Monday, 25 November 2013

Recouping on Spotify? You'll wait a LONG time

More on that level playing field - here's how it works in the Spotify corner

In the last two months Thom Yorke, David Byrne and many others have gone public about Spotify's poor payments. Led Zeppelin and the Beatles are largely absent from the site, arguing there's more to be made from back catalogue sales of their bodies of work than the site's streaming royalties. 

It's hard to disagree when you look at the numbers. But: we're not in 1985 anymore; in 2013 there’s a new, harsher, musicbiz reality. I don't think there's ever been a fair and equitable payment system for musos. But now? Clear winners, clear losers, and way too many barriers between the two... 

1  The old model was broken. 

Good riddance: it ripped off artists AND buyers something rotten. For well over a century (Columbia was founded in 1888), record companies have given lousy deals to artists
(read this Don Fardon post, for example). Until their hands were forced, they happily pushed CD prices to £15 or more. They routinely manipulated the charts to gain airplay and generate sales. I could give you dozens of examples, but you only have to look hard at some of the inexplicably awful stuff that made it to number 1 back in the day to see a few obvious patterns. That manipulation’s still going on, but it’s subtler now.

When did you last buy an album? Many’s the time I’ve gone in to a shop – except now it’s more likely to be Amazon - and forked out for a shiny new CD. Took it home, listened… and found maybe three tracks I liked. The album model was based on trust in the artist and after too many fillers, that trust has been eroded. By the record companies. 

2  Spotify didn’t destroy the record industry. Piracy did.

Everyone says it's the likes of Spotify that's killing the industry, but Spotify is an improvement in many ways. Napster, Pirate Bay, BitTorrent and dozens of others cut the ground out from the record companies while their execs were still living it large. Piracy and file-sharing eviscerated the old industry, and one thing that has kept it going has been the legitimate, if sparser, revenue model Spotify generates. Spotify simply helped to shut down the pirates because it's easier and safer to use.

3   Spotify is really convenient. That doesn't help everyone.  

Spotify got traction because their delivery is quick, easy and convenient, and comes on any platform you like. We’re used to free fast stuff on the web. Spotify is fast, virtually free, and portable. Even the paid-for mobile phone model is vastly cheaper than buying albums. And you can cherry-pick. 

The other day I watched a club DJ firing in stuff from Spotify on his laptop. It saved him carting the world’s largest record library along. Convenience is great: you can check out a new album, you can play that song you really like. 

But that only works for stuff that's had tons of publicity. Here's a fresh screengrab. It's what I saw when I opened Spotify: The Cure, the Vamps (hey, at least one of them is new, young and local), the Stones and Jason Derulo. Big names. 

Streaming royalty rates are low. Really low.

In a scorching Guardian piece, David Byrne says
"The amounts (streaming) services pay per stream is miniscule – their idea being that if enough people use the service those tiny grains of sand will pile up. Domination and ubiquity are therefore to be encouraged. We should readjust our values because in the web-based world we are told that monopoly is good for us. The major record labels usually siphon off most of this income, and then they dribble about 15-20% of what's left down to their artists. "
No punches pulled there. This is compounded by this amazing graphic – which tells you
that Spotify might just pay you $0.00029 (that’s about 1/35th of a cent) for each play. And note too that your record company gets $0.0016 per play – 1/6th of a cent. Note that this isn't comparable to sales royalties.

5   Spotify doesn’t help you find new stuff. Not really. 

If you’re curious and adventurous, Spotify disappoints. Its new music areas are weighted by traffic in your region. I suspect that what is presented is manipulated by commercial interests. A few days after the Eagles announced a show in Birmingham (prices start at £59 and go up to £135), I'm told that the Eagles are trending in my area. How enormously coincidental... and convenient for ticket sales.

No, the only way to get around their gazillion song database to find new music is to let
yourself be led. I’ve never gone for following other playlists – and I’m sure I’m not alone. 

6   The model works great for established artists.

Spotify is a great model for the likes of U2, who get money for their daily quarter of a million streams. That’s long-term earning power. In fact, it’s really good for them, because it's extra money: many people will own albums - making U2 big money - but simply can’t be bothered to dig them out, and so will stream them instead. Hello, secondary revenue stream.

7   So is there any way it can help you become an established artist?

This is where I think it’s really crap. Spotify may claim that it’s a platform to break songs. But for that to happen, you have to be endorsed, added to playlists, and all that palaver. Lots of people do that without success. If we’re looking at easier ways to go, there’s YouTube. You need some sort of video content, of course, but that could be a still shot. Then you put it up, and share on facebook, tweet it, all that. Outfits like SoundCloud and Mixcloud make it easier and simpler – and they’re virtually free, too. And there don't seem to be as many barriers. You only need to look at this post - I run this every six months - to see if it works.

