Spotify (Basically) Tells Its Free Users, 'Go Pirate!'

from the carrots-taste-better-than-sticks dept

Spotify is pulling the plug on free access to some artists’ newest releases, according to The Guardian. Currently, Spotify’s 50 million paid users fork over £10/month to play their music offline without ads, but now they’re also getting exclusive access to artists’ biggest new releases. Meanwhile, Spotify’s other 50 million free users have their access suddenly restricted.

This has been a major sticking point with some artists and labels for many years. They’ve long demanded that some music only be available to paying subscribers because the royalties shared there are much higher. With this new setup — which Spotify loudly resisted for years — Spotify benefits by paying fewer royalty fees to record labels, though those fees from free streaming were lower per stream than paid streams anyway. But it’s the record labels that pushed this one through:

Labels believe the free tier, which pays lower royalties per stream, can serve to cannibalise other audiences, hitting album sales and lowering the incentive to upgrade to premium.

We’ve heard this argument before, and too many times. It’s always some iteration of the following (choose one from each line):

Bootlegging / piracy / free access / abundance
+
kills / devalues / cannibalizes
+
music / movies / books / games / art

Taylor Swift even invoked this argument when she recently pulled her songs from Spotify: “music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for. It’s my opinion that music should not be free.” Of course, Swift’s fallacy is equating importance & value with rarity. Water, for example, is critically important and valuable? but also far from rare. Rare things are typically valuable because they are rare, but music that can be copied to every hard drive on the planet at no cost? The polar opposite of rare. Will Spotify yanking access to newer releases actually encourage its free users to upgrade to a premium account? Not likely. As you may remember, the Copia Institute published a report on this very topic called The Carrot or The Stick? Innovation vs. Anti-Piracy Enforcement, and its key findings should be emailed to the CEOs of every record label:

In Sweden, the success of Spotify resulted in a major decline in the file sharing of music on websites like The Pirate Bay. A similar move was not seen in the file sharing of TV shows and movies… until Netflix opened its doors.

In response to rights holder complaints, the Korean government pressured popular music subscription service MelOn to double the price of subscriptions. Since the mandated increase, online music sites have seen a drop in the number of subscriptions as consumers move back to unauthorized means of access.

Strict criminal penalties in Japan for copyright infringement, enacted in 2012, didn?t prevent a steep 17% decline in CD sales, nor spur rapid adoption of streaming music services. Streaming services are starting to catch on in Japan, but only as their selection and convenience have improved significantly.

New Zealand passed the Copyright (Infringing File Sharing) Amendments Act, also known as ?Skynet.? After enactment, there was a short-lived drop in illegal downloads over a two-month period (Aug.-Sept. 2011), but after that activity returned to previous levels.

Because Spotify’s decision affects 50 million users, this move could create huge waves for both Spotify and the music industry as a whole, since it could encourage users to regress from free (and legal) methods to their familiar free (and illegal) methods. Most everyone knows you can type in “Taylor Swift discography torrent” into Google and get years of Taylor Swift’s music in minutes without paying Spotify, record labels, or Taylor Swift. So what will happen when 50 million users you’ve been slowly leading away from piracy suddenly feel like they’ve been left out in the cold?

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Companies: spotify

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Comments on “Spotify (Basically) Tells Its Free Users, 'Go Pirate!'”

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34 Comments
Anonymous Coward says:

Re: Re:

Her main fallacy is centered around rare. The music industry is build on mass markets (even 45 years ago…). There is nothing even remotely rare about mass market products. The value of buying music has always been a combination of supporting the artist, relax your conscience and get some accessories with the physical token often in that order. Music is the least rare in the package of buying music. Worse for her; holding that music should not be free would require some consistency. In this case it would be barring certain radios from playing the songs since the argument about listening to ad-based radio would be exactly the same.

Not to mention miss Swifts american heritage of not getting a dime from radio-play, but that is a separate can of worms she will have to discuss with record companies and consumers to understand the chasm in opinions.

That Anonymous Coward (profile) says:

I await the press release form next week about how Spotify, is stealing even more money from artists.

Somehow the RIAA managed to maintain power & relevance when their ‘work’ is about the same as ice delivery men for ice boxes.

Dear artists,

The RIAA is lying to you. Your label is lying to you.
You are making money, but your shitty contract allows them to rob you blind. They support ‘rights’ societies that use royalties due to you as personal piggy banks.

We aren’t going to pay you $5 each time we hear a song.
How much do you get for each YT hit or radio play?
Why should another format pay you more? Because they manage to make a profit?

If the RIAA cared about you why did everyone else do the work to build streaming, YT, music sales? For the cut they and the labels take shouldn’t they do more?

