go over and over again to an artist page to listen to an album? You play it once, then you add it as a playlist, if you like it.  If you really like it, you buy it or you go to the concert.

Also, Spotify pays the same percentage of their income as iTunes. Just streams are cheaper than MP3s, but on the other hand, MP3s are free on PirateBay. You keep forgetting that.

Also, the amount paid is way bigger than the one paid for radio streams. Would you advise to artists not to go on Radio because of the payments?

Also, you do know that the money that the artist gets is based on the deal he/she has with the record label, right? I mean, that is like basic, really basic knowledge of the music industry.

Unbelievable the lack of information that you have on this piece man. Screwed up big time.

Martin you said:- "Also, Spotify pays the same percentage of their income as iTunes."

Oh yeah? Oh yeah?

And where is you're evidence for this?

Let's see it!

Come on!

Evidence Evidence Evidence!!!

You also said:-"Unbelievable the lack of information that you have on this piece man. Screwed up big time."

I think this applies to you, not to Paul.

Where is your evidence for the way Spotify splits their income?

Ok now.  You, and many of the people commenting, are totally missing the point of this article.  He's not saying artists should boycott Spotify.  He's saying that they should consider more profitable sources to point people to on their websites than Spotify. 

First off, streaming your music on most any site is really easy for an artist to do.  So, if people can listen to your music right there, why give them additional places to receive it for free, when you could advertise your product and promote the sale of such.  A lot of people know about Spotify and if they want to listen for free (or are subscribed), they're going to go there anyway.  All this spotify point thing does is take attention away from your more profitable mediums (download/cd/vinyl/ect.).

Great article, Paul.

Paul is totally right, this is a scheme to get artist/musicians to do Spotify's marketing for free.  Spotify should pay you for every click thru from your site to Spotify (at least negotiate a free cola from Spotify's new partner).

Be wary of some of the posters in this discussion. Jillian above called one out for scamming artists.  There are others.

Like the one who pointed out that labels and publishers have equity in Spotify.  He should add that said equity will likely not amount to the combined salaries of the major label Chairmen, CEOs, divisional CEOs, presidents and so on.  If and when it does become significant it will be spread among professional investors, other senior execs and finally stockholders (maybe).  Very few, if any, artists will ever see any of that money.  If you have a major label deal that allows you to participate in label equity investments please give us the name of your lawyer.  (U2 and Chris Blackwell/Island were an exception from another century)

Someone else actually said "your music must suck if it doesn't sell." Not "your music must not be commercial" or "you may have to work to find an audience" but "your music must suck."  That ignorant statement says more about the state of this business than anything.

Be wary and think for yourself.

Come on Paul. A week ago you shooted:

"Still Think Streams Are Killing Downloads? Think Again..."

and now this advice?

I fully disagree. Have you seen how many artists are putting up free streams on their website? If they replace these by the Spotify Play Button, they may make a few bucks from these streams.

Are you also advising artists not to put a link to iTunes on their site? Isn't that a freebie advertisement as well with the purpose of getting iTunes subscribers?

@HansH

I may not be articulating myself as well as I should.  Whether streams are cannibalizing downloads is not important to the issue of this article. This article is about whether artists should embed Spotify play buttons into their sites, when other higher-paying options and formats exist.  It is actually a fairly narrow and specific topic, not a broader look at format sales trajectories (which is what the other article is).

If you're asking me to recommend an iTunes link, I'd say that depends on the artist.  More optimally, I'd recommend sending a fan to a paid download that the artist controls.  That enables a much higher payout, far greater information capture, and greater ability to then retain a relationship with the fan down the road.

In answer to your question of whether an iTunes link also doubles as an advertisement for iTunes, I'd have to agree.  But at least the payout is better.  But again, the payout on a totally controlled download is better than iTunes, and definitely better than Spotify.

Let me address this issue also:

"Have you seen how many artists are putting up free streams on their website? If they replace these by the Spotify Play Button, they may make a few bucks from these streams."

Here, I would recommend a free stream for sampling, with a strategy of driving fans towards higher-revenue formats, like physical (perhaps vinyl), bundles, or downloads.  Otherwise, a Spotify stream ropes the user into Spotify, and that's not as advantageous to the artist.

Love the pushback, and hope you'll consider these points.  Let's debate it out.

/paul

You do know that Spotify has a Download (MP3) store in most EU markets, right? Same as iTunes…

But once again, why pay for it if you can get it on the Pirate Bay?

So free streams are fine, but paid streams aren't because it ties the artist to Spotify? A little dyslexic I might say.

