Spotify and the blame game
Jim Carroll
There are some rows which are destined to run longer than a Broadway show. Just as we think some music business memes are coming to a close – we haven’t heard anything from IRMA about piracy in a while, you know – another version of the same argument crops up in a different place and we start all over again. It’s like trying to get rid of ragwort from a big field with a slash-hook – there are always more weeds popping up behind your back.
Last week, it was the turn of Spotify to get a kick in the goolies as the state of the music business argument turned on the popular streaming site. It began when distributor STHoldings became the latest indignant company to remove all the music released by the labels it represents from Spotify and other services due to its unhappiness with terms and conditions (and payments – its iTunes sales had dropped over the last few months and it’s blaming Spotify for this).
As the fuss began to die down from that palaver, Jon Hopkins tweeted about his royalty statement – “Got paid £8 for 90,000 plays. Fuck spotify” – and we were off again. When something like this happens, you don’t need to read “The Shallows” to know how the interweb is messing with your brain and your attention span.
In truth, scuffles and skirmishes like this are part and parcel of progress. In the case of the music business, technology has disrupted its once cosy core business model beyond recognition and we’ve had nothing but whinging and fuming and whining for years from the players who’ve been hit by these changes. Actions like those outlined above are attempts to put the genie back in the bottle and you don’t need to be a regular OTR reader to know how that one goes. Memo for those at the back: we’re not going back to record shops and CDs ever again. Get over it. Spotify revenue is never going to replace the money you used to make back then. Get over that one too.
Of course, it’s human nature to give out when things don’t work out the way you think they should and when you feel shortchanged. Before Spofity came along, an artist like Hopkins and labels repped by STHoldings would be carping about something else to do with the business.
But the thing about Spotify boycotts (Coldplay were also in that game) and giving out about getting eight quid for your music (would Mr Hopkins have sold 90,000 copies of his music had Spotify not existed, perchance?) is that it misses the point completely. The record industry has been changed forever by forces beyond its control, yet many involved still persist in thinking that they can dictate the same terms and conditions as used to be the case. This largely doesn’t hold sway in any other sector which has been disrupted by technology so why should we expect music to be be different? Yes, artists need to get paid for their work, but to expect the same rate of payments as they get from other channels when there’s a different cost base and user experience is never going to wash.
To be fair to Spotify, there are some players who are quite happy (or perhaps “happy” is not the right word – see comment number 19 below) with what it has to offer. Kudos Distribution managing director Danny Ryan points out that “streaming services are very long tail” and “it takes time for consumers to discover your music, add it to playlists, favourite it, and share it with friends” and thus increase your revenue. Ryan also links to reports from Sweden, the home of Spotify, and the US about the positive effect of services like Spotify on piracy (which doesn’t actually pay the artist a red cent),
But it’s the public who decide in this new age and perhaps this is the elephant in the room which the music side don’t want to mention. Let’s remember that Spotify is a big deal because people use the service. Yes, you could say it’s popular because they have millions of (legally acquired and paid-for) tracks from artists but there are lots of services who can say the same thing. Spotify is popular because it’s damn fast and is easy to use and people like it. People have said yes to Spotify. People go to Spotify to hear music. And if your music is not there, well, they won’t be able to hear it. You might want them to go elsewhere but chances are they’re not going to go with you. In the words of the Wu, consumers rule everything about music right now. Artists might think they’re entitled to big pay-days for their music but consumers, most of whom realise that when you’re getting your music for free that no-one gets paid a whole lot, seem to think differently.
Some of those who’ve removed their music from the service will shrug and go “fine”. Other fish to fry, other places to go, other people to see. Some labels know that the bulk of their audience aren’t currently on Spotify to begin with – most of the labels repped by STHoldings are dance labels with healthy vinyl sales, for instance – so their absence isn’t going to hurt them unduly.
But streaming services like Spotify are not going away. They’re on the rise and are going to attract more and more traffic in the years to come. And the terms and conditions were hammered out between the techies and the labels, just like the deals that were done with Apple for iTunes in the past. No-one can say that there wasn’t some negotiations done before someone spat on their hand and sealed the deal (or whatever the corporate boardroom version of that cattlemart deal is). Everyone know what was going on.