8  If you’re not established, Spotify exposure will COST you.

Spotify say:
 “Having new music from independent artists is important to us, so we work with artist-aggregators to get their content uploaded.”
Lovely! Actually, not it’s not. They post a list of third-part aggregators, who will market your stuff through their sites, Amazon and the like. Some offer very limited low-cost or free options to get your music up; most don’t. 

CDBaby are one of the most reputable sites. Their deal is:

  • Sign up, and pay up (typically, $49 for an album, or $12.95 for a single song)
  • Upload your stuff, and add all the background stuff and images
  • Wait a few weeks for it to appear on Spotify.
  • Wait to get noticed and played, for which you will get a tiny royalty. 
  • And the payback? Do the math. Even if the quoted Spotify rates of label and artist mentioned in the link above are added together, you’d need, er, 685,185 plays to recoup.

  • Now, that’s not impossible, but if you were capable of getting that many plays, I suggest you’d
    already be a long way further down the road. If you sold seven or eight CDs at a gig, you’d have made more than you paid out for a CDBaby upload.

    Commerce on the web is brutal. It’s a seller's market that's killed bookshops, record shops and independent retailers. It’s cut income across a whole swathe of freelance areas. Spotify and their ilk may be the main game in town, but looking at it from a revenue-earning perspective, it's bleak. The model works for the big boys, and the big boys only.If you’re smaller, it really looks like you need to go the direct route. Play a gig, be great, and if you’re lucky, make extra money from CD sales.

    I’ve written recently about Urban Folk Quartet, and less recently about George Barnett, who have both achieved much by going directly to their fan base, live and online. That’s – maybe - a sustainable model providing you can keep a handle on it all. I'm going to try to explore this in the coming months. What I’d really like to know next is – how do you jump from here to there, without giving it all away? Of course, if I knew that, I wouldn't be writing this blog.

    Thom Yorke calls Spotify 'the last desperate fart of a dying corpse'
    David Byrne: 'the internet will suck all creative content out of the world':
    Information is beautiful: how much do artists earn online?

    More music business posts on Radio To Go


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    Sebastian Holmes said...

    Great post! My summary:

    1) In the beginning, artists struggled to be heard.
    2) Along came record companies who picked up the lucky ones.
    3) The biggest artists did well and the companies did really well out of them.
    4) 'Unlucky' artists and 'smaller' artists lost (and lose) out.
    5) That (the record company bit) is changing thanks to technology, but the 'Unlucky' and 'smaller' artists are still invisible to the masses even though the technology exists to expose them.

    The problem is three-fold: a) to set up an alternative platform would cost; b) just cos an artist is local doesn't mean he/she's any good; c) who has time to listen to 100 rubbish tracks to find the one that is good?

    However crap the 'old' A & R system is/was, by paying someone to listen to local artists and filtering out the rubbish, and then promoting the result to get airplay, the buyer has the 99 rubbish tracks taken out for them. Suppose Spotify set up a Spotify Local which played only tracks from artists within say 50 miles of where you're listening, a) would there always be enough material to give you a decent sized database? b) would anyone be prepared to listen to 99 rubbish tracks before they lose patience and switch to something else just as the 100th decent track comes on?

    It is a bit like saying capitalism is crap so it should be scrapped. I couldn’t agree more, but it is better than nothing, and probably better than anything that you or I can come up with. But, here’s an idea:

    1) Set up a Spotify-type platform.
    2) Encourage artists to upload their music – maybe charge them £10 - £20 per album, but make sure the upload software forces them to input good meta-data to help categorising and scheduling (so we don’t have to input it).
    3) Recruit critical listeners to listen to tracks and vote on them in some smart way so that the audience determines the listenability of a track. Maybe give them some kind of incentive eg. 1/35th of £0.01 every time they vote and they can’t vote on a track part way through – ie. they have to get to the end of the track before they vote.
    4) Start to build playlists based on votes/categories.
    5) Promote high-scoring tracks/artists in more ‘conventional’ record company ways (funding mechanism to be discussed).

    To do this you would need quite a lot of ‘local’ websites and it would take some setting up – not to mention some cash to get started. It is quite a seductive idea until you start to think about the final step – promotion. How might you promote them? Well, in the first place you might promote them to a regional – Spotify Regional and then to a Spotify National before going to Spotify International. The problem with the promotion process would be that it would be perceived as elitist by all those who failed to get elevated to the promotional level and you would have many of the same complaints that currently are levelled at the record companies.