People want access, not ownership.

@Paul

I guess it comes down to your belief that streams will never provide enough revenue and that Spotify is just for discovery.

I on the contrary think that streaming sites can and will be a welcome source of income for artist. Have you read this article?

Indie Artist Is Making Big $'s From Streaming 

Spotify is not just for discovery.

I agree that ultimately moving a visitor on an artist site into a deeper monetization play is the way to go.  But the argument on to use/not use Spotify really comes down to #5 on your list.  The decision on using Play is based on your streaming solution, which most artists have.  So it's not Spotify vs. iTunes.   It's Spotify vs. Soundcloud, YouTube, or any number of free streaming players.  In that regard, Spotify is at least a viable option since there is some payment, however small.  Most artist sites have a streaming option, so why not get revenue from that?  

If you're going to criticize that the Play button grows Spotify's business, then why have you not criticized Soundcloud for the same?  By your logic, embedding Soundcloud helps promote their service which is good for them, not the artist.  Especially since the artist does not get royalties while they get $50MM in funding.  For my business, I'd much rather get something for those that prefer streaming than nothing at all.

Oh c'mon Jay --- Spotify pays essentially $0 basically so this is about limiting those options.  Don't go feeding stuff that pays $0.  But then if you want to listen more on Spotify then you need to subscribe?  

Who's controlling this conversation?

Answer: NOT the artist I'll tell you that much.

Soundcloud is not the same.

:: MW

Spotify pays $0? Your music must really suck then. If your mom is the only one listening to it, maybe you should consider doing something else for a living?

"Spotify has paid about $250 million USD (€200m) to labels and publishers"

http://www.hypebot.com/hypebot/2012/03/spotify-royalty-payouts-top-260-million-launches-in-germany.html

Yeah, hate to break it to you, but my artists are indeed making money from Spotify.  It's not a top revenue source yet, but it's growing.  More than I can say for Soundcloud which gives me no revenue.

I agree with Jay. If you manage artists who are getting 100k+ views on youtube you should be able to make money off spotify. It aint much, but when everyone and their moms has a spotify within the next 5 years you'll start seeing some cheese.

I disagree with every section of this piece. This advice seems logical for hipster acts that attract fans that are too cool for Facebook, but not beneficial to most acts.

1) Just because a fan lands on your site doesn't mean they are anywhere close to buying your stuff. In many cases they are there to learn more about the artist. Without providing a listening experience for the potential fan, you're likely a long way from turning them into a paying customer.

2) If you're at the point where a fan is ready to pay the high cost of vinyl, they're already sold (and probably also have a more portable copy of the album). The artist has to cater to the preferred listening format of their fans. It's doubtful that any fans are saying "hmm, I was really hoping to find this album on Spotify, but since it's not there I'll go ahead and buy the album on vinyl instead."

3) Just because they have found your page does not mean they have discovered you to the point that they are ready to buy. There's a good chance they are just there to learn more about you. Why not make the process easy for them by offering a (monetized) stream of what you've got available right there on the page?

4) Engagement is great. Having access to your music with a Spotify player will not prevent future engagement. Most first time visitors to your site are not there to buy something. Don't be that pushy salesperson following someone around the store trying to make a sale. You'll scare the fan away forever.

5) You should be pitching Spotify on your site. When the fan plays music from your site, that activity publishes to their Facebook page and can potentially introduce your band to the friends of that fan. The fan is now advertising for you without any effort. Your fans use Facebook. All their friends use Facebook. Their mothers and grandmothers use Facebook. Your band has to be integrated with Facebook and it doesn't get any easier than the way Spotify has made it for you.

Great reply. I fully agree with every section of it. The Facebook connection is a great point. Didn't realise that, but you are right. That's free advertising for the artist.

You appear to be under the impression that the article is saying "Don't use spotify"... you're wrong.

1) I agree

2) This article didn't say that you should neglect spotify, so null point.

3) Of course offer links to different access models such as streaming on your website, but pushing for sales of digital downloads and physical products will reap much more revenue than relying on income from streaming.  For an indie band, pushing sales is so important to survival, the micropayments offered by streaming services just won't be sufficient

4) I agree, but just yesterday I found a new band, ventured onto their website and discovered that they were releasing an album, which I intend to buy as soon as it is released.  Being a first time visitor does not mean they are not willing to spend money.  Getting people to return via engagement and incentive is of course going to help along way to the sales of products.

5)  Yes, facilitate spotify, but don't neglect actual sales.  Spotify can do wonders for growing the fanbase via facebook, but this won't generate substantial revenue unless you can actually sell them something!

