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Spotify’s Official Artist-In-Residence Explains His Vision

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The 29 year old former lead singer of Chester French is the man behind SpotifyArtists.com. I sat down with singer/songwriter/producer D.A. Wallach Monday morning via Skype (even though we were literally less than 2 miles from each other – oh technology… and LA traffic).

Wallach was tapped by Spotify’s CEO, Daniel Ek, 3 years ago to create and lead the Artist Services team. Joining the company before it launched in the US, Wallach has helped guide Spotify’s image from the bowels of Thom Yorke’s kitten graveyard to the shining beacon of Ron Pope’s hot fudge sundae it is now. Who doesn’t love ice cream?

Over the past year there has been a shift in artist perception about Spotify. It’s now not cool to hate it anymore.

Artists are finally starting to realize the power the service has in building a fan base. Ron Pope, who has sold over a million iTunes downloads independently, mentioned in his pro-Spotify piece that the service paid him over $200,000 in 2013.

“If there’s anyone who should be afraid of streaming, it’s me. Instead, I’m watching my fanbase grow exponentially.” – Ron Pope, Independent musician

Not only that, Pope said he was getting nearly a million streams in Sweden A MONTH (with virtually 0 iTunes sales) and because of this, was offered “a very respectable guarantee” to play at the Bråvalla festival last summer and had thousands of fans singing along to every song.

“We want Spotify to be the best place you connect with your fans,” D.A. Wallach, Spotify’s Artist-In-Residence

Along with the spotifyartists.com launch came Next Big Sound artist analytics which breaks down listening data by song, country, age and gender for the past 90 days (going back further will cost you $20 a month for a Next Big Sound account).

Wallach mentioned they hope to eventually break down the data by cities and even neighborhoods.

Artists setting up on a tour could (eventually) use this information to route very targeted tours. Why hit Chicago when most of your listeners are in Urbana? Spotify could one day setup a house concert service connecting the biggest fans in various regions with the artists directly to help create tours (and street teams).

Venues and Promoters would love to see these numbers when artists and agents request show dates.

But that’s down the line.

Artists can request to see their Next Big Sound analytics here.

What is available now is Spotify’s merchandise and concert ticket integration. Currently, every artist can add 3 merch items to their Spotify artist page by signing up with Topspin’s ArtistLink here. Show dates and ticket info is automatically listed via Songkick (which scours all of the various concert listing websites to aggregate this data). Make sure the site you import your show data to reaches Songkick (or enter it directly to Songkick).

Spotify doesn’t take a percentage of any merch or ticket sales – despite what the naysayers would like to believe.

 

“I’m the one driving the strategy and I’m an artist. What I’ve convinced the company to do is to just be totally open about exactly how everything works.” – D.A. Wallach, Spotify’s Artist-In-Residence

“We were, for a long time, slightly less explicit about exactly how our economics operated because we had to avoid exposing the proprietary royalty data related to our label and distributor partners and their content,” Wallach mentioned when I asked him why it took so long for them to release any form of transparency. He said “[Spotifyartists.com] was the product of months of internal work to try and make the model as easy to understand for people and as open and transparent as possible.”.”

Why Are the Spotify Advertised Per-Stream Rates so much higher than Zoe Keating’s numbers?
Zoe Keating is the most famous artist to release her numbers. Or rather, she is the best at garnering press. In her spreadsheet she listed she earned $1764.18 from 403,035 streams. That works out to be about $.00438 per stream. Well below the stated $.006 -.0084 per stream rate Spotify lists on SpotifyArtists.com.

Why the discrepancy? Well, Spotify pays out their advertised rate, but to various entities: a specified amount to the distributor (Tunecore, CD Baby, DistroKid, Orchard, Ingrooves-Fontana, etc) and the mechanical and performance royalties to collection agencies (Harry Fox in the US, PRS in the UK, etc).

Keating’s cut is AFTER her distributor, CD Baby, takes a 9% commission. And, most people don’t know,  Spotify (unlike iTunes in the US) pays out mechanical and performance royalties to Harry Fox as well.  These royalties do not go to the distributor.  So even though Ron Pope distributes his music through TuneCore which takes 0% commission, his stated numbers worked out to be higher than Keating’s, but still do not fall within Spotify’s advertised per-stream range.

Spotify’s advertised per-stream rate is what they pay out. It’s up to artists to collect all of this money from their Performing Rights Organization and from Harry Fox (or from their label and publisher).

