How to Fix Spotify, In 3 Easy Steps…

A proposal from Startup Musician…

  • Save

  • Save

  • Save

42 Responses

    • Anonymous

      right, then piss off and leave me alone…

      i know i aint dreaming, im living in reality…

      • Me

        So you think the answer is to double the price so people are paying $20 a month and spending $240 a month? Good luck w/ that when it’s already hard enough to convince people to pay $10 a month.

    • Ari Herstand

      It’s a nice idea. And I commend your effort. A few major holes though. Rhapsody has been trying the premium only model since 2002. Wonder why it never took off to where Spotify did in a few short years? They didn’t have a free tier. On Spotify, 80% of it’s premium users started as free uses. If you kill the free tier, you don’t solve the problem, we’re back to where we started.

      Newer than 6 months only music? Won’t work either. The alternative to Spotify is not paid downloads. It’s piracy. Sure, Taylor Swift sold 1.2 million records in her first week. With 71 million Facebook Likes, 1.2 million is hardly a number to celebrate. And you know what the number one album on The Pirate Bay was that week? You guessed it. 1989 by Taylor Swift. People say Spotify is killing sales, but then why in Canada has sales been dropping just as drastically as everywhere else in the world even though Spotify only launched there last month?

      Spotify at least pays something (actually over $2 billion to the overall music industry since launch). Know what piracy pays? Nada.

      Indie musician, Ron Pope, wrote an excellent op-ed in Billboard. He made over $250,000 in Spotify (no I didn’t add a zero) just last year! He gets 100% of that money because he’s self distributed.

      That being said, yeah I don’t like how low streaming rates are. I’m a musician and it sucks that I only make about a half a penny a stream. (Actually, Spotify claims $.006-.0084 per stream for ALL royalties, mechanical, performance, streaming) BUT musicians never traditionally made their living from their recorded music. Lyle Lovett sold over 4.6 million records over the course of his career and made $0 from record sales. He made his money touring. So us musicians have to diversify our income streams (like always).

      There are so many more ways to make money with music in 2014 than 1999. Indie artists should be celebrating, not commiserating.

      +10 Ways To Make Money With Your Music That Didn’t Exist 10 Years Ago

      • daytonmc

        I agree with almost everything you’ve said. I would only say to your comments on the free portion that, I understand exactly what you mean. However, there is a possibility of going somewhere in the middle, where you give free users 6 months or even a year free, but at some point it would probably be good and fair if they have to subscribe.

  1. GGG

    I’ve always thought he best thing would be for Spotify to split user generated rev between the artists you actually listen to, but that would require so much extra programming/accounting I doubt they’d ever do it, so I don’t even bother bringing it up.

      • GGG

        Not so much what? That it’s not difficult to program/account? I suppose it’s probably not that difficult for some talented coders, still a lot more involved than paying out artists as a percentage of one giant sum, as opposed to 40M+.

    • Casey

      I think $30 would be a bit high. Easily 90% of their subscribers would cancel.

      I think a more realistic approach would be a more tiered system.

      Free- 10 hours of on-demand monthly cap, unlimited radio. Moderate ad load. Bitrate limited to 96 kbps ogg.
      $5 per month- No cap. Still uses visual ads and a light audio ad load for on-demand. Commercial-free radio. Bitrate limited to 160 kbps ogg.
      $10 per month- No cap, full ad-free access. Birate limited to 320 kbps ogg.
      $20 per month- No cap, full ad-free access in FLAC.

  2. Remi Swierczek

    Mr. Ek can convert it to music store.
    He will not run out of money and $5 billion dollar IPO dream will become reality.

  3. Casey

    How to kill Spotify in 3 easy steps.

    Seriously, step 1 would kill the service. People are not going to buy music and subscribe to a service. It’s one or the other. No new music would kill off well over half of the paying subscribers.

    Step 2 undermines the point of the free service. The free service funnels users into the paid service. Without it Spotify would never have gotten off the ground. Like Rhapsody used to be. Limitations can and likely will be applied in the future. But this is the critical growth period for Spotify. They will do it when they are ready.

    Step 3… WTF? $10 per month on top of $10 per month for access to 5 artists? Yeah no.

    • Anonymous

      Musicians tend to overvalue their stuff too. Films > music. To give you an idea, a film usually has a musical score! Films also cost way more to make. Netflix is $8/mo. $2 cheaper than Spotify. The actual problem, is Spotify is too expensive relative to what it gives you – only music for $10/mo? Where is the movies? TV shows? That’s why it has fewer subscribers.

