Is Spotify Looking To Enable CwF+RtB For Musicians?

from the that-would-be-cool dept

There's been plenty of buzz around Spotify, the online music service that is available in Europe, but not in the US. Having played with the product, it's really nicely done, but there's always been a huge concern over whether or not there's a real business model there. The record labels have been notorious for burdening any useful startup with ridiculous licensing terms that make it close to impossible for any such business to survive (let alone profit). Spotify had said it was going to launch in the US, but hasn't been able to, and while the company keeps saying it's close, other reports suggest that the major labels still haven't reached agreements with the company.

However, what's much more interesting is this interview with Spotify CEO Daniel Ek, where he suggests the company wants to branch out well beyond the subscription/ad-based business models and start enabling musicians to offer other business models that sound an awful lot like the CwF+RtB business model we talk about here:
"We want a platform where we can [allow] lots and lots of experimentation. We don't know what will work for an individual artist. Some will benefit from scarcity. Some will benefit from it being widely available, even free. They might make their money by giving away all their music for free ... In the best of world, Spotify will become the platform where you manage your music and because you do that, we will figure out what kinds of offerings you're interested in. For certain types of artists, you might be interested in something unique. You might do a meet-and-greet. It might be that you want it on vinyl because it feels better. Or just go and see the show. Or have the merchandise."
Who knows if Spotify can pull it off (and if it will build this itself, or partner to do so), but this is a much more ambitious play than what's been talked about in the past, and while it's risky, seems like a much better long-term bet.


Reader Comments (rss)

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  1.  
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    The Anti-Mike (profile), Feb 5th, 2010 @ 5:41am

    I would say they have probably realized that piracy is such a big deal that being in the "music selling business" is an unworkable business model.

     

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  2.  
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    SteveHedberg, Feb 5th, 2010 @ 6:14am

    I would have to respectably disagree that selling music is an unworkable business model The Anti-Mike.

    When you look at the success of NIN or Steam or iTunes or even, to a lesser extent, Netflix, people have shown time and time again that they don't mind paying for content. However, it is important that the content is reasonably priced, easy to get, and DRM matters. Perhaps the old way that the RIAA and MPAA seem to cling to is unworkable, but selling music is far from dead...

     

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  3.  
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    Anonymous Coward, Feb 5th, 2010 @ 6:43am

    Re:

    Yeah! Now you're getting it!

     

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  4.  
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    PaulT (profile), Feb 5th, 2010 @ 6:47am

    Re:

    It's amusing that you say this in response to the article that starts by noting that Americans are currently not allowed to access the service in question. Withholding music from potential customers is a great way to prevent them from buying it, but the "pirates" have no problem servicing this demand. Don't service the demand and you don't get paid - simple. They don't get to create problems for customers and then complain that they didn't get paid - not servicing demand is a death sentence in any industry.

    To give a recent personal example: I heard a snippet of the theme to the original Hitchhiker's Guide TV series (Journey Of The Sorcerer by The Eagles) and I thought it would be nice to have it on my iPod Touch. I fired it up, accessed the store and saw... the song isn't there. In fact, no classic Eagles is available to me. I would have checked another store, say Amazon or Play, but the record industry won't allow them to sell to me because I'm in the "wrong" country.

    That's what's killing the industry. Had I been able to satisfy my immediate demand, I would have been happy and the label would have made a sale. Whatever the reason for them not offering me the album, be it in my region or in any region, they lost a sale. I bet that the Pirate Bay would have had no problem supplying the album to me if I'd have gone there...

    This is the outdated thinking that's killing them. They probably expect me to buy a CD, but I'm sure as hell not buying a full album just for one song. It's not "piracy" that's killing the industry, it's the business model. Even if I had decided to pirate the song, it would have been their blockade that cost them the sale, not the evil "pirates".

     

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  5.  
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    The Anti-Mike (profile), Feb 5th, 2010 @ 7:12am

    More thoughts on this...

    I can't help but think that various services are trying to position themselves as "friends of the bands", while really just trying to come up with a way to get a cut of the action.