Spotify is a discovery and marketing tool for artists, the website is where you must actively incourage sales in a non-pushy/creepy way.

Of course, piracy pays more. Oh wait…

I think all the teenagers buy vinyls. Oh wait…

Or maybe put it on Youtube. Oh wait…

Really Paul? Digital Music News? Vinyl? Please, name 4 young people that you know that aren't hipsters that buy vinyl.

Name 2 people that haven't downloaded pirated content.

Get real dude.

I hadn't given it too much thought before today but this argument against it seems reasonable.

As big a supporter as I am of Spotify...

Agree wholly. Love Spotify, but this is not advantageous to the artist.

Horrible advice & argument.

This is the right advice because you are pushing more people into the low-rent Spotify ecosystem with embeds.  

Remember: SPOTIFY PAYS NOTHING.

$0.007 = nothing

I want the money thanks, not "access" for my fans.

That's the mentality that has destroyed the industry. You can't keep your music behind the counter anymore and expect people to blindly take a chance on it. 

Artists good article! Pay [$$] Attn!!

If you need to be told this, quitting is an option.

From Reuters:

Daniel Ek said in a newspaper interview that Spotify turnover for 2012 may top 6 billion Swedish crowns ($889 mil USD).

Your suggestion is that artists should ignore this $889 million in revenue. 

Keep in mind that if Spotify do $889 mil in 2012, it is very likely it will cross the $1 billion annual revenue for 2013.  

Wouldn't you want to get part of this $1,000,000,000?  

.000001% of 1B = $1,000.  Is that for the label and the publisher to split or is that for the artist? 

Brilliant advice from Digital Music News...

I agree for almost all acts, but not all.

I couldn't have said it better myself.

Paul nails it.

Also, and i havent read every comment to see if its already been mentioned, its a legal way to stream your music, no its doesnt pay loads, but its discovery. With regards to number (3) yes it is discovery, when you stream the track, your still playing it through Spotify, so surely it shows up that your listening to this artists track in your ticker? 

Also, people can then straight from the page add your track to their playlists, who they might share with friends etc.

I dont see why everyone is trying to stunt streaming growth. Yeah we know it doesnt pay loads at the moment, but in my eyes its the future and we should be willing to embrace it and help make it better not just avoid it.

Am i alone on this one?

Paul - you're right and you're wrong.

Rather than suggest outright that artist shouldn't add the buttons why not do what actual smart businesses do.

TEST!

That's right. It's called A/B testing in the internet world. Serve a portion of your audience your site with the Spotify buttons and a portion without. Then track spending behaviour to see which fans spend more. The one who can hear it over Spotify or the one who can't?

If the creative community was actually half smart about these things and came up with REAL solutions (not just whining about payments, real-life alternatives) then maybe they would be the ones in charge. Not the Spotify's, Facebook's and Google's of this world. 

It's time to smarten up and not just whine about others.

that sounds like a great idea, but I'm a musician.  I already spend loads of time with visa applications, tax returns for every country we play in, trying to keep thje website up to date ......etc... How do I fit in A/B testing and still have time to play guitar?

I use my Myspace page (I know, I know...) because I can stream my catalogue for free (full songs) and also have iTunes and Amazon buttons linking out.  My merch store is also prominently placed above the fold.  It's a really easy solution, and comes up first in Google search results.  

This is the most ignorant "news" story I've read in a long time. Go work for the majors! You obviously have no idea what fan engagement is or how hard it is to get people to listen to your music, let alone buy it or go to a show.

Your recommendation is "to convince a fan to purchase a piece of vinyl"? And how do you expect someone to convince said fan to do that? Maybe, BY LETTING THEM LISTEN TO THE FUCKING MUSIC! I could go on, but I've got work to do.

Reality check: "potential fans" NEVER buy anything, especially not on a whim. You must let them listen. Go for ubiquity. The payout comes later.

-Adam Beasley

Well put, however I don't totally agree. 

1) you have to go to what's hot and working, especially in something so fragile as music. Spotify has gained a ton of traction lately and it's social sharing features can really help artists. 

2) it doesn't have to be one or the other. I think in many cases, especially with smaller bands, people visit a page to hear your music maybe for the first time. If they can listen to it, and you're still getting paid SOMEthing, that's still a win for you, albeit a small one. Let people go to your site, profile, whatever it may be, and listen to your music, but still have a strong way to convert the people who like it to higher paying customers. 

