Against continued licensing problems and high-profile fallouts involving superstar artists, Spotify is now hoping to calm the waters with a secretive ‘information tour’ in the US. On the surface, the aim of the meetings is to ‘dispel myths and bad information’ about streaming royalties, according to one source, though one insider said ‘checks may be written’ to reluctant holdouts to coax participation.
Currently, we know of three confirmed dates in the US: October 6th (ie, today) at the Soho Club in New York, October 8th at City Winery in Nashville, and October 10th at a private residence in Los Angeles (complete details on these dates below). The US-based sessions that we know about are being coordinated through the Music Managers’ Forum (MMF), with the Featured Artists’ Coalition (FAC) potentially bringing serious, high-wattage superstars to the table.
Sources noted that participation lists, and even event entry, are being tightly protected. “Please note this venue is a little difficult to find, being in a very residential area and a ‘Secret Club’,” the coordinator for the LA-based event emailed to participants. “We’ll have someone outside to meet and greet.”
Please send any additional information you have under complete confidence to [email protected], or just call me at (310) 928-1498.
Top image by Hector Alejandro, licensed under Creative Commons Attribution 2.0 Generic (CC by 2.0). Written while listening to araabMUZIK on Beats.
What, exactly, are the high-profile fallouts involving major superstars you’re talking about?
It is Beyonce and her video album from 2013. The streaming services are still missing several songs from that album and has consequently become a museum.
Haha, I love ‘Anonymous’s “spotify is a museum” comments while Spotify’s top lists mirror Top 40.
I can see you’re not familiar with the concept of windowing, GGG — please see my crash course below… 🙂
Seriously, you know that windowing is killing Spotify.
And again, I’m truly sorry that audio-only streaming failed. It could’ve been absolutely awesome. But it just didn’t work out — the money isn’t there, and it’s time to move on.
You’re right, I don’t know what windowing is. Where am I? What is music?
First half of 2014 streaming is up 28 percent and downloads are down 12 percent, in the United States. Now tell me again, who is killing who?
Apple apparently agree with your concern to some extend though, and suggest that prices should be changed accordingly. Perhaps they have a point.
“who is killing who?”
Video+audio kills audio-only.
“Apple apparently agree with your concern to some extend though, and suggest that prices should be changed accordingly”
Yes, Apple and Spotify are desperate. And for the same reason: YouTube Music Key comes to a screen near you within weeks and it’ll do to Spotify and iTunes what talkies did to silent film.
That sounds reasonable. If you can get video also, then why not go with that if it isn’t more expensive. The only concern should be how much data it will take when using the mobile phone, but i am sure they have made an option for just streaming the audio only.
Anyway, this will of course only make streaming even stronger and make sure that the download market die even faster.
You agree with me? (Bending over, kissing ass goodbye — Armageddon is near.) 🙂
And yes, you just disable video on your mobile devices.
As for the future: steveh and I discussed how the service may affect the industry. You can find it in the comment section of Paul’s article “A Detailed Explanation on Why Streaming Has Failed…”.
But armageddon already happened. Napster was armageddon. Music biz is post-apocalyptic. Legal, paid streaming is the music business’s only hope.
Here’s an interesting angle on Spotify:
A TALE OF TWO PIRATES? Daniel Ek (uTorrent) and Kim Dotcom (Megaupload)
See TheTrichordist.com, October 6, 2014
Daniel Ek, Chief Executive Pirate? Interesting how the guy who helped to depress the market get’s to profit from the market being depressed…
…if the MMF or the FAC have been paid or have received funding and/or any kind of compensation for setting up this little charm tour? Curious minds want to know.
Probably. It’s 2014. Does anyone in music do anything for free?
Here are a few famous — and extremely succesful — Spotify holdouts: Adele, Coldplay, Black Keys, Taylor Swift, Daft Punk, Vampire Weekend and yes, Beyoncé. 🙂
I can see from your comment that you’re not familiar with the problem artists have with streaming — often called cannibalization — and the most popular solution to that problem — often called windowing, so allow me to repeat my little crash course here:
Most acts sell most of their music during the first weeks and months after release.