Is there a discrepancy between what Major Labels make and what Indie Artists make?
Yes. But that’s because the majors DO own some equity in Spotify. However, Wallach mentioned it’s “a very small minority.” He wouldn’t say how much exactly. It’s not half, like some have speculated.

But, setting the ownership aside, yes, Spotify pays out different rates to every label in the world. Spotify has struck deals with tens of thousands of labels and each deal is a little different.

However, Wallach said that these variances are so small that they work out to be a “rounding error.”

Why Can’t Spotify Strike Identical Deals with every label and distributor (and artist)?

Wallach mentioned that when iTunes launched it had different deals with each label as well. Eventually, over time, those initial deals concluded and iTunes struck up standard, “we take 30%” deals with everyone.  Spotify is working towards that point.  Their deals with the various labels end at different times and Wallach mentioned that when deals get renewed they are making them more consistent across the board.

“Our goal is: a play on Spotify should be worth the same amount no matter how it got to us” D.A. Wallach, Spotify’s Artist-In-Residence

Most people forget that Spotify launched in the US 2 years ago. And in Sweden 5 years ago. It’s still in its infancy.  People also don’t talk about how YouTube is HUGELY more popular than Spotify and it’s per-stream royalty numbers are abysmal.  Much worse than Spotify’s.  And there are many more hoops to jump through to just grab ANY money from YouTube.

But people look at YouTube (rightly or not) as a promotional outlet.

Labels are starting to realize that streaming is quickly becoming MORE profitable than sales.  And artists soon will as well.

“Now, 2 Years after I released an album (independently), I earn way more from Spotify than I do from iTunes,” Wallach reveals from his own music career.

Spotify rewards artists for creating music fans want to play over and over again.

 

Ari Herstand is a Los Angeles based DIY musician and the creator of Ari’s Take. His record release show is Saturday, March 29th at The Hotel Cafe in Hollywood. Get tickets here. Listen to the first single here. Follow him on Twitter: @aristake

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Comments (21)
  1. Carlos

    Just a shill. This puppet would tell everyone cigarettes are good for musicians if you paid him enough.


    Reply
    1. Anonymous

      If Hitler lived today, he would be an avid music streamer.


      Reply
      1. GGG

        Didn’t you hear? According to DMN, Spotify was actually founded by Nazis. Hitler was the original CEO.


        Reply
    2. visitor

      funny how no one is talking about

      1) how little Spotify pays songwriters and publishers, about 1/10th of what they pay performers

      and

      2) the more streams are played, the less each stream is worth…

      Spotify pays out a monthly margin of (they say) 70% although we can’t get transparency and openess on that either. Spotify at scale (say 30m paid subscribers – hahahaahaha – ok but just saying) would make more money for Spotify and it’s investors (the labels) than it would for artists…

      Essentially growing Spotify to scale stabs the artists in the back who have supported it and helped build it. Oh, how awesome that is…


      Reply
      1. Nina Ulloa

        no one has a gun to artists’ heads. if you don’t want your work on spotify then don’t put it on there.
        if you don’t want a label to put your music on spotify then don’t sign your rights over.


        Reply
  2. Nevermind

    Here are my questions:

    1. And why does Spotify NEED an “Artist In Residence” anyway to convince me this is a good deal?

    2. Why do some of the biggest artists in the world HATE Spotify?

    3. Why do some of the biggest artists in the world like Beyonce refuse to license Spotify?

    4. Why does every artist statement that DMN publish make you want to cry?

    5. Why isn’t Spotify EVER going to be profitable?

    6. Why is Spotify preparing for an IPO and not caring about the above question?

    7. Why is Spotify’s premium subsriber number FLATTENING?

    8. Why doesn’t Spotify say ANYTHING about massive payouts to Major Labels?

    9. Why won’t Wallach tell you the shares that major labels have?

    10. Why is Spotify JUST NOW admitting that Indies get less than the Majors?

    11. How much does DA Wallach get paid on his Spotify streams?

    12. How much is Spotify paying to DA Wallach DIRECTLY to be this mouthpiece?

    13. Why is streaming killing every other type of music consumption?

    14. Why is most of Ron Pope’s Spotify income coming from his Universal Music release?

    15. Why is Spotify so damn FREE?

    16. What happens when Spotify gets rich on an IPO, what do artists get paid then?

    17. How much money does ARI get from Spotify?

    18. Why does every analyst think Spotify is a financial deathwish?

    19. Why does anyone trust a company backed by Goldman Sachs?

    20. Why don’t I understand anything about Spotify payments when iTunes is so simple?


    Reply
    1. Me

      1. And why does Spotify NEED an “Artist In Residence” anyway to convince me this is a good deal?
      Because a lot of artists don’t fully grasp the how streaming services work and what their potential is. They are trying to reach out to the artists.