Listening is just the first step, having people like it is the next (that's where every musician is different), and having people that like it pay you something for it is the holy grail, something that unfortunately has been severly dimished over the past decade. 

That's just one opinion. 

Interesting argument.

Interesting perspective.

Musicians, please DON'T use Spotify play buttons.

This is quite possibly the worst Digital Music News article i have read.

No - let's not link to the digital service that creates the most revenue (overall) for artists in those countries where the service was first launched.

I find it strange that you are called "digital" music news, with your negative view of any innovative service. Your main problem and reason for your negativity is that you are based in the US; digital music news, and digital music innovation is not happening in the US. You are 3-4 years behind the rest of the world.

This article makes an excellent point.

Seems to have hit a raw nerve with the zombie kool-aid drinking Spotify fanbois....

But to tell the truth I think very few established-artist websites or facebook pages have a Spotify link button - they want people to go there own merch stores obviously....

AMEN

It's a simple concept. If you got a fan to land on your site, they are either a customer or a potential customer. But at that point they are YOUR customer, WTF, why would you push them to any other brand?

Make sure there is a path to capture a potential fan. A way to listen, view, share etc.. and simply let them download a track or more for FREE. Then you own an active lead to market to. 

Why would you send a fan to become someone else's customer when they could be yours? Keep it simple and be sure to let your fans support you. 

Artists, fail to understand your fans?

Stay away from Spotify? To all my artist friends, YOU BETCHA!

bizarre advice from Digital Music News.

Good point.

So true.

Artistas músicos no useis Spotify son unas ladronas.

Does the Play link take the 'fan' from the page directly or simply play the track from Spotify's back end? Not saying it has to be a Spotify link, but taking away the option of a stream for a sale of Vinyl or a CD, neither of which I have bought in at least 5 years (MP3s I have purchased though), is a horrible suggestion.

If not Spotify then use SoundCloud, their platform at least allows for a single click back to your beloved iTunes store or the Amazon MP3 store that is frequently overlooked. Something is always better than nothing right?

Paul, how about a little bit more reporting on the alternative licensing paths taken by technology companies these days. Where are the stats on Google's, Amazon's and Apple's cloud solutions? Users, hours listened? How about are there any DL stores doing anything innovative a la Amie Street? What does the current download market share look like? Are there any up and coming competitors? OR are we to believe that the only thing going on in Digital Music News is Spotify payments, Pandora's floundering, and Grooveshark's lawsuit? I don't mean to be so critical but let's get a little diversified man.

Evan

Thanks for posting this. I've advocated for songwriter's rights for 20 years. The work we do-- writing songs-- is our livelihood. Please don't let anything take that away from us.

Totally agree.  Except for the really big names we were all better off when people just downloaded songs for free.  I know so many people who would download loads of music for free, but still buy the stuff they liked (usually discovered from their own or other people's free downloads).  Now those same people listen to Spotify and feel that they have paid the artists, so no longer feel the need to buy the songs they like.  They don't realise that the artists get a tiny amount.

Artists: don't let your websites grow up to sell Spotify.

Fantastic.

Fascinating take.

As far as I see it, you are all wrong: 

I'm running a record company, or "label" I prefer, in a country where Spotify dominate the way people listen to music. Everyone have it installed on their computers and in their phones. And today almost everyone pays for it as well (Spotify premium accounts). When it was launched here, no one payed for it, and that meant Spotify payed almost nothing to the right holders. But today, about 2 years later?, that picure is very very different. 

Actually, we get quite a decent amount of money from Spotify (and so does our artists - since we split everything with them).

We started like 8 years ago, and was never a part of the golden days of selling CD's in the 90's. So we never _sold_ lots of music to our fans (because of illegal downloads etc). But we had lot's of fans, and lot's of press and blogs etc, and our artists grew quite big in our region. (We never took anything from the live-shows either - where the artists got most of their money from. Radio, sych etc was our primary income.)

And today, for the first time since we started, big attention and a big fanbase in our country, means lot's of Spotify plays. And lot's of Spotify plays, means a lot of money.

So, today, if you build an audience, you will have quite a big income from fans listening to your music. That was not really the case from 2004-2010 in our region (since illegal downloading was so wide used). 

Today, we make A LOT more money from Spotify than from any else service or medium our music is featured on. We do CD, Vinyls, iTunes, all other MP3 stores, Youtube, LastFM, Soundcloud etc etc etc. We try to be everywhere our fans wants us to be. But we - by far - make most of our money from Spotify.

And I think this could be the case for all regions in the world. Our market is not unique in any way. 