Now, if you give your songs away during this critical period, you will suffer a certain amount of cannibalization (people don’t buy your music because they can get it for free without breaking any laws). Nobody knows the exact ratio, but you would lose money even if it were as low as 1 to 100 (it takes 100-140 Spotify streams to balance the loss of 1 sold song). And nobody claims it’s that low.
So a lot of smart people thought about this for a while and the smartest among them — people like Adele, Coldplay, Black Keys, Taylor Swift, Beyoncé and their teams — realized that windowing was the way to go:
Windowing comes in all shapes and sizes, but it generally means that you keep your property away from Spotify, or similar services, during the most critical period in the lifespan of a record — and that you make it available on these services as soon as sales begin to drop.
Hope this helps.
That is actually a quite small number of somewhat successful artists. There where certainly more important holdouts 2 years ago and back then it was a real buycott in many cases.
With regards to windowing, why do you even consider that important? In 5 years or less it won’t be a realistic option for anyone, with the download market having disappeared. Or do you suggest they should first make things available on vinyl?
“In 5 years or less it won’t be”
Hahaa, you’re not exactly my first choice in the predictions & prophecies department, pirate. 🙂
Here’s what you said when Beyoncé launched her legendary anti-streaming success in 2013:
“it is just some silly arty-farty project, which very few will care about”
A few months later, we all cared! Time Magazine even selected Beyoncé as the cover star for the magazine’s special 100 Most Influential People issue, crediting her for shattering music-industry rules — and sales records!
Audio-only streaming failed, it’s time to move on.
It is not like you have to be Nostradamus to predict where this one is going 🙂 Actually, you just have to look at the numbers and know the fact that downloads are falling very fast and with increasing speed. Streaming on the other hand is growing at a very healthy rate. If this continue for 5 years, downloads will be dead. Thats just a plain fact and there is no reason believe otherwise, especially looking at the markets where streaming is a bit more mature. If anything the speed should increase.
Again, I agree with you on the video side. Why would people not want that as an option? Spotify & friends will properly have to come up with something similar. In other words, in 5 years downloads will be dead, more videos will be included and streaming will be the only important method of distribution. Also, the windowing nonsens will be just as dead as downloads obviously, because what are you going to wait for?
Again, I think you should see the discussion I had with steveh. Not because I think it will change your mind, but because this is more complex than it seems.
Every new aspect you add to the industry can fail or succeed, and every new outcome will have its own set of consequences.
Yes, people will choose the service with more options, that’s human nature. So YouTube Music Key will win at first, and iTunes/Spotify will lose (unless they copy YouTube, as you suggest).
But then what?
I don’t think YouTube Music Key is going to make money from the subscription version.
People love the free version and they don’t like pay walls. But Google paid a nice chunk of cash to the music industry and they’ll want it back. So they’ll feel inclined to cripple the free version more and more in order to force consumers across the wall. And that’ll really piss people off!
So where does that leave the labels when the contract expires?
In search of something else. And then it begins all over again. Except that Spotify and iTunes will have suffered severe, perhaps fatal, blows in the meantime.
At that point, there’ll be a void where the orginal iTunes, Spotify and YouTube used to be. And the only thing we can say for sure about that void is that something else will fill it.
But, all those artists have their music up on Spotify. I don’t get it?
“I don’t get it?”
Don’t worry, it’s very simple: Windowing is a temporary holdout from streaming services such as Spotity.
That’s why it’s such a popular release strategy among succesful artists today: It prevents cannibalization, but still allows long-term streaming.
Please read my introduction to the concept again — then you’ll get it.
Windowing only makes sense if there will continue to be a download market.
five questions for artists and managers to ask spotify this week…
Five Important Questions For Spotify from Artists and Managers
If artists and managers were to find themselves in a room in the coming weeks with representatives of Spotify there are some questions which should probably be asked and some issues which should probably be raised.
Spotify is working hard to convince musicians that they are not the enemy. We appreciate that the service is legally licensed. We also recognize that the major labels have a different relationship to Spotify than most artists ever will as it has been reported the major labels collectively have at least an 18% equity stake in the company.
