Spotify Wins. Artists Lose. Any Questions?

If Taylor Swift and Jay-Z can’t beat Spotify, neither can you.

As my Depression-surviving Jewish grandmother used to say, ‘it could be worse’.  The recording industry almost got completely eviscerated; iTunes downloads almost got wiped out by BitTorrent and free streaming.  Five years ago, pundits like BigChampagne told us that nobody would pay for streaming music.

Some industry forecasts left recorded music revenues out.  As in, rounding error towards zero.  Artists were gonna make money off of touring, merchandising, and branding deals.  Everyone had to hope they had an Amanda Palmer bolt of energy and entrepreneurism in them — or starve to death.

Your recordings would just be loss leaders.  And the industry would adapt accordingly.

Amazingly, the tech behemoths didn’t completely kill music copyright with DMCAs and crooked ad deals.  Spotify reintroduced quality into the equation; they actually got people to pay.  Of course, only a fraction of Spotify’s 71 million subscribers are paying full-fare, but they’re all paying more than $0.

Toss in Apple Music’s near-40 million subscribers, Sirius XM Radio’s 30-something million subscribers, and Amazon Music Unlimited’s ‘tens of millions’ of subscribers (their words), and suddenly you have a brand-new industry.  Even Pandora is getting people to pay.

And all of that progress was crystalized on April 2nd in New York, when Spotify catapulted itself into a $25+ billion company.  But that doesn’t mean artists are going to suddenly get paid.

Sure, the top .01% will get a nice paycheck from Spotify.  But in reality, the Daddy Yankees of the world are enterprises; streaming is just a piece of a much bigger pie.  And sadly, artists with millions of followers and tens of millions of monthly plays are getting a few thousand dollars.

Also Read:  Spotify Is Expanding Its Pay-for-Promotion Program — Not Everyone Thinks That's Such a Good Idea

Spotify Says They ‘Created a Marketplace’ for Musicians. An Artist With 1.1 Million Spotify Followers Responds.

And if you think artists are going to get paid by their labels when they cash their shares…

Well, if Enrique Iglesias can’t get paid on some aging downloads, then very few others have a shot.  And don’t forget, Spotify’s valuation was falling by the Monday bell.  This isn’t a profitable company.  Apple and Amazon are catching up quickly — if they’re not already there.  The stock market is shaky right now, because the world is shaky right now.  Maybe this thing tanks, nobody knows.

But the reality is that artists have to play in Spotify’s sandbox no matter what.  If not, they risk total obscurity.  Even Taylor Swift and Jay-Z are suffering from their Spotify boycotts.  Yes, Spotify is that much more powerful.

And the smarter artists are taking a paltry paycheck from streaming and making it up on the road.  Or, at least pursuing that business model and hoping for tens of millions of streams.  Hey, maybe there’s a big playlist break and a fanbase ahead.

Ironically, the entire music industry is now winning — except for the artists.

The live concert industry is crushing it beyond comprehension, thanks partly to the explosion in digital music.  It started with flowing Napster downloads, and continues into the streaming era.

Of course, major labels are also enjoying an incredible resurgence, while publishing catalogs continue to elevate in value.  On the hardware side, headphone and turntable manufacturers are cashing in.  Not to mention the constellation of well-financed and growing startups.

Also Read:  Live Nation Stock Keeps Plunging — $8.3 Billion Lost In 30 Days

But this goes way beyond the existing players.  Spotify’s success on the New York Stock Exchange is a siren call to the thousands of investors that have been petrified by the music industry for decades.  They’re coming off the sidelines.  And the biggest whales, starting with Apple and Amazon, and pushing harder than ever.

But as Daniel Ek enters the billionaire elite, let’s hope his projections of a future class of well-paid artists come true.

There’s just something wrong with lavish Spotify billionaires powered by starving artists.  Not to mention 7-figure employees.  But that’s the story of the music industry right now with Spotify.

USA Today asked me when I thought Spotify could start making a profit.  Well, that’s complicated, because labels can always hike up their royalty rates.  There’s a $1.6 billion lawsuit to settle.  But somewhere between 100-150 million paying subscribers, maybe we’ll see some profitability.

Maybe way down the road, the future industry will feature 500 million streaming subscribers.  Maybe then, Daniel Ek’s bold projections of a healthy class of artists, powered by streaming incomes, will come true.  And the creative class will finally start winning again.