So, here's transparancy for you all. Our income numbers from recorded music, B2C (radio/synch etc excluded), looks something like this: 

Spotify: >75% 
CD: 10%
iTunes: 10%
Vinyl: 2%
Other mp3 services: 2 %
Other streaming services: < 1 % 
Youtube:  <0,1%
Soundcloud: 0.0% (they don't pay right holders)

2 years ago, it looked very different. Spotify was probably around 10%. Now it's more than 75%!

....And this is new releases only. If we take a song/album released more than 2-3 years ago, Spotify is  probably 85-95% of that track's sales/income today.

So, if you want a model that works; start fighting for the same development/implementation that happend in our country concerning Spotify (or similar streaming services). If it become as big as it is here, in every country in the world, just imagine how happy the music industry and the artists would be. It will be almost like the 90's all over again?!

And if you don't believe what I'm saying is right, if you don't like streaming – at least, please, try not to stop this for everyone else.

@KM. Thanks for sharing this.Great info. This is worth sharing to convince te non-believers.

You are from Sweden I take it? Can you be a bit more specific and reveal the name of your label maybe? I would like to use your info for an article on www.spotdj.com about streaming revenues.

Uh, transparency?

How much money are you making?  80 percent of 100 knonors is 80 kronors, go have fun with that, and you're mixing up your facts on Spotify's payouts -- they pay before they even get started plus give away percentages to labels.

The most important reason not to put a Spotify play button on your site is that Spotify isn't available everywhere and you're going to aleinate some fans along the way. Even if it's 1%.

Lessig's "hybrid economy" in action: Spotify "Play" embeds screw artists even more than the service does already.

Good call Digital Music News.

If you are not on Spotify there is ZERO chance of me hearing about you. I get loads of bands sending me demos all the time. I never listen unless they send me a Spotify link. If they can not even get it together to be visible in the most important streaming service.... well

I am fine with people not putting a spotify play button on their sites. But that move makes the irrelevant to almost everyone they want to reach.

You are a fucking liar and a fucking troll.

How can a music service be more important than the music content?

Regarding having on a "Spotify button" on an established band's website - why would they wish to send traffic to anywhere other than their own merch page?

Tsk, tsk. Easy on the Language Steve. Why would I lie?

Obviously, distribution is important. Aligning how this happens is also important.

I do not want an email inbox full of mp3 files. Do you ?

No I will not moderate my tone when dealing with offensive bullshit like your postings.

It is an absolute blasphemy to the art of music to say you will only listen to music if it is delivered by a particular music service.

Are you saying you refuse to listen to Mozart if it is not on Spotify?

Do you refuse to listen to The Beatles if they are not on Spotify?

What kind of malicious idiocy is this?

What do you mean by "mp3s in your inbox"?

The substance of the original article is based primarily on established artists who have already been "discovered" by the fans who visit their own websites or fb pages. In this case it makes perfect sense for the established artists to direct fans to their own merch pages - it makes no sense to direct fans to Spotify, a service that is not based on the specific interests of the established artist.

Do you understand this? Or are you a complete moron?

Steve. I disagree with your assumption that this article is about established artists. I read it differently.

Of course I do not refuse to listen to Mozart if its not on Spotify. What a strange conclusion. It is true that The Beatles dont get much of my time because they are not on Spotify however.

If you do not understand what i mean when i say"inbox full of mp3 files" you are clearly not a target for new artists looking for a favour. Anyway, I have recorded, arranged toured and made my living in the music business for over thirty years, so my listening patience with newbies is limited i haveto admit, and it helps to add stuff to a playlist and go through it once a week or so.

However the industry that has fed me is in deep $#"! and in my opinion services like Spotify are assisting it back out of the water. The aggro from people like you is not really helping. Lighten up.

As artists, we are NOT obliged to prop up other people's buisness models.

They need us a Hell of a lot more than we need them. They act like it's a privledge for them to exploit us..

Good article Paul.

Your comment is 100% on the button.

Kind of redefines the term "Killer App," eh?

Spotify=evil, Pandora=good

Now explain why.

I'm a huge fan of Spotify, but couldn't agree with this post more.

The Orchard's newsletter recommends artists embed the spotify player, which is amusing for reasons already enumerated.

Great insights on the Spotify button.

Got to say, I agree with your viewpoint that the buttons are great on blogs etc, and that the website should focus on generating actual sales and higher revenue.

I can't comprehend why some people completely dissagree!

Upselling physical products & digital downloads on the artists website substantially increases the artist's ability to earn money.  Why are some people so focused on counting the miniscule micropayments from Spotify when they could actually be using their official website to MARKET their more PROFITABLE products.