More than anything else, this whole fandango demonstrates the lack of trust and understanding between the music side and the tech side. The music side knows that the tech side has the upper hand and knows that new business models are going to decimate old revenue streams and are trying their damndest to stop it. The tech side know that consumers are changing their music listening patterns and are responding to that by providing services which music fans are embracing. While there are still some who shoot first and answer questions about payments later (cough), the vast majority of tech players in the music game have copped on and do the meetings they’re supposed to do and pay the cash they’ve agreed to pay. Of course, the music side want the same deals as ruled the roost when everyone bought CDs but, sure, like Robbie Keane, we all have dreams.
Next week, Spotify wil be unveiling a “new direction” which will, per a statement from the company. answer the quesion “what’s next for Spotify?”. It’s unlikely, much to the chagrin of many, that it will involve the service paying the same amount of cash to artists that they currently get from national radio stations. Time for this particular blame game to come to a close.
You’re being hard on ol’ Hopkins there Jim.. One tweet, rightly telling Spotify to go fuck itself, does not necessarily make a rant.. I feel sorry for people like Jon Hopkins. A talented guy like him no doubt deserves time and space to hone his craft. When you’ve that many people listening to what you do, and £8 is your reward.. Where does he get the money to expand on what he’s achieved thus far and makes things bigger? Have you no sympathy for him?
Yes, blah blah this is the reality.. I wish IRMA and other rights organisations well in trying to suck more revenue out of streaming sites.. After all, they wouldn’t exist without the last people to get paid.. The ones making the music..
Dance labels have healthy vinyl sales? Are you sure? perhaps better than some digital sales through specialised sites like beatport, but very few people, DJs or fans, are buying tunes on.vinyl these days.
Halandor – just mentioned him as he was the one who kept the debate going last week – and he followed up that tweet with others about the money he got from the Beeb etc.
Yes, of course, I feel sorry for Hopkins and ALL acts who’re trying to make sense of what’s going on but, as I said above, this applies to EVERY sector which has been disrupted by technology, from retail to newspapers. There’s a whole ball of confusion going on and it doesn’t just applying to artists, sadly. I also feel that Spotify are getting a lot of stick unfairly – after all, they’ve done the right thing, negotiated deals, paid cash etc. Labels knew what they were getting into. Hopkins’ ire might be best directed to whatever label he is contracted to and the terms and conditions he agreed with them.
Fenster – I’ll refer to the interview we did with Olan from All City from earlier in the year – http://www.irishtimes.com/newspaper/theticket/2011/0128/1224288436005.html – some labels are doing fine from a mix of vinyl and MP3 sales. And these days, “fine” or “OK” is as good as it gets.
Hey Jim, you touch on an interesting point at the end about radio play. How much does an act get for a play on an Irish radio station these days? Does it vary by show and listener figures?
What I’m getting at is if an act got €30 say for a play on 2FM with 250,000 listeners it wouldn’t be a million miles away from the money per listener that Jon Hopkins is getting from Spotify. Any idea what the actual figures are?
Jon Hopkins is right about Spotify, for him it just doesn’t add up. It’d take about 140 iTunes track downloads to make him £8.
He only needs to transfer a fraction of a percent of his Spotify listens to iTunes in order to make more money.
At best Spotify is a marketing, rather than retail, service for bands. It might be useful at certain points in their career, but those points pass by quickly.
Phil – that question was answered in part by Jenny Huston at the recent Meet the Media panel at Sligo Industry Day – she said it was about €3.50 a play on 2fm – full panel at http://soundcloud.com/sligomusic/meet-the-media-panel – amount varies from station to station depending on size and audience. IMRO would be a good place to go for more info on this – http://www.imro.ie
Dave, Dublin – be interesting to know his iTunes sales figures – and his sales from other outlets too. It’s easy to pick up on Spotify (whose reporting metrics are amazing, by the way, especially compared to traditional record label accounting procedures) – what about the cash he makes from his soundtracks, his collaborations with Brian Eno, his production gigs with Coldplay? Spotify is just one part of the pie.
I think Hopkins and STHoldings argument is that, for them, Spotify is threatening to become the whole pie.