    Imagine that you take each of the pieces that the labels provide, from management, promotion, booking, inventory control, distribution, image, representation, local, regional, and national contacts, etc... you break each one of them off as a separate business. Now the artists end up contracting each of those pieces out to various companies at a cost, potentially higher because each of these companies has to make a profit on each piece, not on the overall.

    So if you look at things, it would appear that the artists make more money (because the income is paid to them, not a label), but they end up spending all that money (and more, because they would have to spend money to make money, not the other way around). So a band might have to max out their credit cards or mortgage their homes in order to afford to buy services.

    What spotify appears to be doing is trying to position themselves to get a nice piece of the "CwF" style action, and potential in the long run becoming as much of a drag on things as a label might be, without having to finance anything up front.

    Good move for them, but is it really a good move for artists?

     

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  6.  
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    Lachlan Hunt (profile), Feb 5th, 2010 @ 7:40am

    Yes, Spotify has a lot of benefits, but they are not without problems. The major problem I have with it, and why I cancelled my subscrption to it, was because the use DRM and force you to apply software upgrades as soon as they're released by not letting you play your music until you do. On mobile devices, where you don't always have access to wifi connections or good mobile data plans, this is not always convenient, and I got screwed over by this policy once already.

     

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  7.  
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    RD, Feb 5th, 2010 @ 7:44am

    Exactly

    "It's amusing that you say this in response to the article that starts by noting that Americans are currently not allowed to access the service in question. Withholding music from potential customers is a great way to prevent them from buying it, but the "pirates" have no problem servicing this demand. Don't service the demand and you don't get paid - simple. They don't get to create problems for customers and then complain that they didn't get paid - not servicing demand is a death sentence in any industry."

    Excellent, and this point should be RAMMED up the ass of the Big Media and TAM and his trolling ilk. If they dont get this idea, then they DONT GET TO WHINE LIKE A BABY about "piracy." FIRST service the market demand, THEN we can talk about the impact of "piracy" (which is far, far less than TAM and his corporate masters would try to have us believe).

     

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  8.  
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    The Anti-Mike (profile), Feb 5th, 2010 @ 7:47am

    Re: Exactly

    you forgot about that "reply to this comment" link again.

     

    reply to this | link to this | view in thread ]

  9.  
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    RD, Feb 5th, 2010 @ 7:50am

    Ok...

    "Imagine that you take each of the pieces that the labels provide, from management, promotion, booking, inventory control, distribution, image, representation, local, regional, and national contacts, etc... you break each one of them off as a separate business. Now the artists end up contracting each of those pieces out to various companies at a cost, potentially higher because each of these companies has to make a profit on each piece, not on the overall.

    So if you look at things, it would appear that the artists make more money (because the income is paid to them, not a label), but they end up spending all that money (and more, because they would have to spend money to make money, not the other way around). So a band might have to max out their credit cards or mortgage their homes in order to afford to buy services."

    Fair enough, and a reasonable argument. However, the 2 big points you gloss over (ie. ignore) and that has been brought up NUMEROUS times to you in these arguments are:

    1) The big issue isnt that a "label" (or production) is needed, but that they take EVERYTHING from the artist, including their copyright, and rarely pay anything back. So, yes, there is a place for a label (Mike has pointed this out REPEATEDLY) but it shoulnt be to completely rape the artist (as you advocate).

    2) Selling things on plastic discs as the ONLY method of attaining the product is going away, and the labels/industry needs to explore other options. LEVERAGING the internet (and "free", the idea of which seems to short-circuit your brain) is going to become de facto, and the labels can lead, follow, or get out of the way. It WILL happen, legally or not, whether they want it to or not. The question is (and has been): ARE they going to do anything with it? OR are they just going to resort to lawsuits when their current methods get supplanted by the newer ones? Guess which road they have taken so far.

     

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  10.  
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    RD, Feb 5th, 2010 @ 8:00am

    Re: Re: Exactly

    "you forgot about that "reply to this comment" link again."

    Oh! Sorry, forgot you have to be spoon-fed like a little baby in order to use these forums...

     

    reply to this | link to this | view in thread ]

  11.  
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    PaulT (profile), Feb 5th, 2010 @ 8:04am

    Re:

    Since Spotify is a streaming service, I don't have a problem with DRM (one of the very few cases where I don't). You're essentially renting the music, so DRM does have a place unlike in cases where you're supposedly buying it.