What is particularly troubling about these equity positions (same for the Beats sale to Apple) is that we don’t know of any artists who benefit from their work being used as the leverage for the labels equity participation.
So with this in mind here are five questions artists and their managers could ask Spotify…
1) At what scale and price point is Spotify actually sustainable for artists?
Daniel Ek says it’s 40m paid subscribers, but that math just doesn’t work. 40m Subscribers x’s $84 per year = $3.3b in annual global revenue to artists and rights holders (assuming they really are paying out 70% of gross). Here’s the simple math* : 40,000,000 x’s $84 = $3,360,000,000
The current domestic record business is bottoming out at about $7b annually.
When confronted with this fact, “Investor and Artist In Residence” D.A. Wallach recently responded publicly that “Itunes has more than 40m users.” Ok, fine. We showed you our math, how about you show us yours. Once that’s out of the way, let’s ask the second question…
* 10 a month per subscriber, x’s 12 months = $120 per year per subscriber. $120 per year per subscriber paying 70% to rights holders is $84 per year per subscriber.
2) When do you think Spotify can realistically achieve a sustainable scale for artists?
Given that Netflix only has 32m subscribers in the USA and that there only 52m premium cable subscribers in the USA why does anyone really think Spotify will have more than that anytime soon? Spotify is reporting only 10m paid subscribers, and that’s for the entire world. Sirius XM as a mature business, which is installed in homes, cars and is also accessible via the internet only has 26.3m subscribers across all platforms.
Does anyone really think that Spotify is going to ramp up to over 80m paid subscribers in the USA alone anytime soon? We’ve detailed this math before, it’s not pretty and it’s right here.
3) Why not publicly show the full tables of equity participation’s and the distribution of payments, including the rate of pay to all stakeholders? If Spotify is really paying out 70% of revenues, let’s see where it is really going and who is getting what share.
We already know that majors (and possibly Merlin) are getting preferred rates. Say what you will about Apple but everyone knows that take a flat 30% across the board. It’s a transparent business. If Spotify wants to talk about transparency and openess, they should lead by fully disclosing this information.
4) Why should artist trust a business created by the same person who profited massively from the illegal distribution of artists work, without compensating them?
According to Wikipedia, Daniel Ek the CEO of Spotify was also “CEO of
µTorrent, the world’s most popular BitTorrent client with more than 100 million downloads.” uTorrent makes its money the same way The Pirate Bay does, by monetizing the distribution of infringing works with advertising revenue.
5) Why not publicly and vocally join the fight against Ad Funded Piracy? Why not publicly endorse and support legislation (like SOPA) that would stop illegally operating businesses like uTorrent from destroying the lives of creators?
Well, this should be pretty obvious given that the CEO of uTorrent is now the CEO of Spotify. We all know there is a lot of money being made in the distribution of music online. Unfortunately that money is not being paid to artists in a meaningful and sustainable way. In the case of uTorrent artists don’t see a penny. Spotify paying fractions of a penny to artists per play is functionally of little difference to most artists.
The simple truth is that the fundamental problem with Spotify and other businesses like it, is that the cost of goods is grossly undervalued. In other words, the only way that streaming really works is to increase both the price of subscriptions and the number of paid subscribers. Of course we understand the appeal of having musicians subsidize their business, but in a word that is just unsustainable.
One last point… Stop with the misleading press and stories about Spotify growing the transactional business. It’s not. It’s not going to. Spotify is cannibalizing the transactional business into accelerated decline without replacing the revenue that is being lost. If this trend continues we’re knowingly pursuing a death spiral from a current $7b annual business in the US to a $3b annual business.
It’s not that complicated, it’s just math.
“According to Wikipedia, Daniel Ek the CEO of Spotify was also “CEO of
µTorrent, the world’s most popular BitTorrent client with more than 100 million downloads.” uTorrent makes its money the same way The Pirate Bay does, by monetizing the distribution of infringing works with advertising revenue.”
Whoah… so Mr. Ek is just another criminal?
Ahh, another American confused with the concept of a world outside the USA.