      • scotty

        Musicians don’t over value their music, the industry that takes a majority share does. I think the approach spelled out here is a good idea. The numbers can be adjusted. The main point is to stop thinking of music (and film, and artwork, and software, etc.) as free!

        How about a system based on usage? $5/month gets you something like 50 plays a day. That’s around 2 hours of music per day. The $10/month plan would be for unlimited plays. Then some premium account for $15/month for the New Releases.

        • Anonymous

          Scotty, I’d disagree with you on musicians not overvaluing their music – they pretty have to, to service.

          Working in any creative field means you gotta be as aggressive as shit about what your perceived value is.

      • Sheesh

        wait – were music videos movies first? Doesn’t matter which is pricier, people consume music far more often than movies. Not a valid refute.

        • jw

          People might technically consume more music, but it’s a background activity, not a foreground activity.

          The reason that Netflix is such a great model is that you can spend a whole weekend eating Chinese takeout & binging on Twin Peaks. That’s like 30 hours of content.

          It’s very unlikely that a Spotify subscriber is going to sit down in front of his speakers & listen to 30 Eric Clapton albums back to back. It’s more likely something that plays in the background while you’re doing something else… driving, talking, cooking, working, reading, etc.

          And tv shows & films are often multi-million dollar affairs. Netflix paid $50m per season for House of Cards, & probably more for Season 3 onward. A lot more money & effort goes into creating Netflix content, which makes for a much more compelling product.

          I mean, if you tried to release an album in… some equivalent of a theatrical setting, like pay $10 to come hear the album on release day through big speakers at some event, people wouldn’t show up. It’s just not the same thing.

          The consumption habits differ, & so does the value proposition. Anyone who doesn’t realize that doesn’t really have any insight to offer.

    • FarePlay

      I guess JW doesn’t know where to start swinging on all this.

      In the scheme of things artists need to decide what they want to do. Because, unless they’re signed to a major label they can just remove their music, some or all of it. Simple. Until Spotify has a LOT more money and can buy major new releases they will be subject to more and more windowing.

      And until they start demanding payment for their service as far as I’m concerned they’re not a business.

  4. scorn100

    Step three perplexes me. What if your Top 5 artists are not consistently putting out new music. Most bands still only release an album a year, if you’re lucky, along with a few singles or EP’s, if you’re really lucky. So what would that extra $10/month get you? $120/year for how much music?? you might as well just buy the 5 albums you want and save $70 per year.

    Step 1 is currently the experiment with AmazonPrime. But there, you have the primary value of a movies, TV shows, and free shipping. Music is being treated as a loss leader. But I guess it’s OK because it’s only “older” music (6 months or older). I don’t know about most people. But I don’t consider 6-month old music to be old. I often don’t get around to listening to new releases for six months or more.

    I really like the creativity of StartUp Musician. But this is still not a feasible solution. Yet, it’s better than anything that I’ve come up with. Let’s keep the juices flowing.

  5. D.B.

    Interesting idea, but…
    * as others have mentioned, people are more willing to pay for exclusivity with video (like House of Cards, etc.) than with audio.

    * Spotify doesn’t have much of an incentive to adopt this proposed model. It may be the biggest on-demand audio service, but if it makes people pay (or pay more), they’ll just get the music they want somewhere else. Note that Taylor Swift pulled her music from Spotify and Rdio’s free service, but not from YouTube. Artists (especially big ones like Swift) produce expensive videos for promotional purposes, and need YouTube to show them. Granted, you can’t legally stream an entire album by most artists on YouTube, but there are plenty of illegal albums, movies, etc. uploaded. It’s a game of whack-a-mole for YouTube to try to remove them all.

    * Though Startup Musician has an interesting idea, it turned me off by implying that anyone who doesn’t pay for streaming is a “freeloader” and not a “decent human being.” We’re not talking illegal downloads here; Spotify is a completely legal service. Since Spotify seems unlikely to change to the S.M.’s model, maybe it should continue focusing on getting copyright/artist royalty rates changed to keep up with the 21st century.

  6. Name2

    Er, no.

    I’ve walked away from less complicated cell phone plans.

    • FarePlay

      And be onto the path of being a viable business, instead of a Napster retread.

    • Versus

      Would that be a bad thing? A bad business model should be replaced, either by revamping Spotify or replacing Spotify with a new and better approach, that actually profits and pays out fairly.

  7. Mysteron

    Startup Musician’s idea is all very nice and theoretically fine in a vacuum. Of course Spotify could do business differently, in both pricing and splits. But they have labels, investors, artists, and users to please. Let’s see what happens post IPO after exit, when the business is based on value rather than having to spin plates. That’s the time for good ideas.