      2. Why do some of the biggest artists in the world HATE Spotify?
      Because they don’t understand how it works. They are used to the way things have been for years, and are hesitant to accept change. They don’t realize that 1 million streams is not at all comparable to 1 million downloads.

      3. Why do some of the biggest artists in the world like Beyonce refuse to license Spotify?
      There are a number of reasons for this. They may be under the impression that Spotify is bad for artists or they may have lucrative, exclusive deals from other services. In Beyonce’s case, I’m inclined to believe it’s more of the latter, as 2 songs from her last album are now available on Spotify, and as far as I know she’s never spoken out against streaming. It took years for heavyweight artists like The Beatles and Led Zeppelin to accept digital downloads. In fact, Tool’s music is still not on iTunes.

      4. Why does every artist statement that DMN publish make you want to cry?
      It doesn’t make me want to cry.

      5. Why isn’t Spotify EVER going to be profitable?
      This is just speculation at this point. Yes they’ve been spending a lot of cash lately, but the company is still pretty young and growing.

      6. Why is Spotify preparing for an IPO and not caring about the above question?
      Who says they’re not caring about the above question?

      7. Why is Spotify’s premium subsriber number FLATTENING?
      Again, there are probably many factors at play here. More similar services are entering the market and there are a lot of potential listeners who just aren’t aware of what Spotify is or how it works.

      8. Why doesn’t Spotify say ANYTHING about massive payouts to Major Labels?
      What do you mean? They talk about paying rights holders all the time. Does every company have to talk about how much it pays to every other company all the time? Why doesn’t iTunes talk about payouts to Major Labels?

      9. Why won’t Wallach tell you the shares that major labels have?
      He’s most likely signed a confidentiality agreement

      10. Why is Spotify JUST NOW admitting that Indies get less than the Majors?
      Because these deals are usually confidential? I don’t know.

      11. How much does DA Wallach get paid on his Spotify streams?
      That’s actually an interesting question.

      12. How much is Spotify paying to DA Wallach DIRECTLY to be this mouthpiece?
      I’m not sure. What does a normal P.R. person for an entertainment company get paid?

      13. Why is streaming killing every other type of music consumption?
      Because it’s more convenient, more affordable, and more consumer friendly? (If indeed it is “killing” every other type of consumption – don’t forget that vinyl sales continue to grow).

      14. Why is most of Ron Pope’s Spotify income coming from his Universal Music release?
      That’s a fair question. It would be interesting to know what, if any, marketing Universal did for this single. To be fair, though, he’s had at least 10 songs get over 1 million streams, and only one of those was released as a single under Universal.

      15. Why is Spotify so damn FREE?
      Because that’s what the consumers want.

      16. What happens when Spotify gets rich on an IPO, what do artists get paid then?
      Depends on how many streams they get.

      17. How much money does ARI get from Spotify?
      Probably not as much as Ron Pope.

      18. Why does every analyst think Spotify is a financial deathwish?
      Does every/i> analyst think it’s a financial deathwish?

      19. Why does anyone trust a company backed by Goldman Sachs?
      Because it’ll most likely get bailed out by the government?

      20. Why don’t I understand anything about Spotify payments when iTunes is so simple?
      Because you’re not trying to? Spotify released the basic formula, but the whole streaming model is not as cut and dry as the download model.


      Reply
    2. Paul Resnikoff

      The question of what Spotify is paying D.A. Wallach is important to ask. It strongly sounds like he’s on the payroll, which makes him obviously biased and non-objective. An ‘artist advocate’ who is paid by Spotify (or anyone else) is more accurately a ‘paid Spotify advocate’ who happens to be an artist.

      This is a well thought out strategy. For example, Spotify recently hired respected analyst Will Page to offer expert research and data on Spotify. Unsurprisingly, all of those reports are glowingly in favor of Spotify, and not objective.

      The good version of this is that Spotify is selecting experts to help plead its case. The only problem is these are paid experts, whose opinions are difficult to accept at face value.