Remember, Spotify makes quite a lot of money outside of your country!
Windowing. Spotify’s Achilles heel and what will ultimately block their success.
I’m sure the way Ek is looking at it is, in theory, at a certain level of users/avg per stream payout, windowing won’t be necessary really. We all know most music industry people lack the ability to look/care about things more than 2 quarters in the future, but let’s look 5 years in the future. Do we really think people will be buying music (at least as it exists now)? So what will they even be windowing for?
My question to you. Would you fight for Walmart to pay their workers less to support a business model that purports to paying higher wages in the future when they become successful.
Or if you were a manufacturer / vendor / supplier would you agree to sell your goods below cost for an undeterminated amount of time to enable a lower paying business to put your existing, higher paying vendors out of business?
Personally, I don’t shop at Walmart and seldom purchase from Amazon, after I let my prime membership lapse a year ago.
None of this is relevant to my comment. Do you think music ownership will be the same or higher in 5 years? If not, windowing won’t matter. If so, why?
But to your analogies, the WalMart one doesn’t make sense because it’s already a profitable entity. But you know who does promise to pay higher wages when the company is profitable? Probably literally every new business ever. That’s why people often get paid in equity.
You really didn’t answer the question, but that is no surprise. Walmart was a hypothetical example, something you’re well versed in.
If the artists had equity in Spotify, we might not be having this conversation. We both know “the blame it on the record labels” will be your retort. And there is truth to that response. The record labels could have and should have walked away from that deal.
Now the artists have the power to decide, at least those who are not bound to record deals that deprive them of the opportunity to decide.
Whether it be piracy or streaming, let the artist always decide.
It might be a surprise to you, but the dude singing on the album isn’t the only one who is important in the music business.
If Spotify payouts are bad because it doesn’t make artists/labels enough money to develop acts, then why would the labels bringing home some massive amounts of money a bad thing? Obviously that won’t go towards artists in the form of direct royalties, but people on this site have this weird notion that when Spotify goes public, all the labels will just like close shop and cease to exist. Well, Spotify IPO gives labels hundreds of millions if not more, there you go. Money to develop acts. Hopefully they use it.
Now the artists have the power to decide.
But it’s no longer the artists music. When you SELL YOUR PROPERTY RIGHTS, you don’t get the ability to take them back. Ooops, I sold you a house, now I want it back, and also keep all the money you gave me to buy it. If record labels own the music, they can do fuck all they want it. Deal with it.
GGG interesting how you’ve shifted the conversation to holding out hope that IF Spotify can mount an IPO; if indeed Goldman Sachs is behind it they will most likely succeed, that it will enable the record labels to re-invest in talent and revive the industry. Do you really believe that.
And you Mr. Anonymous, you have failed to follow a trend over the past decade that has seen a shift away from labels investing in new, untried talent, creating an independent record industry that accounts for over a third of the music sold and a similar success rate at the Grammys. ( Besides, if you’d bothered reading my entire comment, it clearly states that “Artists Decide” does not apply to those indentured servants who are signed to equity deals with Spotify. )
And perhaps you’ve overlooked the fact that some artists can reclaim their masters after a fairly lengthy wait.
What I can’t figure out is whether your contempt is for the artist or the industry or perhaps both.
My comment was purely another example pointing out that you argue from 20 different angles, many contradicting many others, every time you argue streaming.
But it’s also about how you and others perceive a public offering of Spotify; as I said, you seem to think major labels will shut down and decide to not be in business anymore. Majors want as huge an IPO as possible. That will obviously be with a much higher user base. How many users did Facebook have for their IPO? How many did Twitter or Tumblr or Instagram or Pinterest or whoever have when they put themselves up for sale? Nobody in 2014 is going to try and pass off 40M users as big. So an IPO will mean there are enough users, which will mean (in theory) more money will be paid out to artists through normal operations.
“but let’s look 5 years in the future”
Nobody can do that. But we can look a few weeks into the future.
Try it. All you’ll see is the new YouTube.
