Why Won’t Artists and Labels Give Spotify More Exclusives to Drive Subscription Uptake?

The other day a friend of mine, who is a Spotify Premium subscriber, vented his disappointment with the service for rarely featuring any exclusives anymore. He was puzzled as to why David Bowie had chosen to give iTunes the exclusive streaming rights for his new album, The Next Day, in the runup to its release this coming Monday (though, as we reported yesterday, access to the album turned out not to be as exclusive as Bowie and Apple may have thought).

Spotify used to get a number of exclusives.  Back in 2009, for example, Spotify proudly announced that U2’s No Line on the Horizon would be available to all its users in the UK and Spain as an exclusive pre-release one week before it officially went on sale. Meanwhile, the album was available solely to Spotify Premium users in Sweden, Norway and Finland before its release.

These days, however, the exclusives seem to mostly go elsewhere, such as iTunes, SoundCloud, NPR’s First Listen  (currently featuring David Grohl & Friends’ Sound City: Real to Reel), Pitchfork’s Advance section, and the Guardian, which is currently featuring an exclusive album stream of the excellent John Grant. Then, of course, there are the “unofficial” exclusives that appear on sites such as YouTube and Grooveshark.

I do understand that many artists, as well as songwriters, are dissatisfied with the royalties they currently earn from Spotify – especially from the ad-funded part of the service – and that Spotify reportedly insists that records featured on the premium service should also be available on the free version.

But if artists and record labels want paid subscriptions to increase in volume, why do they almost always grant exclusives to marketing platforms – as opposed to services that might monetize them – leaving paying subscribers feeling hard done by? It seems counter-intuitive.

And if Spotify won’t do exclusives solely for premium subscribers, they may want to reconsider.  My friend says he would be willing to pay £30 a month, at least, if he could stream pre-release albums – and he’s convinced other fans would as well. “That would be rewarding to me,” he concludes. “Instead I’m disgruntled at paying £10.”

by  Helienne Lindvall

41 Responses

  1. Visitor

    ugh, i thought you were gonna answer the question in the title. But the article is just one big question?!

  2. jw

    iTunes doesn’t have streaming rights, they have download sales rights.
    I agree with this wholeheartedly, though.

    • Fistful of Dave

      Yes they do. iTunes match is considered streaming.

      • jw

        Yeah I missed the memo. My bad. Kind of missed the whole setup.

        • FarePlay

          If you’re agreeing based on raising the subscription rates at Spotify to enable them to pay more to artists. Right on.

          • Economics 101 - Equilibrium Ra

            High subscription rate = less subscribers = less money to artists.

    • FarePlay

      Love that “Think Piece” line from Almost Famous.

  3. Visitor

    Or perhaps another question is why isn’t Spotify offering a blanket short term license fee for some of these exclusives to drive subscription???
    Basic loss leader concept for a company with a ton of VC…
    Just sayin….

  4. Visitor

    I bet more artists/labels would give Spotify exclusives if the Cupertino crew wouldn’t threaten to pull any promotion if they see something up early there.

  5. David

    I am not David Bowie, but I would guess he had two reasons for giving the exclusive advance streaming rights to iTunes:
    a) they paid him a lot of money
    b) iTunes are streaming the album (for a limited time) with a prominent pre-order button next to it. Presumably streaming will stop on or soon after the release date. If this turns even a small proportion of casual listeners into buyers, that will give sales a flying start. (Hard-core Bowie fans will course buy the deluxe CD version anyway.)
    Spotify could, in theory, match motive (a) (if they can afford it), but they can’t match motive (b), as they don’t sell downloads (and deliberately stopped linking to download options last year). Moreover, Spotify would presumably insist on continuing the stream indefinitely after the release date, so casual Spotify users would have no real incentive to buy. Indeed, it will be interesting to see whether the album goes on Spotify as soon as it is released, or whether it is ‘windowed’.

  6. Visitor

    “a friend of mine, who is a Spotify Premium subscriber, vented his disappointment with the service for rarely featuring any exclusives anymore”
    Well, we all know what happens when we don’t stream.
    Red was the turning point. It really changed everything…

  7. steveh

    There is no direct value gained from doing exclusives with Spotify.
    Whereas with iTunes – or Beatport for dance music – exclusives definitely without a doubt drive pre-orders or sales. It’s proven and tangible.
    To offer Spotify an exclusive on the vague premise of helping to ultimately drive up premium subscriptions doesn’t cut it at all.
    It’s almost like working for Spotify. Most artists see Spotify more as a threat to their livlihoods and while they might be content to have their music streamed on Spotify they would have no wish to actively contribute to Spotify’s progress.