If anyone can figure that out, it’s Ek.  If he wants to.

 


 

 

 

 

 

 

22 Responses

  1. Avatar
    Remi Swierczek

    I call it mid term BONUS on construction site of $30B music industry TOMB!
    UMG induced streaming and advertising SUICIDE just got TURBOCHARGER.

    In any case, very successful IPO (DPO) BLUFF relaying on 150M ass kissed but investment naive Spotify users/lovers. Capitalization equal to 1/3 of the biggest automaker on day one is beyond insanity. VW (VW, Audi, Porsche, Skoda, Seat, MAN) 800,000 employees $90B stock value.

    Reply
    • Avatar
      Matt

      How do you listen to music, Remi? You still buy cds or records, or do you download music on iTunes?

      Reply
      • Avatar
        Remi Swierczek

        Streaming is the way to go! Ad and sub free streaming with toll for addition to your personal playlist. 90% of my tunes comes from XM in my car and Alexa – free of charge all inclusive, on demand jukebox for just one time payment of $29.99.

        Reply
        • Avatar
          Anonymous

          OK then… tell you what… come over to my house and be my servant for that same pathetic amount of money and work for me for the whole year… that is what your telling ME to do as a career musician, well I used to be, thanks to people who don’t value the incredible amount of effort and emotion it takes to create good music. Don’t you realize that you’re killing all other artists that aren’t on Drake’s level?You’ve made it impossible to make any kind of decent living on any pro or local level for most artists…has nothing to do whether you like my music or not…sales are gone, local gigs are gone and in order to make a buck I’d rather sell one CD… I’ll make more money that way than million views because ALL the streamers and YouTube FUCK the artist’s out of almost all the revenue made.
          … attitudes need to change and a new model that puts artists first must be accepted!!!!
          What did I ever do to you except try to bring you some joy with my work?
          Hypocrites and self centered fucks..the lot of you are!!!!

          #LARSWASRIGHT

          Reply
  2. Avatar
    Jody Dunitz

    The ultimate beggars are the songwriters. The artists can cling to the illusion that they MIGHT see a crumb of a payday from the labels’ share of the IPO spoils — since the labels are pretending they might share it even though there is no contractual obligation to do so and no rational way to execute it. But the publishers got nada (except the exec bonuses from the corporate coffers enriched by the IPO) so the songwriters can’t even hope. Songwriters get 1/4 of on-going Spotify revenue and no legislative tinkering will fix that in any meaningful way. The Spotify-Label model swindles the songwriters. Spotify and the labels go public while the songwriters go broke.

    Reply
    • Avatar
      Anonymous

      yep… you are correct…artists and composers get FUCKED while everybody else reaps their cash.. WTF?!?!?

      Support your favorite bands and buy DIRECT from them… screw the corporate pigs!

      Reply
  3. Avatar
    DavidB

    Zoe Keating just released her ‘non-physical’ royalty income data for 2017 https://docs.google.com/spreadsheets/d/1eJyp7AQ7Ye-MNdyD1pn0SulZZSlrxE3mr5rrXp20FXc/edit#gid=0
    Main points of interest:
    The largest single source of income (more than all streaming combined) is in royalties from ASCAP (‘mostly TV royalties’). This may be untypical, as Zoe’s instrumental music may be more attractive for TV ‘background’ music than songs with vocals.
    In the streaming royalties, the pay per stream from Apple Music, at around 1 cent per stream, is much better than the pay from Spotify, at just under 0.4 cents. However, the total payout from Spotify is higher, due to a much higher number of streams. Of course, this reflects the usage over 2017 as a whole, and both the pay per stream and the number of streams may have changed over that period.

    Reply
    • Paul Resnikoff
      Paul Resnikoff

      Interesting. She makes over $80k. Not bad for ‘an artist you’ve never heard of..’

      But wow, hard to survive on streaming alone.

      Reply
  4. Avatar
    Anonymous

    Sounds right to me. I see Spotify as essentially one giant scheme to make Ek and a few executives multi-billionaires without creating a profitable business. If they made a profitable business, by removing fremium, making everyone pay at least $10/month (if not more), and allowing for windowed content, the entire music industry would prosper. Instead, they considered market share to be more important than profits, and gave away just about everything for next to nothing. And became billionaires anyway, while the rest of the industry starves. Profits are what gets artists and songwriters paid. Not market share. This shit shouldn’t be legal. But here we are.

