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The scary question for Spotify is when this all ends - or, if this snowballs into a far more serious problem. On Wednesday, we got word that another indie - Projekt Records - had pulled its content from Spotify. And, Grooveshark, Rdio, and similarly low-paying partners. Projekt is a Brooklyn-based indie distributed 
through IRIS Distribution, with genres that include ambient, shoegazer, and goth.
But why the bail? The explanation offered by Projekt founder Sam Rosenthal sounds all-too-familiar.
______________
"On July 29, 2011, I instructed IRIS (Projekt's digital distributor) to remove all Projekt Records releases from all-you-can-eat digital services such as Spotify, Grooveshark, Rdio, etc. The tracks are down; I am ready to talk about it.
Century Media pulled their material August 9, Prosthetic Records became the third reported label to remove their material September 20. It is good to see other labels have reached the same conclusion I have about these services: they are not a viable way forward for the music industry.
What is our objection? Century Media put it nicely:
'Obviously it is ultimately up to the music fan and consumer, how they access their music, whether it is buying, streaming or stealing. There needs to be awareness though, that how you will consume your music has direct consequences for the artists, who we are all trying to support.'
There is the crux of the problem. Artists would like fair compensation for our creations. I believe in a world where fans value the music they enjoy, and are willing to put some of their money towards it. Paying artists is THE RIGHT THING TO DO. There is value to music, just as there is cost to creating music. Personally, I believe in creativity, art, value, doing the right thing.
Spotify claims, "The overwhelming majority of our indie label partners are thrilled with the revenues we're returning to them." Honestly, I doubt that is true. Spotify further claims to be "monetizing an audience the large majority of whom were downloading illegally (and therefore not making a penny for the industry) before Spotify was available."
Yes, it is true that torrents gave no artists any money. Spotify gives all artists almost no money.
Let's discuss the economics. For a play on Spotfy.... NOW READ THIS CLOSELY..... $0.00029 is paid to the label/artist. There is the math, plain and simple! 5000 plays generates around $1.45. In comparison, 5000 track downloads at iTunes generates almost $3000. You have probably seen this article in The Guardian; over a five-month period, 1-million plays of Lady Gaga's hit 'Poker Face' earned just $167. Really.
I talk about this with my 9-year-old son; he fully understands we all have a basic right to earn a paycheck for our work. See this chart for a comparison of how much is earned via different sales formats. To earn the U.S. monthly minimum wage - $1160 - 4,053,110 plays a month are needed at Spotify. This is not a viable number for artists. It is not that we are even aiming for the minimum wage. We only desire something equitable. $0.00029 per play is not.
In the world I want to live in, I envision artists fairly compensated for their creations, because we (the audience) believe in the value of what artists create. The artist's passion, dedication and expression is respected and rewarded. Spotify is NOT a service that does this. Projekt will not be part of this unprincipled concept.
I hope you continue to purchase music via sources that give the artist a fair payment for their work, such as iTunes, brick & mortars, the Projekt.com website, etc. As always, I thank you for supporting the music."
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Comments Closed
@Matt_Kiser Wednesday, September 28, 2011
Matt Kiser
The irony is that they knew the terms when they signed up.
earbits Thursday, September 29, 2011
Their distributor could have made the deal on their behalf, hence they had to tell their distributor they would no longer like to be involved in those services. And, last I checked, people are allowed to change their minds.
Econ Saturday, October 01, 2011
The real problem is the label can't turn the few streams they're getting turned into sales. Until we get some figures on how many streams over the course of a month the entre label is getting, the amount paid per stream is rather meaningless.
My guess is they're getting a dozen track-streams per month at most and the "rent" they pay to be carried by Spotify isn't worth it for them.
You can put your stuff up on YouTube for nothing, but if you don't get enough streams over a certain amount of time the file is removed and you have to monitor that and re-post the file. There is a cost to that.
But to say that Spotify isn't worth it for anyone is stupid. It all depends on your volume. The problem comes when, because sales are down, you get the urge to raise the price. That will probably only reduce sales further. Not every artist makes art worthy of a consumer's money.