  8. Econ

    “My friend says he would be willing to pay £30 a month, at least, if he could stream pre-release albums – and he’s convinced other fans would as well.”
    Please. Less than 1,000 people would pay 30 pounds or dollars for exclusivity. It isn’t worth it for the artists or for Spotify.
    Spotify can’t (or won’t) turn streams into ANY sales they can measure. All Apple has to do is turn 0.25% of the streams into sales and the artists or labels will think it’s worth it. Especially since the stream is for a limited time.
    And right now Apple is testing the waters on streaming to gauge how many streams they can expect and the labels can compare this with their streaming levels on other services. The real test of course will come when Apple does a pre-release streaming of a non-exclusive release.

  9. Visitor

    I’m I reading this correctly? This is DMN, so Spotify is the devil. You don’t want to support evil do you?

    • Anonymous Coward

      Good point: maybe Digital Music News is the reason why exclusives are going elsewhere.

      • bundlez

        cause they had the balls to call out that artists were getting screwed?

        • Visitor

          Everyone screws artists, including artists. It’s a great pasttime! You should join in.

    • Father Merrin

      Maybe DMN has a soft spot for the underdog.
      and compared to apple spotify is the underdog.
      also reserve the “evil” comments for discussions that include google. they are the masters of evasion, obfuscation and mixing lies with the truth

  10. Bobby Boberts

    Can someone explain to me why Spotify, Rdio and the like can’t, don’t or won’t use Soundclouds API. Is it a licensing issue and, if so, why do labels and artists have official Soundcloud pages? There seem to be so many contradictions and loopholes.

    • Bald Headed John

      Welcome to the wonderful world of digital music distribution.

  11. Chris

    It’s a simple answer – you give the biggest store in the terrotory the exclusive offer first – if they don’t accept it youmove to the next biggest.
    In the UK and USA iTunes is by far the biggest revenue generating store digitally so you give them the exclusive. It it was Sweden then Spotify outdoes iTunes tenfold so you’d offer your exclusive to them.
    Nothing else really to say about it

  12. Visitor

    Concurring with another visitor – the biggest holdback on this is that iTunes pulls all positioning on the project if they see that Spotify, which they consider a direct competitor regardless of the different business models, has an exclusive.
    Nobody wants to mess with the 800 lb gorilla.

  13. Visitor

    So artists are supposed to provide exclusive content to a paid service? Yeah…
    Why exactly would an artist want to limit his/her reach?
    Anyone fan can stream on NPR or iTunes.
    Spotify Premium costs $$$.

  14. musicservices4less

    I don’t think anyone who would pay $360 a year just to have access to music before anyone else. The sweet spot for music, the majority of the masses who are that interested, are between the ages of 10 & 21 most of which, even if they have that kind of money to spend, pre-released music would not be the first thing they would spend it on.

  15. Visitor

    You don’t have to pay for Spotify (in the US at least) to access content, exclusive or otherwise.

  16. here's why...

    Everyone on the internet can access a stream at NPR, Pitchfork, guardian, etc….and some of these are set up through spotify / rdio so that artists can monetize the preview streams.
    Why they don’t offer exclusives and premieres at Spotify? Why would they?! Spotify has 1M Premium users in the us and 5M ad-supported users…it’s still growing, but let’s take David Bowie for example. One of the biggest artists of the last 50 years – when he’s thinking about where to debut his new album, is he going to give it to Spotify? Where he makes .005 cents a stream and can’t get it out to the majority of his fans??
    Or will he premiere it with iTunes or an online editorial premiere? iTunes is the biggest music retailer in the world, they don’t do streams often – pretty much only for people of the calibur of David Bowie. So not only will they reach more people – but they give folks the opportunity to purchase the album and give them 12 whole dollars right there, right then.
    There is some incentive for artists to give Spotify / Rdio exclusives, but it generally works better for developing artists who are looking to build their visibility, not someone like David Bowie who doesn’t have to even offer a preview anywhere and people will buy his music.
    Also – iTunes and Amazon don’t love it when you bring exclusives to the streaming services, i.e., their competitors.
    Hope this helps

  17. tony

    have you noticed that spotify has metallica exclusive in the streaming world but barely promote it?

  18. Helienne

    I do enjoy the emails, but why do I always feel like DMN is run by Spotify execs, or, at least, those with an equity stake in its success. I have no stake in this side of the business and even I roll my eyes when I see “Spotify” in the headlines – sort of the same way I feel when the same ad gets played over and over and over….
    P.S. I love the “The other day a friend of mine, who is a Spotify Premium subscriber” beginning… wink wink.
    P.S.S. I am not anti-Spotify but am ambivalent.

    • Helienne

      “I do enjoy the emails, but why do I always feel like DMN is run by Spotify execs, or, at least, those with an equity stake in its success.”
      I see your point. I do, however, have to clarify that I’m a songwriter – and if anyone has experienced how paltry the Spotify royalty payments are, it’s songwriters. On my last royalty statement I got £1,500 for “disco” in Italy (which I assume is club play) while, altogether I got £8 from Spotify for the same track.