    Reply
  5. Avatar
    trollsite

    Imagine all those freemium Zoe’s streams being played on apple music which has no freemium. People usually listen a limited amount of times to songs. With these swedish fakas she lost at least 30k dollars.

    Reply
  6. Avatar
    Seth Keller

    As a manager of one artist on a major and a consultant for independent artists, I’m a fan of streaming overall.

    I don’t think it’s a Spotify wins/Artists lose scenario. IMO there are many more positives than negatives to streaming.

    We can discuss rates, and label deals with artists and how publishers are getting screwed when it comes to their share streaming payouts, but none of that has anything to do with Spotify per se, but other factors surrounding streaming.

    At a lunch meeting this week with a longtime royalty accountant who now works for a non-US PRO, he asked why we demonize Spotify and blame them for all artist ills when in his mind they’re basically a retailer. He said no one blamed Walmart when majors didn’t pay artists fairly for CD royalties or indies couldn’t get paid from distributors, so why do we blame Spotify for low payouts or laws that prevent publishers from getting a bigger share of streaming payouts or the inability to find writers to pay them? Interesting take, I thought.

    My one issue with streaming services in general is the emphasis on contextual vs. genre or artist-based playlists and discovery. While their job isn’t to promote individual artists or create stars, the push of mood and situational playlists is making the individual artist less important. At traditional retail (and radio), the artist was the draw, the star. Streaming is all about song and mood (much like many festivals, too). I’m sure they’ve found that’s what their audience wants, but, to me, that subjugation of artists to context is much more of a threat to artistic viability than low payouts.

    Reply
    • Avatar
      Faza (TCM)

      The reason we blame streaming services is that the model is, not to put too fine a point on it, crap and ain’t gonna get any better.

      Miniscule payouts from streaming services aren’t due to label meddling: they are one hundred percent the result of how streaming services generate revenue. They are literally baked into the model and they’re only going to get smaller (because price is the only thing streaming services can compete on and because the number of eligible tracks grows faster than revenue).

      We’ve been doing this for a decade, we really should know how it works by now.

      Reply
      • Avatar
        Blobbo

        WTF is your point exactly? Cable companies have monopolies and charge $100 plus per month subscription rates. Let’s say film and tv are more valuable than music (they aren’t) but even at that rate, people should be paying a minimum of $25 per month for music. I guess it has to be unlimited, and a streaming service should provide a pipeline straight into an artist’s own portal to monetize more from their true fans.

        Spotify is LOSING money sending billions to labels even though they are destroying music. That means, once again, that labels are getting most of the gravy, except for Ek and some shareholders themselves, who should soon be bankrupt, since that stock will not survive if that company doesn’t even turn a profit. It’s a massive ponzi scheme, and with any justice, Ek, and the entire structure will be imploded.

        That is, unless, he removes the free tier. A free tier can exist for say 200 listens a month, and just gatekeep it. WTF are these guys offering unlimited subsciptions when DSL can gatekeep your broadband, and cloud date can regulate amounts of data used? It’s bullshit, and I wish lawyers like Azoff would do more to neuter these jerks.

        Reply
    • Avatar
      Remi Swierczek

      All inclusive, on demand access to everything unless it goes for $29.99/month is uncalled for ASS KISSING giveaway. Play the best for particular location or even particular huma – sub and ad FREE – and charge for additions to personal playlists.
      $300B music industry by 2030 at 49¢/tune.

      Reply
    • Avatar
      Blobbo

      Good points about artist identity. However, this is cultural also. Young people flock to comic-con and then sakura-con 6 weeks later. They care more about fantasy and vibe and costume characters than they do about celebrities. In fact, if anything, the rotten celebrity culture created around the relentless diva egos and Kim K has probably alienated music fans from music stars, since they don’t seem to relate to average people, at least average people older than 15.

      Celebrity culture is bankrupt because no true poets and heros are being let through. This is very, very helpful to the elites who want to suppress true rebel messengers like Kurt Cobain, Bob Marley, Kurt Cobain, etc. Even a band like Radiohead isn’t being recreated in modern times. The entire concept of a hero band is toast, there are so few. It’s all solo and boy band bullshit generators. Why wouldn’t people tire of consuming that and just go into video game heros instead?