Yes, embrace new digital business models, but realise that traditional revenue streams still reap large revenues for many artists.

All Musicians... This is a must read.  Get the real return figures dollars.

Maybe we should all avoid the play button? Blogs & musos alike?

Prefiero regalar mi música antes que ponerla a la venta en Spotify. Ya esta bien de ladronas intermediarias!!!

Intégrer le nouveau player embed Spotify, une bonne idée pour les artistes ? pas vraiment

This article is all about one question: Does it help artists to put a Spotify play button on their personal web page? I agree with you Paul. I have been a huge advocate in the past for artists not devaluing their own music by treating it as if it were not worth anything, and this is just along the same lines. As Resnikoff outlines, if someone is visiting your site, obviously they have some interest in you. That visitor might be there on a recommendation from a friend, a Google search, interest in your cool profile picture, or anything. That web page visitor may even have discovered you through Spotify. Whatever it may be, they have already decided to make the first commitment to you, which is a little bit of their time. Now, if this person gets onto your site and wants to check your music out, they’re going to click on whatever free link you put in front of them to do that. You could put up one or two songs that they can listen to for free, right then and there. Once the songs are over, they are still be on your page where, ideally, you’ve made it easy for them to purchase more music or merch and share that with their friends.

            On the other hand though, you could put up a link to play your song on Spotify. Once that song is over, where is your fan though? They are no longer on your website seeing your content. They are on Spotify seeing some of your content, surrounded by advertisements for tons of other content. Even if you’ve got their attention, they are now just lined up to keep listening for free. If they are on your page at that critical moment at the end of the song when they’ve decided that they want to hear more, they will stop to think about how they are going to go about it. If they have had access to the internet in the last decade, they know that they can get it for free pretty easily, but here they are, already in front of that same content on your site and you’ve already got them liking you at least a little. Why not try to make a sale? Is there going to be some better, more opportune time to make a sale? If so is putting a Spotify button on your page really the way to get to it? If you send them to Spotify, they won’t take that time to consider whether or not they should go back to the your page to buy the music. That would be silly. They’re just going to keep listening for free. Let’s face it, there’s a pretty big chance that they are just going to go search your music for free on Spotify after discovering your page anyway. Spotify is not some secret free music service, it’s hugely popular. You, as an artist, do not need to advertise for that.

            What I think is really important to understand about Spotify is that although it does pay artists (a little) that money should be in addition to what they make from selling their own content and merch, not instead. It’s nowhere near enough money to justify not even trying to sell your stuff. I think that Spotify is a fantastic and innovative service, but I think that when artists embed its play buttons on their pages, they are selling themselves short.

seems like this sorta changes things pretty quickly:

http://www.zdnet.com/blog/facebook/facebook-adds-listen-button-for-artists-bands-musicians/11877

There are only two types of music listening in the world: discovery vs. consumption. The former is meant to lead to something as a means to an end, the latter is the last stop. The listener doesn't need anything else; they are satisfied. There is no "new paradigm" or "blended listening." Either the fan is paying to listen or they are not. Both are useful in different situations. Ideally your fans will discover your music and it is kept scarce enough that they will want to pay for it after discovering it. If it is no longer scarce at all or hard to acquire and replay, they will not pay for it at all. So it's up to you: you can allow, encourage, free consumptive listening. Or you can endeavor to stream, perform, and get radio play with the intention of getting your music sold at a profit. Doesn't matter if the profit comes from an a la carte download sale, a stream, or a payment for a private show, or an ad or sponsorship footing the bill. Either you are getting paid or not. If you think that you are going to get enough spins that .00025 per spin or something is going to add up to a million dollars go for it. If you think that having free spins on every blog and facebook page, go for it. But if you think providing discovery that is linked to selling an album or song at a profit, that might make more sense. Think about it. How much are you getting paid when your song plays? (if you wish to get paid, that is.)

Great read for all independent artist and label people...

A good read! Don't give Facebook your fans!!!

A must read for musicians looking to make money!

I agree. I hate the whole notion that Spotify is a new and unique service when in fact it's just a hyped-out, corporate vehicle. I'm truly impressed with the readers of this site. Nicely written and exceptional that I'm not the only one ready for the demise of big music. 

They need the endorsements with Coke to stay afloat, don't humor them by advertising them on your own website.