Sparky Wednesday, September 28, 2011
But didn't the labels know that a play only paid $0.00029 before signing up? And didn't they research the average plays for certain artists before hand? I think in the future labels will have to operate in a totally different way. Maybe Scion is going in the right direction.
Nick Mango Wednesday, September 28, 2011
You know what's completely absurd about these numbers? The fact that you can make nearly triple with YouTube. Yes, nearly TRIPLE! With Spotify you make .00029 per play, and if you're a YouTube partner you make about .00075 with a banner ad.
http://socialtimes.com/money-youtube-partners_b21335
Name Witheld Wednesday, September 28, 2011
Someone from Spotify should chime in here, because I'm fairly certain our deal for US streams is:
Select Non-Euro Countries (US): $.003 per stream
Still not near the iTunes rate, but 10 times greater than what's quoted in the above article.
HansH Wednesday, September 28, 2011
True according to my latest statement I get € 0.004 per stream about $ 0.0057
Does Digital Music ever check something before publishing or do they publish anything anti Spotify no matter what?
SamR@Projekt Wednesday, September 28, 2011
The payment varies by whatever secretive deal Spotify has made. But eitherway, those numbers are not viable, as a way to fairly compensate the artist.
Yves Villeneuve Wednesday, September 28, 2011
Theoretically, stream rates do not increase as the number of subscribers increase. A good assumption here is that 1M subscribers have the same listening habits as 20M subscribers since the subsciption rate is the same.
The only way stream rates can ethically increase is if the monthly subscription rate increases or there is more ad revenue.
Otherwise, money is unethically being diverted from one artist/label to another or one country/continent to another.
SamR@Projekt Wednesday, September 28, 2011
For the sake of argument, let's say this is accurate. .003 per stream = 333 streams to make a buck. That doesn't seem to be viable compensation, either. : (
@JamesDownes23 Wednesday, September 28, 2011
James Downes
Spotify's consumer/product model is viable moving forward; their fiscal policy towards artists is not. Levee's gonna break.
radiowaves Wednesday, September 28, 2011
Here's the thing: when an artist I'm interested in is not found on Spotify, I don't go out and buy the album, I don't go download it off some file sharing network, I just listen to another artist who *is* on Spotify. And so ultimately I'm just not exposed to that first artist's music. I'm not thinking about them, or discussing their songs with friends, they don't get scrobbled to facebook or my last.fm profiles (for what that's worth), and I'm not probably not looking forward to seeing them when their tour comes to town, since I haven't really heard their new album.
Maybe these little labels have determined that Spotify is eating into their album sales, but I wonder if that's really true. And if by withdrawing their catalog, are they just limiting "impressions", so to speak.
The way I see it, the problem isn't so much that Spotify doesn't share enough revenue (and perhaps they don't), rather it's that people aren't willing to pay much for music these days.. unfortunately. The people I work with don't hesitate to spend $25-30 a week on afternoon coffee, and they'll buy DVDs of movies they haven't seen yet, but don't think Spotify is worth $5-10 a month (forget about CDs). They like music, but they spend their money on other entertainment.
yv Wednesday, September 28, 2011
i agree that people (like myself) are not willing anymore to spend as much money on audio (no matter which format!) as in the past. the future will show what the end result of this evolutionary attitude will be: maybe the masses will contend themselves with the (okay sounding) streams and that's it. the only who really profit in the music recording business are the streaming sites themselves (now or in future).
i love spending money on things i love.
but it's true that i've stopped spending money on audio: because it's already there, available, everywhere. And that includes FREE Spotify, FREE Deezer, FREE Mflow, ..etc.. (there are many!)
Visitor Wednesday, September 28, 2011
Just to clarify, yv above is not /yv (Yves Villeneuve)
Regards,
/yv
earbits Thursday, September 29, 2011
You just further outline the problem with Spotify. Not only does it negatively affect people who are on it by completely discouraging people from buying their albums at all, it negatively affects the industry as a whole and even the artists who are not on it. People begin to look at the Free/$5/$10 a month Spotify catalog as the entire collection of music worth paying attention to, but hardly worth paying for.
