What a joke. Looking forward to the day that the VC's get their wake up call and realize that Spotify will crash and burn within 5 years.

I don't think spootify will crash and burn. However, the VCs will feel the burn when the profit projections don't materialize.

The only reason Spotify will not totally crash and burn is because they will maintain their hype long enough to hook VCs and investment bankers, who will then force the IPO move, take their money off the table, leave a bunch of disrgruntled stockholders behind and create an entity that has too many small investors that will not allow Spotify to fully tank.

Spotify will then be directed by their stockholders to not raise payouts to the artists.  Meanwhile, hundreds of millions in revenue will be siphoned away from you, the artist. 

Perhaps this is just a fairy tale.

A wise prognosis.

I think this was all along the plan, with the major record labels hoping for huge profit from their equity stake.

But perhaps the facebook share failure has put a spanner in the works.

Spotify and Vevo are the greatest disasteres that ever happened to music. If they continue to exist we will see just ashes.

Sean Parker (outsider semicriminal both Napster days and Spotify days) Rio Caraeff (insider golf playing Trojan horse)and Steve Jobs ( "my way" scrooge) have locked up music industry in concentration camp. If it will continue their way the industry will plateou at 40 billion never reaching 1998 peak.

Music industry with few bold moves can reach 100 billion dollars in global sales in less then 5 years.

As we see only bold action can prevent 60 billion dollar a year ongoing rape.

Is there a logic to get at the most 5 billion in IPOs  in exchange for 60 billion dollars in lost revenues.

Why  they are doing it?

Anytime anyone says Spotify can't pay artists more, point them to this article.

This all brings back memories from back in the day.  Once upon a time there was a new East Coast record label funded by a major West Coast label with about 30 mil (today's dollars 80-100 mil). When I first went to the new label's headquarters, they were in very modest location, small but adequate.  Did not have one record released yet.  Made sense.  Three months later they had moved to a very prestigous building, at least two floors, Gold records from other labels all over the walls, every body had at least two assistants and numerous interns.  Still no records released.  Finally one single was released and it did go top ten but it was a single.  The related album flopped.  Numerous releases followed all were flops except one or two.  Within less than 24 months the label was completely shut down. At least back then, record executives new a bad business plan when they saw it and took swift action.  Sure they could have "VC'd" the new label. But didn't.  Oh, and in case you're wondering the acts that did sell recouped and continued to get paid by the parent label (still getting paid albeit not much). I know this from first hand knowledge. What does all this mean?

Maybe it is time for these so called venture capitalists to fund labels and aspiring artists instead of technology services that leach off of existing artists and use their funding to force asset owners to take it up the *ss. 

I thought the "Venture" in VC meant taking a risk, not putting the risk on other people like artists and master/publishing owners.You never saw a record label large or small do that.

Hallelujah!  Put energy and capital into the product, not the platforms.

If they want to attract top talent, they need catering, a nice office, $100k+ salaries, etc. that is pretty typical in the technology startup field.

"I am a regular visitor of DigitalMusicNews" Better said I was. 

How low can you go? This "Have fun with your half-penny-per-stream" remark shows is a crying shame. This ha nothing to do with objective journalism. This blog is turning into a constant anti Spotify propaganda channel. Why? Because Paul Resnikoff fails to understand the basics of streaming royalties. 

Research Mr. Resnikoff, do some research!

Bye!

Be off with you!! You beastly kool-aid drinking PR shill from Spotify propaganda central.

There are many people on this blog - Paul included, of course - who have a deep understanding of "the basics of streaming royalties".

Your problem is - in the words of Jack Nicholson - "you can't handle the truth"...

Steveh, you are just as bad as Resnikoff: blinded by hatred for Spotify. Hard to see the truth when you are blind.

Ever visited an Apple Store or an Apple office? Why don't you ask iTunes for more than 70%. You should know it doesn't work that way? You run a label don't you? Comments like this make you look stupid.

Stop the name calling, you are getting paranoid. Not everyone who is defending streaming is a Spotify troll. 

Come up with some real arguments for christ sake!

Apple earned it over the past 30 years. 

Spotify hasn't proved anything yet, except for being able to operate with little transparency while being completely evasive. 

Still love the service though. 

xoxo

You are right about that. True, Spotify operates without any transparency and is evasive, still Businessinsider has a point.

Spotify pays out 70% of the revenue (adds + suscription) before deducting operational costs.

Buying or renting office space is clearly operational costs, so the rate per stream is not affected.

Hate to say this, but starting this article with "Have fun with your half-penny-per-stream" is below the belt and misleading.