  8. Concerned

    you said 3 easy step, instead i got this confusing poster of nonsense.

    there are plenty of first run films and TV shows on netflix, they actually do Netflix exclusives and netflix produces content. you should sell music in all forms, not just physical. also, spotify isn’t broken, the music industry is (according to you)

    • Anonymous

      He compares it to Netflix, ignoring that fact that Netflix costs less than $10 per month. Netflix allows people to share accounts between multiple people. Netflix pays much less than 70% of their revenue to copyright holders. And all that despite the fact that Netflix’s content is far more valuable than music.

  9. DeezNizzuhh

    I say they should do $3 Monthly memberships. Everybody will join then.

  10. Universalmaster

    the only step on this long poster that seems to have any rationality behind it is step 2.

    Step 1 and step 3 completely obliterates step 2 though. Even though you have the “Lets take step 1 and reverse it!” part in it. Then in step three you go back to step one – and removes that exclusive content which you stated would be for spotify premium users, and takes it away from them – and gives it to an even more expensive spotify VIP, voiding the whole entirety of step 2.

    This ‘solution’ doesn’t make any sense in total.

    Step two is what spotify should persue – make new releases exclusive for premium users for 6 months – or a whole year. If you end up thinking that it is too expensive – $17 (if you live in Denmark) a month, Then just think that every physical copy costs ~$20 dollars each. Paying $17 dollars a month is not much – but it is still more supportive than pirating or freeloading.

  11. Nissl

    Right direction, but a little too restrictive imo. My suggestion:

    The free tier is ad-supported radio and albums older than 12 months. Have a $5 tier that removes the ads from the free tier and bumps the window up to 3-6 months. Have a $10 tier with new standard albums. Have a $20 tier with HD, deluxe versions of albums, and extras like Spotify Sessions. Bridge the gaps between those tiers with some combo of PPV/rental/favorite artist packages.

    I guess after reading my proposal I think I mostly disagree with the 6 month cutoff on albums on the $10 tier. That’s the sale you really want to make, and imo it’s just not appetizing enough if you’re switching from a system with everything for free. You have to boil the frog. Yeah Netflix is all back releases, but they aren’t being pressured by pirated videos posted on Youtube the same way.

    Speaking of which, the industry needs a program to wrist-slap those people. Even if Youtube got a perfect filter, they’d just move to other sites. The huge lengthy trials of the early 00s didn’t work, but I would love to see major video sites agree to figure out a way to back charge for views of stolen albums on their sites. Even a few cents per view would get the message across real fast.

  12. Anonymous

    6 months might be too long. How about if you buy Taylor Swift’s new record you get to listen to it on Spotify and you get a free 3 month sub to premium level. The free program does indeed need to be downgraded; not enough incentive to move up to premium.

    • Name2

      I’ve got an even better idea.

      Step 0: Anyone wanting to join Spotify has to first buy a Taylor Swift album.

  13. Nick

    This doesn’t work, sorry. You are just thinking about how much the “artist” gets, not the label or the songwriters – who are the one truly affected by spotify. Major Artists don’t make their money selling/streaming records, they make their money from touring. Taylor swift is an exception because her father owns her label. Spotify hurts the pockets of publishers & songwriters and this doesn’t address that.

  14. Versus

    What about the variable payouts problem?
    There should be fixed pay-outs, not a fraction of Spotify’s variable income at any time.

    If necessary, to be able to control Spotify profit/loss, then perhaps Spotify should introduce listening limits. That way the maximum amount of music minutes (and it should be by time, not number of plays) would be capped. That’s where tiers could also come in; users could choose their minutes plans.

  15. Cherch

    Primarily based in idealism, sure…but the problem is not exclusive to Spotify. As an independent musician (who tours constantly), the general issue is not being underpaid by streaming outlets (though this is tremendously problematic), its a generalized devaluation of art by our consumer market.

    Normally I’d abstain from turning a comment section into an op-ed but in this case I’d like to shed some light with the following: if you feel that Spotify’s payout by stream isn’t adequate (which it isn’t), why do you think the artists they’d sign to produce exclusive content would be compensated fairly in their recording/publishing agreements?

    Personally, I wouldn’t be eager to sign with a service like Spotify because of that ideal. I’d assume that their modus operandi is to spread content in a universally accessible medium, not to increase the wage of an artist. I’d also assume that because their target is at a macro level, that they’d be more interested in signing artists who already have a large fan base such as your Ms. Swift which would only further polarize the gap between independent touring artists (or, “musicians” as I call them) and pop stars (“sale generators”).