You're wrong about the streaming services being the only ones that make money. Pandora and Spotify are not making a profit. All of their money goes to the major labels, with some scraps going to the indies. Eventually, sure enough, people are just going to get less music, or poorer quality music, factory produced by the majors, because they'll be the only ones making money from the system you all contributed to.
Yves Villeneuve Wednesday, September 28, 2011
I am positive Projekt have taken the right step in recouping digital sales. Nothing lost by ditching Spotify, Deezer, Grooveshark, etc... True fans will find these bands elsewhere and buy their music. Non-fans could care either way and the label/artist feeling is likely mutual...as it should be.
These pitiful payouts from these subscriptions services are not transparent. Some get way better deals (though still pitiful), depending if you are a major label or where you live.
radiowaves Wednesday, September 28, 2011
If you're right that labels/artists don't "care either way" about non-fans, they should remember that "true fans" were once "non-fans" themselves. And if a goal of the label is to get people to discover the artist, removing a means of discovery seems counter productive. But then again, I'm sure these labels have thought this through since it's their livelihood. And it must be beyond frustrating to see all that work result in pennies returned.
But I also wonder which party is more dependent on MP3 and CD sales as opposed to other revenue streams, the label or the artist? Maybe artists still benefit from the exposure, but labels need the sales? Do labels typically get a cut of merch and ticket sales?
Visitor Wednesday, September 28, 2011
You appear to be a non-fan of the music that disappear from Spotify. True artist fans are loyal to the artist not the music service. The most popular means of discovering music is terrestrial radio. iTunes is just as effective as Spotify if not more effective with its social network for music (Ping).
Spotify is a waste of time and the cause of lost revenue. Roughly 70% of worldwide digital music is purchased at iTunes... this is where the true paying fans hang out... this is where business-smart artists should entirely devote their resources, in my opinion, otherwise they are contributing to the devaluation of music.
/yves villeneuve
radiowaves Wednesday, September 28, 2011
Sadly, the devaluation of music occurred years ago, with the advent of P2P sharing, not with streaming services.
But I think I understand what you are saying. For the artist, the music business would be much better and simpler if iTunes (plus Ping!) was the only digital option and people were loyal "true fans" rather than casual music consumers. If only!
Visitor Thursday, September 29, 2011
Sorry to burst your bubble but most people are true fans of artists of their choice.
At the same time, while piracy control is underway such as recently instituted by Digital Rights Corp there is no need (there was never a need) for a free service as brought to us by companies like Spotify.
Limiting music expenditures to $10 per month is not a viable business model. Why would a business limit a person who can afford more than $10 per month and normally consumes more than $10 per month while the vast majority don't spend $10 per month on music as evidenced even before the advent of rampant piracy...doesn't make sense.
/yves villeneuve
Yves Villeneuve Wednesday, September 28, 2011
An effective marketing strategy is: a one-stop shopping place for my digital music. The best place to achieve this is with the most respected digital music retailer in the world.
Usually, all roads lead to Rome.
@jamesallworth Wednesday, September 28, 2011
James Allworth
Indy labels pulling music off Spotify. See the problem with renting DRM'd music?
@annielin Wednesday, September 28, 2011
annie lin
Yes, it is true that torrents gave no artists any money. Spotify gives all artists almost no money.
@AidanDThomson Wednesday, September 28, 2011
Aidan
...money not worth the plays.
@amaccardo Wednesday, September 28, 2011
Anthony Accardo
It may reduce piracy, but that might not be enough.
DB Wednesday, September 28, 2011
Argh. Why do so many people compare Spotify revenue with iTunes revenue? They are completely different services.
iTunes = permanent download, unlimited plays.
Spotify = ONE PLAY PER STREAM!!!
Of course you aren't going to get iTunes $$$ from a stream on Spotify! I'm not saying that many artists are going to be retiring on their Spotify revenues, and I'm not sold on the ethics of it yet, I'm just sick of seeing this ridiculous comparison.
Would you pay £10,000 for a bus ticket? No, because you don't KEEP THE BUS.
lifer Wednesday, September 28, 2011
@DB. Touche! I had to stop yelling at my computer. Hopefully Sam R's son will learn not to compare apples to radiators. Streaming is to renting what buying is to owning? Or something like that...