      Reply
  3. David

    Well, it’s good to see a Spotify spokesman confirming my suspicions that Spotify’s recent ‘transparency’ statement was misleading. That statement said clearly that the total payout for each track on Spotify within each territory is proportional to how much it is played in that territory. The payout rate may differ between territories because of differences in revenue per user, but apart from that it is an equitable system based solely on the popularity of the track concerned. That leaves no room for any difference based merely on which label owns the rights to the track. But now Mr Wallach confirms what everyone already suspected, that ‘Spotify pays out different rates to every label in the world’. Either the transparency statement or Mr Wallach must be incorrect. I trust that someone with more influence than me will press Spotify for a ‘clarification’.


    Reply
    1. Me

      To be fair, it’s possible for both to be true. Every label is going to get different rates for each artist. We have several different payout rates from Spotify each month.


      Reply
      1. David

        No, it isn’t possible for both to be true.

        The payment rate for different artists may vary according to the territories in which they are popular. For example, if Spotify’s revenue per user is higher in the UK than in the US, then the rate for artists who are played more often in the UK will be higher than for those who are played more in the US.

        But Spotify’s transparency statement implicitly rules out different rates of payment based solely on the identity of the record label. The key passage is ‘That 70% [i.e. 70% of Spotify’s revenue in the territory concerned] is split among the rights holders in accordance with the popularity of their music on the service’. The statement goes on to explain this in more detail, but nothing in that explanation leaves any room for differences based on the identity or type of record label, for example a bigger share going to the major labels.


        Reply
        1. Me

          My point is that since it’s a variable payout rate, by default is that no label is going to get the same rate right now. On our statements, we get different payout rates on different albums/tracks by the same artist.


          Reply
          1. David

            And my point is that the only source of variability in payout rates allowed for in Spotify’s transparency statement is the difference in revenue rates between different territories. Whereas Wallach is saying explicitly that each label’s deal has different terms.

            To quote from the transparency statement, the royalty to rights-holders is expressed in the formula:

            [Spotify monthly revenue] x [artist’s Spotify streams/total Spotify streams] x [70% to master and publishing owners].

            How much of this goes on to the actual artist depends on their contracts, etc. But leaving that aside, the amount going to rights-holders is determined by this general formula, which leaves no room for variation e.g. between major labels and indies. If in fact there are such variations, then Spotify’s statement is at best oversimplified and at worst dishonest.


            Reply
  4. smg77

    Nice explanation about Zoe Keating’s numbers. She has become insufferable when talking about Spotify.


    Reply
  5. TuneHunter

    Spotify is ALL GOOD!

    Yes, we can have it subscription FFEE!

    Just one condition: let’s start discovery moment monetization.

    As is they equal to giant garbage disposal getting few cents for energy from incinerator.


    Reply
  6. FarePlay

    Riddle me this:

    A comment in Reuters recently put Spotify’s valuation at 8 billion.

    The entire music business revenue in the US is 8 billion.

    How can this be?


    Reply
  7. FarePlay

    Why does DMN allow an employee to continually post propaganda about Spotify?

    Clearly Ari is both a self-promoter, promoter of his friends and unbalanced promoter of Spotify?

    Does the editor of DMN care to respond? And yes, this goes beyond presenting both sides of the discussion.


    Reply
    1. Paul Resnikoff

      I do disagree with vast portions of this article, but I don’t regard it as propaganda. It is critical to have both sides, even if I (or, in this case, we) don’t like what the other side is saying. Everyone (user, artist, publisher, label) needs to make decisions about streaming based on all the information and perspectives.


      Reply
    2. Ari Herstand

      The “other side” has been present on DMN for quite some time now. I’m here to present the musician’s perspective. Or rather, my perspective as a working musician in the field. Kudos to Paul for allowing this sort of civil discourse and editorial variance amongst contributors.


      Reply
  8. Anonymous

    STreaming is worse then STalin!


    Reply
  9. stratomartin

    This article is a shameless commercial deception, and most probably a marketing piece by Spotify.

    And with a morsel of respect….who the hell is Chester French?

    The myth of earning a living on Spotify’s payments to artists is an impossible reality. Please check Aloe Blac’s recent posting on this. His is only one of hundreds of reality checks out there.

    I don’t know what the solution is, but Spotify is not helping one tiny bit.


    Reply

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