These streaming services were able to convince labels that they’re a way of making money from people’s ambivalence towards music piracy. That was fine in the early days, but now labels and artists have more information about what these services mean to their bottom lines.
Dave – the question though is are we talking about just one pie or loads of pies (man, I need a Pieminister pie after all this). Remember, that income from recorded music (be it streams, downloads or physical) is just one component of the overall revenue stream an artist like Hopkins will earn. In times past, recorded music was a large part of the take but that has changed enormously in recent years due to changes in the sector and artists have had to change to take that into account.
These streaming services were able to convince labels that they’re a way of making money from people’s ambivalence towards music piracy. That was fine in the early days, but now labels and artists have more information about what these services mean to their bottom lines.
But that bottom line now no longer resembles what it used to be! Costs have been cut, savings have been made yet many still expect the same revenue, which can no longer be the case.
Phil@4,
the UK Radio1 payment per play cited here:
http://www.musicweek.com/story.asp?storycode=1047525 , works out around £20 per minute. However, as noted in the article, that play has a listenership of about 8m people. If Jon Hopkins were getting 8m plays on Spotify, he’d be making much more than the £50 he makes for each Radio1 play that he seems to be remembering so fondly. Not to mention the radio play is bringing his music to a large amount of people who have never heard it. I’d imagine most people listening on Spotify have either heard him before, or have an idea of what his music sounds like before they choose to listen.
As for his tweet, surely his issue should be with his label for agreeing to those rates in the first place. If he’s so unhappy with it, he should have his music pulled from Spotify? Of course, that would just drive those who are curious as to what his Mercury Prize nominated album sounds like to downloading it illegally, and then he wouldn’t see a pennny, as how many people are going to blindly pay for an album they’ve no idea if they like or not, from an artist/duo they’ve likely never heard of before?
Very fair point about Hopkins directing his ire at the label. Perhaps however, the reality of revenue on offer from Spotify is only actually starting to dawn on both labels and artists. Perhaps indie labels and artists are actually better off coming together and vowing to stay off Spotify. If they don’t like it, opt out. And by just leaving major labels on it, they’d be damaging the platform’s ability to become the ‘whole pie’ (mmm I want Pieminister for lunch now too..)
As regards comparison of revenues with radio, I’d argue them to be qualitatively different. With a radio play, you generally get a DJ foaming at the mouth telling you how amazing the record they’re about to play is. It’s much more likely to convert to a sale than a play on Spotify. Radio is also (think about it) about what music is ‘not’ being played from a band/singer/musician’s perspective. It’s psychology at play. If a given DJ champions one band over another ten, it has an impact on the listener’s impression of the music they’re hearing. Far different in terms of building audience for an artiste, and far different from someone coldly checking out music (they briefly read about somewhere) on Spotify..
i run 2 labels myself, and until spotify came along – the revenue off downloads was just about starting to make sense in terms of us been able to breakeven off releases. Vinyl we do purely out of love for it, or as a promo tool even, certainly it makes no logical business sense, most if not all labels i know are in the same boat.
so on first hand glance, this spotify thing looks really dangerous. but we’ve been here so many times in the past in the music game , it’s really funny how the same cycle keeps happening. when vinyl came in, they said it was the death of live gigs. when the drum machine came in, they said drummers were gone. Cd’s would kill vinyl, downloads would kill cds, webcasts would kill live gigs, yet here we are in an age where the live performer still makes all/most of their living – playing gigs. all’s changed & nothing’s changed !
im gonna adapt a wait and see approach. maybe there’s opportunity there somewhere. it took a while for labels to make sense of downloads but they did, maybe the same can happen here . for the label though , im not so sure. for the artist definitely this isnt a bad thing surely they make fuck all of sales anyway . would be interesting to see how many of those 90,000 plays or the people who heard them, paid into one of his gigs or bought something else he did . or maybe got a sync deal via a play. and maybe that one sync deal from those 90,000 plays keep both label and artist happy. its too early to tell…
We do our distribution with Kudos, they are a really on the ball company to deal with. If Danny’s saying ‘wait and see’ , i’d tend to agree with that.
hopkins is a bit of an exception in that he has his fingers in a few different pies- he does film scores, production for other bands as well as his own work and live performances, so id say he’s in a better position to tell spotifys 8 pounds to fuck off. if your a run of the mill bedroom producer or rock n roll band a few thousand plays on any streaming service is a great boost.