    So, you have identified the problem brilliantly, but the solution is very difficult to devise.

    Edward Johan Bol said...

    A few years ago I thought I wouldn't do cheap cd's, cheap mp3's, streaming... You bastards can't have my skill/art/time/creation/product/material for cheap... or free...

    Then I thought: ***k it... Use the music as a loss leader, you can download it for free, and if you want to pay, that would be lovely. Builds audience, better for ticket sales etc.

    Spotify is an amazing money making model, for Spotify. If you don't want your music on it, don't put it there, same with iTunes. Or host a cheaper alternative then iTunes, that revenues more cash for the band/artist. Bandcamp perhaps.

    People don't need to buy the CD to listen to your music now, so selling a CD is like selling a T Shirt now. Fans want one as a thing/item/something physical to "have". Simply having the music to listen to has little value these days.

    For new acts to make money from music, perhaps the music has to be the identity of the brand, rather than the sole product. EN is a band. Based on its identity as a thing that makes ace music while looking super cool... for that reason people will want the associated "things", the CD in the rack, the T-shirt, and apparently the cool singer chick paints and sells artwork... cool cool want want buy buy.

    The music has to be the key to the brand though, as it's a band. If the music goes naff, everything does.

    Neil Hillman said...

    The problem is with a culture that expects everything on-line to be free at the point of delivery. If it's not, it gets pirated or torrented. The truth is, it comes at a cost, and not just to the giant record companies.

    Christopher Woods said...

    People have always expected stuff for free.

    As I've grown older my own attitudes have changed toward the whole 'music as water' concept. I've seen the long tail theory disproved time and again (something I also wanted to believe for a long time but which is now debunked as a case of wishful thinking).

    But though people have always had Usenet, BBSes and sneakernet, I was amongst the first generation of kids who had instantaneous access to Napster 1.0, to Limewire, to KaZaA, to AudioGalaxy, to DC++, to SoulSeek, to WinMX, to iMesh, to pretty much every sharing platform you can think of. This overwhelmingly simple means of getting things for free was simply an accentuation of the 'freetard' period every prior generation went through - home taping, jumping the fence at festivals, sharing round concert bootlegs. What's made the most obvious difference to the fortunes of the creative industries is just how severe the change was thanks to the now near-infinite supply of this delicious, free entertainment. It was, and still is, intoxicating. Like a kitten with catnip, it made a generation of kids go absolutely nuts and we're all still in recovery.

    Growing up with an apparently constantly increasing amount of free stuff was overwhelming and fundamentally changed my perception to music, TV and film (and the industries which produced them). Whether they would have suffered by now had piracy been such a problem is a rather moot point, given that society and worldwide culture has matured and diversified to a point where the old arrangement wouldn't have lasted much longer anyway. What we can all agree on is that the severity of the creative industries' downturn was exacerbated by digital piracy... A worldwide economic downturn was the final icing on the cake for some.

    Now, because of my own personal interests I went on to spend hundreds and hundreds of pounds each year on music for over a decade - almost exclusively specialist vinyl - so I'm not quite your average bear. I did however download a mindboggling amount of stuff in my teenage years. I still download a handful of things, often programming like The Colbert Report (which infuriatingly you can't watch on TV in the UK!) or a show like NCIS -- though I then buy box sets, and watch again on UK TV, because I enjoy the experience. I'm an eager user and promoter of well-made services: I use the iPlayer daily. I have a Sky subscription. I subscribe to Google Play Music. I still buy CDs. (CDs!)

    Why am I and my fellow Gen Ys now spending more on entertainment than I think the previous generation did at the same age? Because growing older, and having been able to easily create my own work (whether you consider it 'creative' or not is a matter of taste ;-), I understand more clearly the complex web of social, moral and ethical values. I've seen what happens when creativity is shuttered by cruel commercial interest (or lack of funding)... and I've crowdfunded half a dozen projects so far.

    I've also worked in the independent sector of the music industry - where the struggle to survive is like existing in a Mad Max film - so I understand more about this discussion than most. The landscape is still shifting. There is no "final" version. As the first digital generation continues to age, we'll always be the first adopters of new things we feel provide us with something of value and convenience - currently that's streaming services.

    The creative sectors now have to continue to do this weird dance with the tech sector to produce things valuable to consumers whilst fighting their corner to represent interests of rightsholders, their shareholders and creative talent. Everything invariably finds its own equilibrium but it will remain the most interesting battle to watch through the next ten years, it's all so mercurial.