      At the same time I get zilch from Grooveshark and a lot less than £8 (believe it or not) from YouTube, for the same track. I have my issues with Spotify, but at least they bother to get a license and at least they try to upsell to subscriptions. I’d put Deezer in the same category.

  19. P

    A streaming service is a luxury. You have millions of songs at your fingertips for $10 per month, or even free if you’re doing the ad based service. Giving exclusive content to Spotify is a bad business move from the label’s perspective. Customers whining about why they don’t get exclusives through their streaming service remind me of the book “if you give a mouse a cookie”. For those who don’t know, the book goes and says, if you give a mouse a cookie, then he’ll ask for a glass of milk, then he’ll ask to take a nap, then he’ll ask for a blanket, etc etc etc..
    Poing being, is that the subscribers are paying the price of one CD purchase per month to have access to hundreds of thousands of records. To have exclusive content, one must pay the premium for it. Meaning.. go to your local retailer and buy the disc or pay the full download price through amazon or itunes. A LOT of people do this, and it’s profitable for the labels, the retail partners, and the customers ARE happy for the most part. Plus, I’ve seen spotify exclusives with commentary on tracks.. isn’t that enough?
    Your friend says he’d be willing to pay 30 pounds a month to have more exclusives. Newsflash, he’s an outlier in the subscription model. I find it funny that in your daily email this morning there was this story.. and then there was the story about the guitar instructor which basically hammers home the point that illegally downloading music IS HURTING MUSIC!! Like I said earlier, streaming services are great and they’re a super great deal to the consumer. Asking for more is quazi-illegally downloading. No, streaming isn’t illegal, but the outcome is the same. Offering up the exclusives to Spotify hurts legit retailers, whether it be digital or physical, and loses money to the labels. You look down the line and might see iTunes close up, you might see Target/Walmart/Best Buy stop selling records, same with Amazon. So, now Spotify is the only outlet one can get music. You think the music industry is in a sad state now? IF Spotify were the only way to make money for labels we’d be in a dire situation… layoffs, no music marketing, no music discovery, lack of funds to get tracks to radio.. radio stations close, big retailers have to cut jobs.. you get the picture I think.
    I don’t hear many cable subscribers saying, “how come I don’t get free HBO or Showtime with my $60 a month subscription? I’d gladly pay more to get those!” Because they can pay more for that exclusive content, and that’s the format right now. If you want exclusives, pay extra and download them or walk to your local store and purchase the disc.

  20. HansH

    Reminds my of an idea I posted a few months ago.
    Good to see the new Bowie album is on Spotify. No windowing, that’s enough for me.

    • David

      The album isn’t on Spotify (not where I live, anyway). The two singles are, which may indicate that the album will not be ‘windowed’. We will see on Monday.

      • HansH

        I checked the Spotify API. Availability:
        You are right no GB or US. Will labels ever learn?

  21. redwards

    There are a many reasons that play in this several good ones mentioned in the comments.
    You gave one of the big answers in you article (although you did not realize it) and made a bad assumption.

    “why do they almost always grant exclusives to marketing platforms – as opposed to services that might monetize them”
    Artist at that level make a lot of money from other sources other than album sales; merch, licensing, sponsorship to name a few.
    To them marketing is very valuable. Look at how spotify does exclusive – they slap up some cover art at make it easy to rotate on to the next song. NPR, iTunes and other outlets do a very good job of making it an experience, surronding you with other content and engaging you.
    Spotify does not offer nearly enough exclustivty to create any sort of experience.
    I love spotify with the accesses they give to cataloug – but that same model makes them very bad for releases.
    Knowing some of the guys at spotify who work in artist relations, they are pretty good and will work this aspect out.

  22. bob

    I love the philosophy behind spotify, and that’s why i am a subscriber: making all the music available for everyone at a really good price.
    Can’t see where exclusive releases fit in there at all. Thats just marketing to make money. So forget them

  23. hippydog

    Has spotify ever “broke” a new band?
    Maybe if they ever take an indie bad out of obscurity, maybe more artists would be more willing to give them an exclusive..
    If spotify wants to increase subscription, maybe they need to improve their value and relevancy..

  24. Branislav Plesa

    Let me tell you why… putting exclusives on there will detract from incentive to buy the cd or buy the songs from I-tunes, and as Spotify offers ridiculously low rates to the musicians I can’t blame them, neither would I.

    Consider this: Renting a professional studio costs a thousand euros a day (for a cheap one, you could also find them for 200 but then you’d end up in a crappy studio with shitty gear and unprofessional results). Even if you want to record at home you’re spending thousands on gear to get professional results.

    That doesn’t even take into account promotional costs, costs of having cd’s pressed, rehearsal expenses, expenses made on instruments, cover design or anything… just making the recording itself.

    You people need to stop wanting everything for free, 5 to 10 euros is not expensive for a product that cost thousands to make and distribute.