That's the problem with statistics.  It's hard to prove causality.  I just did an analysis of our top artists' revenue for Spotify for 2012/2011 and compared it to their permanent download revenue year to year.  

My stats show that, almost without exception, our top artists saw both Spotify and a la carte revenue increase year over year.  Even for artists that had 50%+ growth in their Spotify revenue still saw very significant growth in download sales.

One could argue that the download sales might have been much larger without the Spotify usage.  But then again, you could also argue that streaming on Spotify increased awareness and, therefore, download sales.

Honestly, I have no clue if Spotify usage affects download sales either positively or negatively.  From my vantage point, I see practically all of our top artists growing their revenue across multiple platforms.  

I just don't see any cause and effect to derive even from my available stats.  I think, simply, that there are very different pools of music consumers (with some overlap, of course).   Perhaps there is a different dynamic with such a popular artist as Metallica.  Maybe the demographics and buying habits are very different at that level of public awareness and sales volume.  Hard to say.  

I'm grateful that our label's revenue increased significantly in 2012 across most services.  In the aggregate, I believe that labels and artists benefit more from offering a variety of music consumption business models than limiting the types of distribution.  I don't want any DSP to go away.  I want them all to continue with their successes.  

Happy Holidays and Happy New Year! 

"From my vantage point, I see practically all of our top artists growing their revenue across multiple platforms."

Kinda overblowing your own trumpet here, are you not sir?

Oh Wait! you're blowing it again:-

"our label's revenue increased significantly in 2012 across most services."

Now you wouldn't be trying to use the comment section of this blog as a bit of free advertising would you?

Of course not... Perish the thought!

Hey, go away and let the adults talk.

September 2008: Metallica releases Death Magnetic, Christmas sales spike 60%.
March 2009: Metallica releases Guitar Hero: Metallica at the height of Guitar Hero's popularity.  Christmas sales spike 70%.
November 2010: Metallica releases the Big Four dvd/cd. Christmas sales spike 50%.
November 2011: Metallica releases Lulu with Lou Reed. Christmas sales spike 50%.

2012: Metallica releases no new material. Christmas sales spike 30%.

Yeah, that all sounds about right to me.

The reason that Metallica has traditionally performed better than Bob Marley or Led Zeppelin isn't because they weren't on Spotify, it's because Bob Marley & Led Zeppelin are dead &/or disbanded & therefore aren't releasing new material. When Metallica isn't releasing new material, surprise surprise, their catalog performs like an artist who isn't releasing new material.

Also, this article is clearly biased & stupid.

I really wonder about the power of the 2010 and 2011 releases you mentioned.  But perhaps, I'm not sure (but can't say) if people were rushing to get the Lulu album (1/2-LOL'ing)

More importantly, what about all the publicity generated by teh Spotify inclusion?  That's a lot of publicity and usage, shouldn't that create a bigger increase?

Why would the Spotify publicity generate album sales? That doesn't make any sense, it's the wrong audience if that's your goal. Hopefully it generated some subscriptions for Spotify, but I wouldn't for a second think it should support a holiday catalog sales spike.

Regardless of the quality of Lulu, the point is that they were part of a marketing campaign or the star of a video game in the preceding years. (Honestly, whenever Metallica releases new material, the reaction I hear is, "Well it ain't Enter Sandman," & that in & of itself gives their catalog a shot in the arm, though Death Magnetic was much better recieved than previous albums, & those songs actually get played live.) But this year both parties were waiting on this contract to expire... Metallica wasn't going to release any new material & WMG wasn't going to promote them.

So the point is, this "journalist" is suggesting that Metallica does better than Bob Marley in december just because they're Metallica. And we can look at 2009 & CLEARLY see that the spike was driven by Guitar Hero, & the other years also seem to reflect the reception of the material they put out.

I'm saying there is nothing to suggest that their sales should be 15% higher. And I strongly suspect that Metallica wouldn't have signed a deal with Spotify if they didn't see cd sales weakening over time. They're way too savvy for that.

Additionally, you have factors like shrinking shelf space at retail, a massive upswing in digital album sales, etc.

Truly, we can't get a clear picture of Metallica's holiday catalog performance until we see what kids spend their iTunes gift cards on.

This is just awful journalism all around.

You're the only one that's not getting it. Metallica knows this will impact their album sales but they don't care because they're getting a lot of money from Spotify (heard of up front licensing fees anyone)?  

Spotify knows this impacts album sales and digital they've said it out loud.  

And anyone who thinks Spotify helps digital album sales, well....

I'm not arguing that Spotify does no cannibalize sales to any degree. In a perfect world, sales would be almost completely cannibalized, & subscriptions would make up the difference & then some. But the subtext of this article is that "Spotify cannibalizes your sales to the tune of 35% & pays out balogna, so unless you're a giant band who does a global webcast with Sean Parker, you're going to be hurting."

What this article attempts to do is quantify Spotify's affects on sales, & suggests that the lost sales are a loss leader for some exclusive deal with Spotify, & that's just factually incorrect. I'm arguing that the "lost sales" aren't lost sales at all. For the "research" to be legitimate, it would have to be filled with so many caveats that it wouldn't be worth reading.

Digital album sales have jumped by 10 million in 2008, 2009, & 2010, & then 15 million in 2011. Certainly another jump could be predicated this year, that alone makes those wrapped up iTunes gift cards essential. Couldn't the author have waited until January to write this piece?