@fenster- without having any evidence for this id say vinyl sales are doing fine. if you want something decent on boomkat you gotta move fast, since a lot of their vinyl stock sells out quickly (the good stuff anyway). and new online record stores like surus seem to be doing well.
I agree that one of the biggest problems is the confusion regarding who gets what out of the streaming deals but unfortunately it seems that the confusion is deliberate. Whether that’s being perpetrated by streaming companies or labels is the question. On the one hand musicians are saying that on a pay per play basis they’re earning .001p per play whereas the streaming companies say that the deals negotiated with the labels are not strictly a pay for play basis but incorporate subscription revenues and that’s it then up to the labels themselves how they distribute it to their roster.
The game has evolved but it’s hard not to feel sorry for Jon Hopkins, someone is making money off his back and it doesn’t appear to be him. Of the 90,000 plays it’s safe to presume that many of those are repeat listens. Arguably were his music not on Spotify some of those repeat listeners would have bought the album in which case he would earn more than £8. On the other hand it’s impossible to quantify the number of listeners who then went on to buy his music or as a direct result of streaming decided to see him in concert. Perhaps for bands starting out it’s a no-brainer but as bands/artists become more established it will become a bigger issue.
Streaming and radioplay are two completely different things and it’s spurious to compare the two. Radioplay is effectively the best promotion a band can get and supplements a band’s music sales but the streaming model is replacing a band’s music sales.
fuck all people are buying vinyl in electronic music. thats just a race to the bottom . i wish it was different, but we are where we are. there’s a few people still buying , it’ll be years before it dies for sure, but if nowt else, the recession and economics are making vinyl defunct even more so . a kid with a laptop and an internet connection can be a dj for e300, and thats it . if he knows what he’s doing. going the vinyl route, your looking at a minimum of e1000-2000 investment, plus the 12”s cost e8-10-25 beyond that. ive noticed alot of new bars and clubs arent even investing in vinyl setups too.
checkmate.
I think it’s unfair to blame labels. As noted in the article, the tech side is in control. Spotify have them by the balls. Obviously shit loads of labels want to get on the new platform but the ball is in Spotify’s court. And certainly, small indie labels won’t get much of a chance to hammer out a deal, they’ll be told like it or lump it. All this does is cheapen music more and more, makes me sad. It’s not a worthless artform, yet more and more it’s treated as such.
I run a small label too, and i don’t do digital so i certainly won’t be doing spotify. Not remotely arsed. I ain’t in it for the money, but I feel very sorry for those trying to make a career out of it, the consumer doesn’t give a shit, but if someone asked them to do their job for free they’d look at em baffled.
If I was Spotify, I would move into the arena of get independent bands to use spotify directly.
There new direction should be to get into films, TV shows and books. Eventually leading to releasing there own android base tablet in the next year – 18 months.
An the music industry can go a fuck themselves because will no longer allow themselves to be fucked anymore.
Spotify pay ‘aggregators’ about £4000 per million plays. Those aggregators then pay labels, less 15% normally. So Hopkins is probably on the usual bad points deal from his label (about 8% of what the label gets) to be only getting £8. So the answer (tho it still won’t be riches) is either to be your own label, or argue for a better points deal.
Otherwise- given the plethora of equivalent places that pay tiny royalties for plays (YouTube for one) the fuss over this seems over the top – but good promo both for ST and Hopkins, as it happens.
On the wider issue – yes, it’s easy to whack the industry and musicians and just say “get over it”. But the truth is that regardless of cheaper recording costs etc, all that music that could survive, financially, on 10-30,000 CD sales now has to achieve nearer 3,000,000 ‘sales’, just to break even. So if you work outside top forty (jazz, world, folk, most electronica) the chances of financial survival- always tricky in those genres- just got very slim.
No genre deserves to survive, sure. But when there’s demonstrable demand for your work, in the 100s of 1000s, but that pays less than minimum wage, then it does seem a bit stupid.
I work in these genres, but haven’t put an album out for about 5 years. Instead, I write “media music” for TV and library, film, etc, because at least it pays something. Justifying six unpaid months work to make an album which will likely make a loss, even if I ‘sell’ 100,000 plays a month…
It isn’t going to happen.