Spotify knows that, hence the desperation…
No, we CAN’T, but why do we avoid it so much? This is why piracy wasn’t reigned in or why the RIAA didn’t make iTunes first.
And I’m not even anti-windowing. You know this, unless your alzheimer’s is acting up.
All I’m saying is windowing might not be an issue in a couple years.
“This is why piracy wasn’t reigned in or why the RIAA didn’t make iTunes first.”
You’re absolute right — except I don’t think we should blame the RIAA. I think we should blame ourselves.
And it’s happening again: Instead of building our own kick-ass audio&video service, we’re licensing everything to the world’s leading advertizing agency.
That makes even less sense than allowing Apple to build iTunes. Apple pays 70%, Google pays much, much less.
So why don’t we roll our own? Indies account for 1/3 of the industry. That’s real money, real power. We should launch a free, non-censored, high-quality, ad-financed, artist-friendly, better-paying YouTube alternative — owned and operated by the industry — and use that service exclusively.
No more songs on Spotify, iTunes and YouTube. All revenues straight back to the artists.
We can act like the record labels missed the iTunes boat, but the reality is the majors would get into serious legal trouble if they sold music directly to consumers and locked everyone else out of the market.
“the majors would get into serious legal trouble if they sold music directly to consumers and locked everyone else out of the market”
No no, that’s just a myth. 🙂
Nobody prevents any label — or any independent artist, for that matter — from making exclusive releases.
Happens all the time…
Exclusive releases are irrelevant. Companies in the same market working together to built out other markets is illegal under the Sherman Anti-Trust Act. The idea that “we can band together in new business ventues” was the norm before that act was passed, in that almost all big companies acted that way. Now, it’s illegal behavior, and criminal too (anti-trust violations can be tried as a felony).
Um, well, it gets worse. You don’t have to actually go through forming a trust to be in violation of anti-trust. Simply talking about forming a trust is illegal. Songwriters can get burned by this because they are actually part of an anti-trust convent with the DoJ, and saying things that imply support of collective bargaining is technically illegal as a songwriter. Advocating a commercial stance contrary to law does not fall under protection of free speech, like trying speech to scam something isn’t free speech. Forming a trust is basically considering trying to start a scam.
But the point is if that Anonymous is part of the music biz, he’s literally a criminal now.
OK, you’re a nut-case — bye-bye. 🙂
Better a nutcase then a dirty felon.
“Exclusive releases are irrelevant”
Would you please STOP your nonsense already. 🙂
I am completely free to choose how, where and when I release my music! So is any other artist and any label on the planet!
Exclusive releases are the future — not only for musicians, but for the entire entertainment industry. Just ask Netflix…
You want to violate anti-trust law.
You can ask Netflix, but considering 99%+ of the content they offer is available somewhere else you probably won’t get the answer you are looking for.
If only Netflix was owned by the movie companies and was the only major streaming service around. That would be an anti-trust violation, surely. But Netflix is not that. Indeed, you on the other hand are advocating the record companies violate anti-trust law.
Indeed, you on the other hand are advocating the record companies violate anti-trust law.
Little known fact!!!
Just advocating this is itself illegal, UNLESS the Anonymous guy isn’t part of the record business. But something makes me think he is part of the record business.
“So why don’t we roll our own? Indies account for 1/3 of the industry. That’s real money, real power. We should launch a free, non-censored, high-quality, ad-financed, artist-friendly, better-paying YouTube alternative — owned and operated by the industry — and use that service exclusively.”
Also, regarding the non-censored part:
Wouldn’t that be awesome?
Imagine a world where Apple no longer can censor your album covers! Where Google no longer can censor your videos (and let’s face it — when they can censor a Katy Perry video, they can censor anything)!
A more relaxed attitude is a major selling point for ello right now.
It could be a huge selling point for a music service owned by musicians, too!
You make a very valid point. It is unfortunate so few people see it.
This isn’t a debate of Spotify growing or dying to Youtube. It is a debate of streaming vs. downloading. Over the next several years download sales will continue to decline and streaming revenues will continue to grow. Streaming will overtake downloads as the #1 source of revenue. At some point windowing will become pointless. The extra download sales gained won’t be worth losing several weeks to months of streaming revenues.