    As for the forced upgrades, it might be annoying but it certainly beats the service getting compromised due to buggy software and it will probably happen less as their software matures.

    "On mobile devices, where you don't always have access to wifi connections or good mobile data plans, this is not always convenient"

    I don't know what phone you had, but on the iPhone it's certainly possible to download an app that lets you store the music offline.

     

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  12.  
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    The Anti-Mike (profile), Feb 5th, 2010 @ 8:11am

    Re: Ok...

    mumble mumble NUMEROUS mumble mumble REPEATLY mumble mumble LEVERAGING

     

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  13.  
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    Fredrik Ekman, Feb 5th, 2010 @ 8:15am

    So interesting to read this! Why? A person from the Spotify team visited my class while Spotify was still in beta in the spring of 2008 (do not quote me, but I think he was the brand manager).

    When he asked for a band (to demonstrate the service) I instantly responsed Nine Inch Nails since I adored their compete with free model for Ghosts I-IV which was in the buzz back then. So we got to hear Sin from the AATCHB live album.

    I later asked how Spotify's business model actually work and how it will benefit the artist, since there is no opportunity to connect with fans (the only opportunity for monetization is 1,000,000s of songs played). The answer, which has probably changed a little bit, was that the "connect with fans" opportunity already exists on other platforms and will become better and better, while Spotify can focus on what they do best. Makes sense.

    As a NIN fan, building the hype around CwF + RtB, and being a Swedish citizen building the hype around Spotify being the future of recorded music, I'm still eager to see NINs and Spotify's models getting closer to each other. That's why I'm still a little bit annoyed over the Null Corp. recordings not being available in Spotify.

    Thanks for writing a very interesting blog, btw

     

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  14.  
    identicon
    :), Feb 5th, 2010 @ 8:35am

    Have CC SA

    If not that is not a service I'm interested on.

     

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  15.  
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    anti anti mike, Feb 5th, 2010 @ 8:49am

    maybe you should consider it ant imike

    yea know cause i have buds that i help promote and guess what they actually give there tunes out free and make a buck off the touring

    YUP aint that special

     

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  16.  
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    kirillian (profile), Feb 5th, 2010 @ 9:03am

    Re: More thoughts on this...

    I agree that it would be a concern; however, I don't think they would be the first company to screw artists...in fact, I don't think you are being fair as the current labels are not nearly as artist-friendly as you make them out to be.

    It will be interesting to see how this plays out...

     

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  17.  
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    Mike Masnick (profile), Feb 5th, 2010 @ 12:53pm

    Re:

    I would say they have probably realized that piracy is such a big deal that being in the "music selling business" is an unworkable business model

    And you *almost* have it figured out. I'm so proud of you! I've been saying for years that the "music selling business" is a bad business model, and that's why I recommend better business models. It's not because of "piracy" though, that has contributed to it.

    So glad you've finally come around and are a supporter of better business models. You might want to finally change your moniker though.

     

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  18.  
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    Anonymous Coward, Feb 6th, 2010 @ 11:03am

    Re:

    What about those who, in light of the recording industry's antics, simply stopped consuming music? No legal purchasing and no illegal downloading.

    I used to purchase music and listen to it but now I don't.

    Looks like, in my case, the music selling business failed. Fancy that.

     

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  19.  
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    jarvis (profile), Feb 19th, 2010 @ 7:21am

    Hands down - Grooveshark!

    I feel duped that Spotify took my money for adfree music. I now use Grooveshark on icloud for free with NO audio ads.

     

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  20.  
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    Anne Mulligan, Aug 20th, 2011 @ 3:13pm

    As a music buyer I like Spotify, but I think indie artists on Spotify get paid peanuts for streaming plays of their music. It's not like they can afford to buy silver after cashing in their spotify royalty checks. They can make some serious coin selling mp3 downloads with iTunes though.

     

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  21.  
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    lrobbo (profile), Jun 12th, 2012 @ 10:01am

    Better off going long term, always.

     

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  22.  
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    Cameraman Sydney, Oct 4th, 2012 @ 2:19pm

    Grooveshark

    Grooveshark all the way in my opinion!

    Cameraman in Sydney

     

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