Keep the comments coming people. You made my night. We're not alone.

in regard to (5) SOO TRUE... just started a new blog the onter day (see Name) and I based arround this cool new thingy http://mycloudplayers.com. Its based on SoundCloud, but im reading good things that they plan to integrate a bunch of other music and video sites. I mean if artists (especially new and upcomming ones) don't have a SC account, I mean COME ON! Thumbs up to MyCloudPlayer,  completely changed my approach to music bloggin' and bloody FB too. Sorry Spotify, im over u babe ;)

Dear Paul,

I must say I'm amazed. Not only by the data you have release, but also by the amount of people that seem to read your publications and agree with it. The past few months I've been conducting my own research on Spotify and needless to say, my conclusions all come down to you not doing as good a job as you should, when it comes to research. Here is why: 

1 ) Spotify doesn't pay the artists and it doesn't pay the music labels. It hasn't even published how it pays the music distributors (you know, the top layer like EMI, Universal, etc) or the online distributors (like CDBaby and what not). Spotify has always denied that it even pays these distributors per stream. When you collect the facts, it’s pretty obvious that Spotify pays these parties in terms of licensing they buy. (source: http://goo.gl/EHtK2)

Spotify doesn't pay the artist. They pay the distributors. The distributors pay the music labels and the music labels pay the artist. I'm amazed by the fact that you seem to miss this point in every publication on this website. (it’s right here people, I’m not making this up: http://goo.gl/VkCkl).

The reason why certain artists receive more then others is because certain record labels and distributors are more greedy then others. (example: http://goo.gl/VkCkl  versus http://goo.gl/KvaFw)

2 ) I’m also amazed by the fact that you would statistically compare the sales of single song to a single stream. Yeah, I don’t even think I need to point out why, let’s just take a look at the comparison: 1 sale = 1 stream. This comes down to comparing 1 YouTube view to me buying the single in a music store. There is a bit of a gap here, don’t you think? The point of Spotify is to discover new music, not to buy new music just to try it out. Since Spotify doesn’t release these specific statistics themselves; I can’t show you how silly it is to even compare the two in a single graph. But believe me, it is pretty silly.

However, let’s break your statistics down here to prove my point. You’re saying that a stream will make the artist $0,04 and a CD sale will make the artist $5,93. So it would take 148,25 streams to counter a single CD sale. Hmmmm, 148 streams versus 1 cd sale, that doesn’t sound too much like a rip off to me?

If you would’ve done your research a little better you would’ve noticed that an artist gets about $0,004 per stream (not $0,04) on average (source: http://goo.gl/CqKUa). Which would amount up to 1482,5 streams to compete with 1 single record sale. The silly thing is, even this does compete pretty well, since a song gets streamed way more then it gets bought.

3 ) You’re also complaining about the advertising on Spotify. It’s just a big scam to earn more money? The advertising on Spotify for the ‘freebee’s’ is there for one single reason: The music isn’t free. There are three type of user accounts to ensure the artist gets paid, and Spotify can exist. Every user account generates a revenue so that the artists can get paid. Without advertising the users would have less reason to actually pay for an account, thus the paid accounts would lose interest and Spotify would lose the income of advertising.

If you do want the artist to receive less for their efforts, I would agree with you and Spotify should definitely kill all advertising and make you pay for the single stream. However, I think it’s also pretty obvious that the hurdle of having to pay for the play button, is kind of a buzz kill for the user (mildly put).

4 ) Just some common knowledge: The artists that are most afflicted by the low pay-outs are the ones with low stream rates. Thus, the indie labels (like the ones pulled from Spotify from STHoldings). What you also fail to realize is that they also don’t make very much on record sales. It’s common knowledge that indie artists make their money primarily by performing on stage and not by record sales (I can’t imagine you didn’t know that, here’s a source: http://goo.gl/gLpyn). Also, the artist doesn’t get the full amount of pay for a record sale in a music store, which it does for a single stream, as I showed you in my previous point.

Bah, this is turning into a really long post now, so I’ll just finish up here. Paul, I see what you are trying to do here. You are pinning Spotify as the bad guy in all your posts, with really bad arguments and poor intel. I would strongly suggest that you do more research on the topic, because you seem to have quite a bit of influence. It would be a shame to miss use this.

Jacco, let me respond to the various points.

(1) "Spotify doesn't pay the artist. They pay the distributors. The distributors pay the music labels and the music labels pay the artist."

Sort of.  Many artists are paid through DIY distributors like CD Baby (for example), and have shared their payments in our forums.  These vary wildly, which is part of the broader problem.  There is little if any transparency, and little attempt to clarify that issue.  I cannot get a straight answer on what the per-stream payment is; and no one seems to have this knowledge.  That's good? 

