Spotify: The latest platform for consuming, discovering and sharing music has swept the nation thanks to an aggressive and heavily funded marketing attack dropped a little less than a month ago. With the help of powerful street cred (”It’s the big thing in Europe!”) and a culture-relevant branding and approach to music consumption (pay a little, get a LOT) – the application has hit the streets with the excitement of a new Apple product.
As these things seem to go these days: the aforementioned “cool factor” ushered the application into a jumping-the-gun level of excitement within a day or two. I remember reading tweets from musicians and engineer/producers saying things like “It makes me want to sit and listen to music again” and “listening to music for fun for once.” It serves as another reminder of how important format/platform/convenience is to the modern consumer.
In my thinking and researching of this phenomenon, my interest is not in whether or not Spotify is a good application – it is clearly amazing. My interest lies in the effects it will have on the music industry as well as the music lover. Since the dawn of digital distribution and pirating, the industry has been waiting for a way out of the corner it has painted itself into. Spotify has already been hailed around the globe as “The Savior To the Industry” and this may not be too far off. Even if it is not the ultimate flag-carrier – this is the new model for digital distribution. It seems to me that it’s only a matter of time before the $.99/song model becomes extinct.
So how will this effect artists?
The artists are, after all, the ones who pour their blood, sweat and tears (yes, BS&T is on Spotify) into the content provided to the several million worldwide users (i). According to the last estimate, the company is valued at approximately $1 billion. The artists receive $0.00029/stream. As this article points out
“to get ten bucks off the song, it would have to be played for 102,000 minutes/1700 hours/70.8 days/10 weeks/2.5 months. I could put a song on repeat and leave it for almost a quarter of a year continuously before the band makes the same amount it can make selling one CD at a show.”
So basically – the aforementioned “content providers” won’t be making any money.
So why have industry big-shots already been hailing this as the “Savior of the Industry”? Why haven’t the major labels thrown a fit like they did when Napster was all the rage back in 2000? That’s easy – they have a vested interest. The 4 major labels (Universal, Sony, Warner, EMI) bought into the company so that they own 18% of the shares. This means that the labels will be making money based on the success of the platform, not the content. According to a post by “informationisbeautiful.net” the labels also receive a royalty percentage estimated at $.0016/play. According to my math, this means that in the amount of plays it would take for an artist to make approximately $10, the label will have made around $54. This figure is not particularly revelatory – labels have always made more than artists from mechanical royalties. The hypocrisy inherent in this model has been preached for decades (most memorably by Steve Albini here). I can’t say it any better so I won’t try.
The big problem with Spotify is not necessarily that artists aren’t making any money off their digital content. The problem is that the company is making money and the artists aren’t getting a cut. Certain artists are already taking a stand by taking their catalog off of the application altogether. Swedish recording artist, “Magnus Uggla,” removed his content citing that he would rather be screwed over by “Pirate Bay” than by his own label, Sony, who owns 5.8 percent of Spotify (I’m paraphrasing: for the exact quote, which is way more vulgar – see this article).
What do we do now?
Every milestone of music consumption has an effect on the way we experience music. There is a fear from some bloggers that Spotify will officially extricate music from any tangible connection between the artist and their work as the previously mentioned Independent Clauses article put it so eloquently:
People may have moved from seeing artists as creators that should be fairly compensated for their work to “MUSIC EXISTS EVERYWHERE OH WOW OH WOW IT’S FREE LET’S DAAAAANCE!!!”
This is a valid point but I tend to think that this damage has already been done and it may not be the end of the world. I have a hard time believing that the majority of average music lovers have ever honestly felt the effect of their $15 contribution to an artist when they purchase a record. In other words, what percentage of the 7 million people who bought Hootie’s 1995 Cracked Rear View on CD actually thought “I bet Darius and the gang really put a lot of time and effort into this and I’m glad I’m giving them my $15″? More realistically, most of them probably said “Geez, CD’s are getting expensive!” or “I read this article by some engineer guy named like Steve Albino or something and it said that the record label get’s like all of the money from album sales. Man, we should totally steal music and stick it to the man!” My point is – While there is obviously a lot of us who understand what it takes to make a great record and want to support it, we are probably in the minority. I don’t think we’re going to change the point of view of the music-buying population at large and we probably shouldn’t waste energy trying.
I find hope in the steadily rising sales of vinyl that there is and will always be a community of people who seek a tangible representation of the music they love and support. That said, 2.8 million units/year total will definitely not keep the industry afloat. What we are seeing with Spotify is the industry taking a big step in the right direction; However, It will need to make some adjustments pretty soon or there may be a serious mutiny.
An Alternative
What if we finally accepted that music is free? What Spotify solidifies is the sense that it is, so lets say for the sake of argument that it should be. Ever since the dawn of the record album, the industry has followed the business model of an artist borrowing a bunch of money (from a label or private loan) to make their art, then recouping that money from sales of the finished product. If the final product no longer has the ability to make money for the artist, how will new works keep being made? Perhaps we need to embrace a new approach to financially supporting the creation of new art that takes the pressure off of record sales.
Kickstarter introduces an approach to creating art that effectively flips the industry upside-down. Instead of paying for a finished product, the consumer has the opportunity to be pitched an idea, decide if it’s something they want, and contribute directly to the making of it. While Kickstarter itself may not be the solution, the crowd-funding model feels like a concept worth exploring. The fact that the site has raised $80 million for 10,000 projects serves as proof that people want to support the creation of new art.
A common criticism of the Kickstarter thing (which I admit to having expressed in the past) is that it makes the artist into a “charity case” and effectively hurts their image. This is partially a product of its novelty and rapid popularity. I believe that, given some time, this model could become the norm as opposed to a fad that refuses to die. The spotify thing could actually be helpful, financially irresponsible as it is, if it became a way for people to hear a new record for free, go on to research the artist, find out what their working on next, decide that they want it, and fund it directly. This would not only support the artistic community but it would also make it a requirement for artists to be constantly thinking ahead. Artist’s would no longer be able to make a work then sit back and watch sales of that work pay the bills. The new model would emphasize the importance of continued growth as opposed to ostensible stagnancy.
In conclusion
Although Spotify represents a turning point in the digital music revolution, it is not the end. I do not intend to take a stand against Spotify either: I am currently a non-paying user of the application and I am still trying it out. I haven’t decided if I will start paying the monthly charge but I am certainly not ruling it out. I will most likely use it to discover and listen to new music. When I love an album, I will continue to buy it on vinyl because that’s how I roll. Spotify alone will not save the industry but it will also not destroy it. What we have now is a 1,000 piece puzzle with the outside pieces locked into place. It will take a lot of discussion, brainstorming, and trial-and-error in order to fill in the middle.
**I must give credit to Joshua Wolack, with whom much insightful discussion was had concerning these things. These discussions informed many of my positions.**