Maybe you can say U2 also
I’m sure you’ll be corrected on Radiohead, but ultimately without curation, unless you count Echo
Nest as curation, which I do not, Spotify isn’t about discovery anymore than Walmart. So if your popular, unless there’s a pay out, why bother?
But this is ground we’ve been covering for quite sometime.
Hmmm. I found every single one of the artists on the above list on Spotify.
I can see you’re not familiar with windowing — a succesful release strategy — please see my crash course above…
Of course I am. Point is, it just makes no real difference to the quality of service. Who really, honestly cares if they have to wait a little while to hear some band (apart from diehard fans) ? Answer: Not a soul. There is so much music to listen to you could never cover half of it in a lifetime.
“Who really, honestly cares if they have to wait a little while to hear some band”
Usually a rebuttal of an argument, (in this case people and priorities regarding urgency to hear new pop music) would include some form of reasoning. Emoticons do not really constitute reasoning.
With more and more people sharing Spotify links via Facebook and Twitter, the artist might as well not fucking exist if their stuff isn’t on Spotify.
music managers forum in the US has no relevant or meaningful artists. This is a non-story.
Featured Artists Coalition has big names
“the aim of the meetings is to ‘dispel myths and bad information’ about streaming royalties”
Here’s another suggestion: Total transparency — iTunes style!
Much better than secret meetings. 🙂
And here I thought you’d be invited since you are oh so very important.
I love the timing of this secret info tour — a few weeks before Google launches the ultimate Spotify killer YouTube Music Key.
I’ll believe anything that ends in ‘killer’ when I actually see the dead bodies.
So, we have two competing services — a and b:
a) Audio and video (video can be disabled). All songs available on release day. Content can go viral. Huge fanbase. Additional content: Interviews, behind-the-scenes, live…
b) Audio only. Songs often available weeks after release. Content can not go viral. Small fanbase. No additional content.
Remember what happened to silent movies, Paul?
Logical arguments only sometimes get validated by the marketplace.
Don’t encourage him, Paul. More doesn’t always mean better.
Does the YouTube Music Key program not feel like Google is just using YouTube to try & market unlimited access to Play outside of the Android ecosystem? And to a customer base that, by & large, is there mainly BECAUSE it’s the free alternative?
I guess it’s hard to say without seeing the service, which makes it so weird that Anon is sooooo deep in the kool-aid.
exactamente – well put….
Logic has nothing to do with it — consumers will always choose talkies over silent film.
you are all clueless. spotify can be awesome if you aren’t a nobody (who prob isn’t making jack shit on iTunes either)
Couple weeks baby!
Shouldn’t it read “Features Artist Coalition invites Spotify to speak” instead of this secret stuff?
Ah screw it. No one here cares about facts…..
On the contrary — we all care about the facts. But Spotify keeps them secret.
No wonder, btw…
I probably should have better conveyed that my sources felt this was being kept secret, and was definitely not for broad dissemination to the unwashed artistic masses.
Incidentally, the image itself of the invite was in a protected format, which yes I circumvented. If that says something.
I would just like to state that some of the most brilliant artists of all-time were largely unwashed.
What about the ability to window releases only on the free version of Spotify? Meaning, those that actually pay for Spotify would have access to content that would be unavailable to those who choose to free ride. Would that be too technologically advanced? Sure it’s not in the interest to those who want to only use free Spotify and feel entitled to all music titles, but isn’t in everyone’s best interest to have more people actually paying to use Spotify?
I don’t think ‘limited windowing’ has any substantial effect.
The movie industry found the right model a long time ago: Total windowing, then DVD (Spotify in our case).
I may be mistaken but I think very early on that was something that was happening. Not windowing per se, but some artists only available on the pay model? I might be totally wrong though, or it disappeared very quickly.
But yea, I think something like that is what they should do. That and fund some bands’ records and have them released solely on Spotify. There’s a slew of ways Spotify can leverage things, they are just terrible at anything remotely related to marketing and promotion.
If there is free food, it can’t be that bad.