So which part of the hundreds of millions from VC and Corporate sponsors like Coca Cola and Yahoo can't handle these operation costs.... and now we're talking about 5 million a month? 

That NYC space is pure conspicuous consumption, and a complete and utter waste of resources. 

Hans, We both love the service, but this is the future and we have the internet. You can't do this kind of shit and expect people to just roll over or not ask questions...especially when they're being evasive on the whole. 

Every major recording studio in NYC with the exception of 2 are out of business, the Capitol Records Building is condos and these guys are gonna come out and do something like this?

It's actually a bit offensive... 

A bit offensive... You are putting it mildly;) 

If this story is true it's a bad move by Spotify, but dragging in the rate per stream in this way is not what I would call professional and objective journalism.

True I love the Spotify service, but have my doubts about the company.  

AGREED.  I am not saying I'm for or against Spotify but I am saying its ridiculous that Paul constantly pushes conversations in a way that benefits him when he has none of the information.  He has never seen a Spotify deal nor has he ever been in a conversation between Spotify and an artist so he isnt in the position to put his opinion forward as fact, even if his intuition is correct.

Paul, you're the Fox News of digital music journalism.  That may get you pageviews but at what expense?

Spotify refuses to disclose any information so this is the only place you can find it out thanks to every artist publishing it here.  That's not Fox.

Sorry Spotify PR trolls, you're media strategy sucks.

*your

Come up with some real arguments for christ sake!

If you would care to check some of the numerous and heavily detailed debates about myriad mathematic extrapolations of the Spotify model and it's impact on artist/indie label income over a period of years on DMN, you would have an answer to this idiotic challenge.

But unfortunately you and others like you have drunk the kool aid and I have come to the unfortunate that reasoned debate is impossible.

Let's see how this pans out in the next few years. Let the cards fall as they may.

Google and Facebook's new tactic in the tech wars

Google and Facebook are using a controversial legal doctrine to channel money to the Electronic Frontier Foundation, the Center for Democracy and Technology, and other groups that share their hostility to online copyright enforcement.

Interesting how no tech or "music business" blog has not published any similar article...

All this without having yet made one penny of profit. Madness! 

Digital Music News is weer lekker bezig met hun anti Spotify propaganda ;)

It's a touristy part of Manhattan but far from a luxury address. Upsides include kitty-corner access to Penn Station (great for commuters) and ultra-cheap clothing stores everywhere. But it's a nightmare for foot traffic.

Ca part en quenouille!

I'm sure 76 9th ave, which is in the upscale Meatpacking District, is not cheap either. 

I believe Spotify was using Google's office on 9th Street.

Paul, I trust your reporting on digital music but you misunderstand commercial RE math. Unless you have other info, I believe it would be $60/sq ft x 73,000 = $4,380,000 / per annum or $365,000/month. Still pricey but not $5mm / month.

I think you're right, after researching more.  Still quite expensive, but $5mm-something/month seems a bit too outrageous.

/paul

Ha! A bit premature to be moving on such a prime piece of real-estate, no? Not only have they proven that they can't pay reasonably to artists yet because they have too few paying customers, but now they've proven that they intend to spend their money before figuring out how to actually make any money... "Funding Rounds" don't count as income BTW.

If you guys want him to stop writing about Spotify--stop commenting (and driving eyeballs) to his Spotify posts. The problem will go away if you ignore it.  We all read DMW for the comments--moreso than the posts.

For those who don't understand the importance of Spotify, look no further than the huge unknown that a fully subscribed service of free file sharing would have on the sales of music.

It is the likely destruction of that revenue stream, inconjunction with oppressive compensation for streams that will create a crippling blow for musicians.

The sad part is the fear that permeates the music scene.  While people like myself can continue to shout out, unless the musicians can muster the courage to opt out of Spotify than nothing will happen.

Are you so afraid to miss out on the scraps, that you fail to make a stand for your future?  For once you have some power; use it or its' over guys. 

I love coming here for a good laugh from the banter! 

Romneyfy

Ah living large .....

Get the VC money,

Screw the Artists,

Pay off & corrupt the major labels execs if pushed....

Laughing all the way to the bank.... Ride the gravy train... set yourself up for life.... the Napster guys showed the way ...

Wake up EXECS who care! Wake up ARTISTS!

um, so. fucking. what?

have you seen the Sony NYC HQ recently? or Apple? or Google?

Paul, your persistent resentment of this service is soooooooooo far beyond boring now.

Spotify 's new Penthouse office looks ridonkulous and i cant wait to visit. Haters, c ya laters

Spotify: the next rise-and-fall IPO on the list?