I can’t afford it. And more and more, few of us can.
Just how it is.
Thanks everyone for your comments – great food for thought in there as always
Tom – good points and it builds into a much bigger issue, which pieces like this and elsewhere amplify – where the hell are musicians going if this is the payday they can expect? Where will this lead? What will it mean for your average musician (by which I mean those who didn’t have a leg-up from the majors in the old days to build an audience and establlsh themselves)? When you leave the blame game to one side – after all, we recognise we can’t go back – what happens next? I’m with Trev above and Danny from Kudos and am adopting a wait and see approach, but there are very interesting times ahead.
Evening Gents.
Just to clarify… I’m not “happy” (as in “satisfied”) with our current Spotify income. Its just no way near as dire as some would make out. It’s reasonable supplementary income along side our a la carte (Itunes etc) and physical distribution income. II also think it has the potential to be a viable model if its not strangled at birth.
Here’s the deal. Streaming technology exists, and for the most part it’s being provided by licensed services (in contrast to the early days of downloads). Given a chance to sample the service for free, the consumer seems to like the technology, and judging from conversion rates, £10 per month seems to be the sweet spot. If legal streaming services didn’t exist you would soon see an abundance of unlicensed services filling the void.
As I point out in my blog post, conversion from add supported to premium and bundling will eventually improve per-stream rates, Personally I also view the current share we receive as a transitional rate. Once these services like Spotify start to scale to a point where they cover their own costs we would expect to see an improvement in revenue share. This has precedent. I’m (unfortunately) old enough to remember the emergence of the CD format. Royalty rates (both performance and publishing) were reduced in the early days (by around 35%, from memory). We have also seen improvement in a la carte prices (downloads) over time.
The last time our industry decided to try and smash a business model we killed off Napster. Look how that masterstroke worked for us. Even the BPI now admits that was probably a wrong move.
http://www.bpi.co.uk/press-area/news-amp3b-press-release/article/ten-years-of-napster-7c-geoff-taylor-bbc-comment-piece.aspx
Controlling supply is no longer in our gift. This is a fact we DO need to wake up to. All we can do is follow the consumer and beat “free” on service.
Danny – thanks for comment & clarification – I suppose I took it as “happy” when you weren’t doing what STHoldings or Jon Hopkins were doing. And I agree 100% with your two points vis-a-vis Napster and “controlling supply”. The former was a disaster in hindsight so does the record industry want another one of these? And the latter is, as you say, out of the music side’s grasp now.
I take it you didn’t sit through IRMA’s lawyer’ stump speech at the Copyright Reform Conference at the Law Society? The attitude remains that the techies (ISPs now) have to come up with the solution to their problems. Otherwise they’ll just injunct as much of the internet out of existence as they can and pay as much as they can in lobbying to have the internet broken, SOPA style. Depressing lack of progress I thought.
Major – sadly, I missed that experience. IRMA’s block is what’s preventing a lot of innovative music services operating here – good news for the music side but totally baffling and annoying to the consumer. And please, enough already with the Eircom Music Hub as a sop to the music fan. It’s far from ideal – why can’t I embed their tracks here like I can do with Soundcloud or YouTube, for example? No wonder piracy is still rife with those people directing the music side.
I was at a talk in NY last week and asked the heads of Spotifys technical team from Stockholm about this issue and they basically said bands who are bitching “have a old industry out-look” and that the real payment Spotify offer is their analytics that all artists and labels get from allowing them stream their music
Given the mention of IRMA, seems like their plan of using the ISP route has taken a major hit.
http://businessetc.thejournal.ie/european-court-makes-it-illegal-for-isps-to-block-blanket-file-sharing-287686-Nov2011/
With the ISPs free to ignore IRMA/the record companies, IRMA are facing the “The Net interprets censorship as damage and routes around it.” issue.
Nelson Muntz HA HA in order I believe.
rhiannon – thanks for the link – hadn’t seen that. Why are The Journal contacting IMRO, though? IMRO have nothing to this! It’s IRMA they need. Those bloody cut and paste aggretators…..!
Poor IRMA – all those lobbying fees were for nowt in the end