And the comparison to Led Zeppelin, who isn't on the service, does nothing to help it's cause. But it's the absense of any credit to WMG's marketing that really gets me.

Any way you look at it, Spotify's affect is completely overstated in this article, & these mischaracterizations of the service may lead to more hold outs, which has a negative effect in the longrun, extending (though hardly derailing) the painful transition period between music ownership & music streaming.

Not only did they get paid, but they gave equity in the company to the band and management. This was no come to Jesus moment.

Only problem is that the article says

"Sales were in line with expectations the week before the titles were added to Spotify."

For one, I don't consider the burden of proof met with that one line. Certainly greater year over year performance context is essential before making these kinds of declarations about Spotify.

And I can't see Metallica signing the Spotify deal without seeing a clear trend in weakening cd sales. I'm saying the holiday expectation is off, regardless of sales "the week before the titles were added to Spotify," which is anecdotal at best.

But the most glaring error in the article is that Led Zeppelin isn't even on Spotify! If he's trying to make the point that Spotify killing Metallica's album sales, Led Zeppelin should be the one selling more physical albums!! But they're exactly where Metallica is, a 28 & a half percent bump. He's pretty much disproving himself right there, but going ahead & making outrageous claims anyhow.

@jw

You should obviously do some research before you put your fingers to the keyboard. Metallica released Quebec Magnetic on November 19.

What? Nobody told me!

Amazon/Wikipedia/ArtistDirect has the release date listed as December 11, not November 19.

But this is EXACTLY my point... the last (Warner Bros promoted) concert film came out in hundreds theaters in the US, & was pretty hard to miss. (I recall seeing cardboard cutouts in store fronts.) Quebec Magnetic (Blackened Recordings promoted), on the other hand, went straight to dvd/br & didn't seem to get the same marketing blitz outside the metal community, & that doesn't translate to a holiday sales spike in the same way.

I missed a missed a key fact, but it doesn't change any of my conclusions.

Thanks for pointing that out, though.

spotify has 5 million paying subscribers

deezer has 3 million paying subscribers

rhapsody has 1 million paying subscribers

muve music has 1 million paying subscribers

between these 4 titans, there are now 10 million + paying subscribers.

$120 a year = $1.2 billion a year.  

it might be a good idea to withhold music from subscription music right now but what happen subscription music reach $3 billion a year in revenue?

"it might be a good idea to withhold music from subscription music right now but what happen subscription music reach $3 billion a year in revenue?"

Then you'll get $20 per million views instead of $13.

"a groundbreaking inclusion on Spotify has negatively impacted pre-Christmas sales"

WOW!

You mean, people actually don't buy music if they can have it for free?

Shocking...

Seriously, streaming is for hobbyists. Professional artists obviously have to be paid.

Completely ignore here is also that Mettalica now own their recordings. They took them back Nov 30th.

Which means they no longer have WMG behind them for promotion and distribution. 

Would it not be possible that that is also affecting sales? 

This is entirely possible. Thanks for bringing that up.

ok, the anti spotify campaign on DMN is getting annoying, which is a shame because sometimes there are some interesting stories on here that actually matter. 

Metallica JUST got on Spotify. Chill for a bit. take a breather. let's analyze in another year or three. sheeeeeesh

For all the artists and managers who are windowing or withholding releases or content from any streaming services right now, technology will trump your cause. You can't stop it. 

The same dumb thing happened when CDs were introduced in the early 80s. 

Get over it and embrace it. Those first will win. 

"For all the artists and managers who are windowing or withholding releases or content from any streaming services right now, technology will trump your cause. You can't stop it."

Don't be silly, it's very easy to stop.

Quote "For all the artists and managers who are windowing or withholding releases or content from any streaming services right now, technology will trump your cause. You can't stop it. The same dumb thing happened when CDs were introduced in the early 80s. "

What?

CD's became the de-facto standard format in 'record time' (6-8 years?).. you couldnt purchase a new product without it having a CD player built in.. it was supported by all labels, in all countries..

This "technological acheivement" of universal adoption in that small a timeframe has NOT been repeated..

If anything it has been shown that "new technology" actually rarely 'trumps anything'.. The exceptions are things like Facebook, youtube, etc..

I feel a wave of cannibalisation fears coming

'Fear is a man's best friend', a wise man once said...

Spotify needs to pay better. 

stupid is as stupid does

#metallica #spotify #stupid

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Honestly, I don't see how anyone who actually pays attention to this side of the industry, can genuinely believe that streaming doesn't cannabalize sales.  Sure, there are tons of other variables in the equation, but the main ones are simple, why pay album to album, when you can pay once for everything?

Personal anecdote: A couple weeks before Metallica was on Spotify I had just started buying their albums again. My plan was one every two weeks, starting with Justice and working backwards.  As soon as I saw they were on Spotify, I stopped buying the albums.  Cancelled my Rdio subscription though.  So, if anything, I think Spotify comes out on top here.

BUT!!! All of that did end up with me actually buying a copy of Cliff 'Em All.  So, maybe it's not that crazy of a move?

What happened in 2010 to cause their increase in sales at this time to drop from just over 70% to under 50%?  From this chart, it appears their increase of sales is dropping 20% every 2 years.