Streaming is more analagous to radio play than sales. And, siruis/xm notwithstanding, the public is not conditioned to overtly paying for radio though they did (indirectly) pay via advertising. Would anyone seriously argue that radio play has traditionally cannibalized record sales? Of course not. Most would say that radio play spurs sales by exposing the consumer to music and promoting the artist.
Gaga has already sold xx million records/downloads and likely saturated her potential sales market. She is not a good example for this discussion. Adele would be a better research subject as she is still (relatively) early in the album's life cycle.
I'd love to see a radio spins to record sales formula applied to streams. Or, better yet, pay me $250,000 to conduct a research study to determine how many (if any) streams convert into a sales over time (you heard it here first).
sasebastian Thursday, September 29, 2011
@DB, exactly. You cannot compare iTunes with Spoitfy. iTunes, AmazonMP3 and such compare to a CD sales. Totally different. The real comparison should be streaming royalty vs. payouts by the PROs (BMI/ASCP, etc...). Payouts for radio are virtually non-existant compared to streaming. The PROs (with the exception of SoundExchange) are still behaving like it is the early 20th Century. They take very small samples periods (about 2-4 weeks per quarter, depending) and count all the plays and if you're song is not in the sample period you're not getting paid. If your song is in the sample period, they run some algorithms and compare your plays with Zeppelin, the Beatles and U2 and yous till don't get paid. And for most indies this is the case. With streaming you get paid PER play. There are bands & songwriters that have never been paid for radio and ARE getting paid for streaming.
The issue is that the labels are not getting paid for streaming, while artists are, and they think that these because of these new services music will end up like movies on Netflix, and will lose sales. We will see labels attempting to make licensing deals with Spotify and other subscription services, like movie studios did with Netflix, Blockbuster and Amazon. The label gets the licensing money and the artist/songwriter will only get the small royalty and NONE of the licensing money.
So by doing this labels think that sales will level out, but pull the music and the artist will remain "undiscovered," the opportunity for the sale is gone, and no one gets paid.
TX972 Thursday, September 29, 2011
There's no doubt that big artists are making money hand over fist and small artists are practically starving. I should have more sympathy for artists in general but I don't because the RIAA was so busy killing the goose that laid the golden eggs (us listeners) by demanding so high a royalty that the streaming services I used to love have had to skeletinize themselves in order to stay in business and they turned off the features that attracted listeners.
What happening to Launchcast? How about Live365? Why did Last.fm have to eliminate Single-Tracks-on-Demand? Why can one no longer play their Last.fm personal tag list, their Loved Tracks portfolio, their own Playlists? The answer is the greed of RIAA in seeking to sue everyone who didn't want to pay their extortionate royalty rates!
Do I really blame Spotify for offer to pay pathetically low royalties? It's a strategy for survival. That's what's left after the RIAA executed the good guys.
SamR @ Projekt.com Thursday, September 29, 2011
Ok. The logic in this reply is that because you don't like what the RIAA did to streaming radio, I and all my fellow artists should be happy with a pathetically low payment for streams of our songs at Spotify? I know that's not what you mean.... but it's what it sounds like you are saying. Do you think that we benefit from the RIAA, being an indie label? Answer = No. Sam
TX972 Friday, September 30, 2011
No, you obviously aren't benefitting from the RIAA, nor do I think you should be happy about the low per track payouts from organizations like Spotify. But realize that RIAA played the spoiler that irreparably damaged the streaming services that would have paid you equitable fees. It is the causative factor that let the Spotifies of this world obtain their dominant positions in the music streaming business.
Recognize, however, that without the Spotifies, the emerging artist and the overseas artist would be totally unknown in the U.S. with no impact in the CD market whatsoever. Artists like Roberto Cacciapaglia of Italy could not have achieved CD sales of the decent magnitude they now have without streamers like Spotify. Artists like Zoe Keating would not play to packed audiences on tour if the millions of people who can listen to her via Spotify had, instead, never heard of her.