Case in point: in terms of payments to labels, this is non-transparency is actually becoming a major problem - after all, we only know that these labels are receiving large (ie, multi-million) payments for licensing, and percentage shares in the company based on repeated sources.  Unfortunately, that means that labels (and mostly major labels) are the beneficiaries here.

Spotify then blames the label, and says there's nothing they can do?  Sounds like a classic blame game to me.  iTunes, on the other hand, pays a specific figure to labels on every download, everyone knows what the number is, and it applies across the board.

(2) I'd reply that it isn't whether one equals the other, rather whether one is cannibalizing the other.  Or, if it makes better sense for an artist to maximize revenue on a release by delaying - or windowing - Spotify access.  I don't think there's definitive data on either side, though we've seen strong results on this strategy from bands like Coldplay and the Black Keys.

(3) It's not whether advertising is needed, it's whether consumers will put up with it, or what level of intrusion they will ultimately tolerate.

I don't think I'm complaining about advertising, merely looking at it from a UI or UX perspective.  The same way I look at Pandora's situation.

(4) "It’s common knowledge that indie artists make their money primarily by performing on stage and not by record sales (I can’t imagine you didn’t know that, here’s a source: http://goo.gl/gLpyn)."

Careful. Zoe Keating (who you quoted) actually has made lots more off of recordings than touring.  On top of that, most indie artists that we talk to are struggling to make the road pay.  It's a fantasy for most.

Here: http://digitalmusicnews.com/permalink/2012/120124keating

I look forward to your responses and continued debate.

/paul

Hah! I'm glad you're in for a good debate, I really do appreciate that!

(1)     Transparency is a real big issue. I totally agree with you here, as do a lot of specialists. However, it has its reasons. During my own research I came to the conclusion that the main reason for the lack of transparency, and the blaming of music labels, is actually due to the fragmentation of power (or money which is basically the same thing). The major distributors are partners and known investors. If there’s deals being made for the access to music it must come at a price and both the large distributors as well as Spotify never talk about this (as if it never happened), which leads me to believe that it was part of the deal not to talk about it.

Since Spotify still is deep in the red figures year after year, but remains to keep the support of these major distributors and stockholders, while Spotify just reacts by blaming the record companies on these issues, I highly doubt Spotify is in control of all the aspects (especially the transparency part). As a distributor (massive content supplier, who also invests money) I’d say Spotify doesn’t get to be transparent about the financials. Why? Well simply because that way the distributors can benefit most from Spotify without anyone knowing. The reason why I don’t think Spotify is ripping anyone of, is because some artists don’t seem to make a lot of money, while others do manage to make a decent amount of money through Spotify. And then there is the fact that Spotify’s losses have kept growing throughout the past 3 years.

(2)     Universal Music also did research on this precise matter and concluded that Spotify doesn’t cannibalize at all: http://goo.gl/7k6dF. The investigation done by NDP Group and NARM was not based on the influence by Spotify since it had just made its appearance in the US back then, and was not part of the free-music section since it has a clear model on making money from every  users.

(3)     Advertising IS basically there to annoy the customer into either paying for a premium account or having to put up with it.

(4)     I’m not going to argue with you on this point. Some do benefit, others don’t, which seems to be the exact case with Spotify. The reason why Spotify is gaining a lot of users is because there is a need for access to music next to just buying & owning it. Technological developments have made this possible and is just altering the music industry. To prohibit this shift from happening is just limiting user needs and wants and our technological advancements.

Just to help you understand a bit where I’m coming from in all this: I don’t think Spotify is doing a really great job, however I base this on something different. The problem from my point of view isn’t the money at all (Let’s face it, Coldplay and Adele aren’t in dire need of an extra million bucks). Spotify doesn’t seem to be able to do anything about this anyway, since it’s generating enough losses as it is. The problem with Spotify is that it doesn’t communicate with the artist. Transparency is an important part in this matter, but also managing the expectations of the artist is completely overlooked in the entire matter.

If you look at it businesswise it’s not a strange thing, because who would want to manage these communications with the content suppliers of your content suppliers. That’s like asking in an apple store if the guy, who assembled the iPad you’re about to buy, got paid well for doing so, right? Well the truth is, if Spotify doesn’t start doing so, it might face even more major artists refusing to release their albums on Spotify. Instead of handing out more money they have to explain where the prices are coming from and offer secondary advantages: like for example introduce a new way the artist can approach it’s fans directly. Because I do think Spotify has a great basis to build on. It just needs to start communicating with all its stakeholders.