    Every industry in our world economy is built off of introducing newer, riskier content tenuously through a small slice of the income generated by a larger, more popular product. You can see this through a beverage company like Jim Beam offering an ancillary version of their main item like “Devil’s Cut” or that Cherry one that was gross “Red Stag?” So, unfortunately we’re a bit bottle-necked by our dependence in the recording industry by having the U2s, Phishs, Depeche Modes, etc. who can effortlessly maintain their massive fanbases and bring in enough income to slice off to beta-test us young ones.

    That (in and of itself) is terrifying.

    Another fundamental mis-step by eliminating new albums: not allowing a beta-testing of YOUR product. I released an LP in February, and by my metrics (though smaller and more concentrated than a major record label’s) Spotify’s hosting of my album did lead to an increase in sales.

    Now, we have our direct sales outlets, too. We have Bandcamp, and well…we have Bandcamp.

    There is one fundamental flaw with that: Bandcamp is used mostly by artists. Artists who are trying to reach an audience beyond their own communities…

    The sales split is fantastic with BandCamp, but we tend to sell more records through the major digital retail outlets because simply: they’re easier to access. Bandcamp can’t put your record into a cloud accessible through your mobile device, Bandcamp isn’t an instantaneous buy (you need to “confirm” your purchase via email), and Bandcamp isn’t as easily navigable.

    Bummer, but its not exactly obsolete.

    However, what does increase sales is touring. Through spreading your market reach through other major consumer markets, you spread your product knowledge. Simple marketing. Door-to-door sales. Have a great pitch, deliver good product, don’t be delusional. Every sale counts.

    Touring will also, however, cost you overhead. This means that your return will not be immediate. Gas is fuck-off expensive, and so is the occasional need for lodging (crash with your friends, you miss them anyways) and the daily need for sustenance. Two months should cost you about $5K you’ll have to be prepared to lose. Investing in any business is generally accompanied by some degree of risk for potential loss. So, be realistic. Also, yes there’s a large chance for your first couple tours that your audience won’t be large and it might be pretty uncomfortable so please, allow me to clear the air on this…

    Think of an early tour date like your first gig. You didn’t have many people at your first gig did you? Me neither. Shit happens. But then you continue to perform, and maybe you score a few write ups and your quantifiable data increases and then the next time you come through town there are more people. Maybe they aren’t. Maybe next time try another city within 90 miles of that destination.

    Speaking of distance: touring also limits your plays to a season cycle. If you’re circling the country you can’t really return to a market for at least three months, so if people dig your tunes they’ll probably want to hear them again: thus creating the avenue for a sale. In the case of a stream, at least they’re still tuning in. It’s not the consumer’s fault that the host pays their clients like garbage.

    What would be nice is that if Spotify utilized their own metrics to issue grants and stipends to independent artists (like universities issue scholarships). Not something massive, but not something that needs to be repaid like an advance through a record/publishing agreement. Maybe a few grand to purchase a safe vehicle and some unique merchandise for the road. Maybe just a free physical replication of your digital product into physical/tangible form (vinyl, CD, tape, reel-to-reel) or maybe an artist liason program/network to set up non-agency based referrals to comparable artists you could collaborate/tour/one-off with to help increase your notoriety?

    After all, without us generating content these services have no product to offer.

    the bottom dollars

  16. scruss

    Original content, like House of Cards? The House of Cards which was based on a 24 year old BBC miniseries …?

  17. Mike

    Wow, what was actually pretty bad. Their main problem is being too expensive, since users keep nothing after they leave. Albums get as low as $2 and with $10x12months that’s a lot of cash for nothing. Old fees were more acceptable. Would subscribe at that price. One could say they get access to “everything”, and it is true, but:
    1) I don’t want “everything”, and in fact I despise the artists you point out that could be exclusive. Keep them. Beatles used to be cool, but aren’t cool enough to be on spotify though.
    2) Too many places to get stuff free. While one could say youtube (and others) just sucks in that aspect, I say paying $120 yearly when I could do it for free with a little more time investment is not worth it. Because it is not.
    3) It is not worth it because you are hardly supporting the artists by subscribing spotify. Like in buying records, artists get next to nothing and labels get all the cash. If you want to support bands go watch concerts.

    What you call freeloaders, they call free publicity. You know why? ‘Cause if they weren’t, the service would be a lot more limited (more ads, limited hearings, etc.).
    New music not being available for free could be a good decision, but having exclusive content is just not going to happen. Spotify not big enough.

    Excuse my english.