Rather than vilifying Spotify, recognize it as a marketing tool, advertising that you don't have to pay for. If your tracks aren't there, then we'll simply listen to someone else. Your most profitable revenue stream, sale of CDs, will become someone else's stream and not yours. How do new artists grow from seedlings to trees? Not by pulling their tracks off the streaming services that their future audiences discover their music on.
Oli Thursday, September 29, 2011
Bash Spotify all you like, the simple fact is that they have found a business model and pricepoint that more music fans are prepared to pay for than all of their competitors and predecessors combined.
For that they should be applauded and given the leeway (along with all other legitimate streaming services) to evolve their products to such a point where they really do eclipse the proposition of downloading songs illegally.
With a big enough audience on licensed services, the pay through (even at small per play rates) will be truly enormous and DMN can stop bitching about them on one hand while championing Grooveshark who contribute almost nothing to the industry on the other.
The "Silver Conductor" Thursday, September 29, 2011
I'm feelin both sides of the argument here, but what seems to be left out in most articles and legislation and negotiations is, the artists, songwriters and profit margins that truly benefits the creators of the content everyone else seems to be making Enormus profits off of, and that's the MUSIC! where is the justification in that? They Spotify, and the many other platforms know this going in, so why don't they reconize this, or maybe it's intentional uhm?
Who am I? The "Silver Conductor" on Facebook,Twitter and:
www.thesiloverconductor.com
SamR @ Projekt.com Friday, September 30, 2011
"the simple fact is that they have found a business model and pricepoint that more music fans are prepared to pay for than all of their competitors and predecessors combined. "
yes, but the pricepoint you mention is "free." They are basically a new pirate site that claims to be compensating the artists. Are they really better than a Torrent? Time will tell.
Oli Friday, September 30, 2011
Well... they're already number 1 or 2 in terms of digital revenue in many territories in which they're established, so i'd say they're some margin more beneficial than a pirate site...
@mfbach Thursday, September 29, 2011
Aaron Fishbein
finally a number! Is Spotify really only paying $.00029 per play?
@cole_armstrong Thursday, September 29, 2011
Cole Armstrong
Projekt Records pulls out of spottily. But it's so convenient.
@KomusoTokugawa Thursday, September 29, 2011
Komuso Tokugawa
To earn the U.S. monthly minimum wage -
$1160 - 4,053,110 plays a month are needed at Spotify.
*sigh*
@poweranimalsbk Friday, September 30, 2011
Power Animals
Is Spotify a fair deal for artists?
At $0.00029 paid to the artist per play, the answer is a resounding N-O
Econ Saturday, October 01, 2011
<i>5000 plays generates around $1.45. In comparison, 5000 track downloads at iTunes generates almost $3000.</i>
A track purchased on itunes is tyipcally "played" 100 times per sale. So the proper comparison is 5000 streams to 50 sales. Now it's $1.45 versus $30. Still a difference, but not nearly as big. At that point it's a question of whether the consumer values the limitations of a stream versus the value of owning the track.
I have no problem with an artist or label trying to negotiate better rates. And if they choose to walk away, that's their business decsion. But the press release to tell they world they are walking away is just drama-queen hissy-fit crap designed to get attention they aren't getting otherwise. I would sure like to know what they think is a reasonable track-stream rate.
sasebastian Saturday, October 01, 2011
"For the sake of argument, let's say this is accurate. .003 per stream = 333 streams to make a buck. That doesn't seem to be viable compensation, either."
"To earn the U.S. monthly minimum wage - $1160 - 4,053,110 plays a month are needed at Spotify."
"Is Spotify a fair deal for artists? At $0.00029 paid to the artist per play, the answer is a resounding N-O"
Again... streaming compares to radio royalties, not album sale royalties. @samR The royalty payout for a band like Black Tape For A Blue Girl on radio has to be minuscule or non-existant compared to what you get from online streaming.
There is not a possibility of anything like a living wage from radio royalties because there are very little spins there. Goth bands easily make more in royalties (albeit not a living wage, but supplemental income) from Spotify, Rhapsody, Pandora and all rest. You have many thousands of people typing in "Goth" or "Black Tape" and being served up a huge variety of bands to listen to, generating hundreds to thousands of spins you will actually get paid for.
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