      The lack of viable heros also makes fewer talented people want to achieve a position that no longer is available. It’s a reinforcing cycles. I keep telling myself new bands have to emerge. We’re talking hundreds of millions of people to draw just a handful of extreme dedicated talent from. It should exist, but something about the mechanism of making truly heroic music talent famous is broken to the point of completely not working any longer. There was always top 40 in the past, and at points in history, it was great music. Then other times it was garbage, but there was a vibrant underground. Now, the underground can’t make enough money from sales, and the labels can’t either. Small indie labels used to float lesser bands, because at least the label might make a living, even if the band never did. Now, there’s no point in a lesser band. Go for the top, and the most middle of the road.

      Every time music has stagnated, something’s come along to blow it apart. However, the last time this happened the old way was grunge and Nirvana. Since then, there was some activity around 99-2001 in response to the boy band onslaught. That was the peak of physical sales, however, and since then, nothing has gone right.

      However, music industry revenue has been coming back to some extent, so there is still lots of money. None of it is getting to lesser artists however, which is probably cutting lots of talent off before it fully ripens. That and the fact that musical tastes are so far into the dumpster, and that has a lot to do with the loss of real tastemakers, and some horrific musical trends, like the millenial whoa, or wtf its called.

      Reply
      • Avatar
        Blobbo

        fricking A – Change one Kurt cobain to John Lennon, and throw in Joe Strummer.

        Reply
    • Avatar
      Anonymous

      All you wankers need to take 10% only and the rest goes to the ARTIST AND COMPOSERS… this should be the new model for Music in general… POWER TO THE PEOPLE THAT CREATE YOUR JOY, NOT THE DELIVERY BOY!!!!!

      Reply
  7. Avatar
    Will Buckley

    Over the years musicians and songwriters have had the opportunity to remove their music from the service and force Spotify to renegotiate. Mega stars like Garth Brooks and Taylor Swift were left to make a statement all by themselves, when the music community could have supporter them by their actions.

    Labels allowed them to offer FREE MUSIC to everyone since their inception. Today that’s nearly 100 million listeners.

    The value of new releases to core fans was obliterated because Spotify gets to stream them on release date.

    You didn’t stand up for your work and as a fan it has been very sad to watch.

    Reply
    • Avatar
      Blobbo

      If you’re already on a label, or your music was legacy music that was signed back to a label 20 years back not knowing how music revenue would implode as it has, then you aren’t in a position to yank your music from Spotify. You have to actually own that right, and most of the people who do are total independents.

      Reply
  8. Avatar
    Kevin Brown

    Let’s not forget that Spotify is a jukebox for music listeners. It’s an on-demand radio station. Radio listeners are not always music “fans” – they’re just listeners.
    It’s not working because we are using Spotify to measure fan engagement while watering it down with “radio listeners.”
    Radio serves the purpose of getting music heard to the masses and paid on a very simular model to Spotify – The difference is one radio play goes to (potentially) millions in one play, therefore, paying out a decent amount.
    Spotify goes to one person at a time.

    There needs to be separation between music listeners and music fans. Fans want to support artists. Spotify has given fans less choice to support their artist.

    We are seeing this very clearly with our artist to fan apps which allow true fans to support their artist with monthly subscriptions. It works. It converts. It proves fans want to support their artists.
    On the other hand, why would anyone want to “support” Spotify financially if you could get it for free, you wouldn’t – because it’s leaching off everyone else’s work.
    Yes, there are artists that Spotify works for very well, but for 90% of artists, it doesn’t work at all!.
    I am the CEO of https://www.gigrev.com , and we are making a difference to artists one by one. The way it should be done.

    Reply
  9. Avatar
    Blobbo

    I want to see great harm befall Daniel Ek. He is a total scumbag, and the labels have bought the load totally. Meanwhile, the artists haven’t or can’t stand up. Only maybe 20 megastars can actually stand up to this cabal of thieves.

    Reply
    • Avatar
      Glyn

      Why should Spotify care about the artists, did the coal bosses care about the miners. The artists are a commodity to be spent. Once the artists are all used up and profits fall, the spotify owners of this world will move on to the next big thing they can exploit.

      Reply

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