Enjoy making less money as you get less coverage & less likely to be discovered by new fans. Be sure to blame everyone except yourself for this drop. Music has changed, and the writings been on the wall for years. You should never expect to make the same amount you get for a plastic disc as a digital file that costs next to nothing to sell.

You don’t need the gatekeepers and the sooner you figure this out & demand better contracts or leave the gatekeepers in the past where they belong the sooner you will make more.

The internet doesn’t have to be your enemy, look at the huge acts who use nothing more than social media & YT to build a following. Maybe stop taking advice from people who tell you the sky is falling, while increasing their cut of your profits.

kallethen says:

Ugh, and I’ve loved using Spotify until recently. Discovered plenty of music via the service, and guess what? I’ve purchased albums because I liked what I heard. I don’t purchase albums unless I hear the music first. So if the artists don’t want me to hear it before paying for it… they aren’t going to get me to purchase it.

Anonymous Coward says:

Well, well. After years of telling us would be no piracy if were convenient and cheap on-demand streaming, NOW flat out admitting that no one will pay at all if can get free.

This… “person”… not so subtly advocates piracy over a MINOR price hike for more popular products.

And why single out Spotify? What about Apple and others?

Anyway, you are NOT paying for the copies as such, people, you are paying a tribute to the ineffable up to marvelous talents that make entertainments you enjoy, and to bring about more, perhaps better production. — It’s much more valuable when you cannot make such for yourself, as you talentless thieves clearly cannot, else you’d understand the WHY of copyright.

You could argue that a few “stars” get too much, and I’d be with you.

You could argue that doper grifters in the studio system get too much through illegal and immoral cheatery, and I’d be with you.

But this flat out attack on creativity, against paying even a pittance for unlimited streaming — so utterly characteristic of Techdirt’s actual notions — just causes me and every reasonable person to turn against you.

Once upon a time, you pirates thought Napster was the free and easy future, thought it an entirely legal dodge to avoid paying, and then after you learned it’s criminal to use the products of other persons that way, you decided to BE criminal. And being criminal is the only thing you’ve succeeded at for nearly 20 years now!

Hell, you can’t even create enough interest here to hold your audience of pirates.

TechDescartes (profile) says:

Conflation

"[M]usic is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for. It’s my opinion that music should not be free."

The problem is that she is conflating "music" with a "recording" of the music.

The former is rare: you have to have a person with talent use an instrument to create "music". That’s rare and extremely valuable, as demonstrated by concert tickets selling for hundreds of dollars.

The latter is not rare: once a music recording is made, a million copies can be generated in moments. A recording is worth something, but it’s nowhere near as valuable as the "music". And that value is dropping by the day.

Rather than bemoan the loss of value in "recordings," go make money with what is "rare and valuable": actually making music. Just ask Ed Sheeran.

Anonymous Coward says:

Taylor Swift even invoked this argument when she recently pulled her songs from Spotify: "music is art, and art is important and rare

Art, even good art is not that rare, what is rare under the labels, is gaining their attention to get that art published.

As Cory Doctorow has pointed out, the biggest problem an artists faces is obscurity, and not piracy. Insisting that the potential audience pays to sample the art is a good way to stay obscure in a world where there is much free art available, and artists are finding other ways to support themselves, like patreon.

What I would like to know is how much ofg her income comes from recordings, and how much comes from concerts. Also, has she not noticed that all the artists that have remained in the business for many decades have all relied on concerts and not records. This includes Tina Turner, The rolling Stones, Leonard Cohen etc.

PNRCinema (profile) says:

The ball has already fallen

All of this will be moot in a year or two – Chance The Rapper has broken the model by refusing to sign with a label, and the Grammys have now agreed to recognize independent artists. The labels are more desperate than ever to block Chance’s kind of success, and will do anything to keep other artists from following his lead. It means that more and more artists will come around, much like Hanson did a decade ago, and eventually the labels will be a true dinosaur instead of just on life support. And so much the better…

AEIO_ (profile) says:

It's NOT the music that Spotify is selling...

It’s the organization and easy availability of that music.

If you know an artist name or name of a song, Spotify can quickly (in a few clicks) bring it up. Not always (Flim and the BB’s) but mostly (the album by Hot Butter)

(OT: Know the actual melody but not the name/artist? Look here.)

But you get great-sounding music, instantly available on-the-fly. And you don’t have to search hard to find and finally download a copy, store it someplace, back it up (on floppies?), copy it to your phone, then find it AGAIN to play it. Like Google, a click or two and it’s just THERE! And absolutely no nasty Copyright Infringement Notices either.

And — oh yeah — you can Feel Good(TM) by supporting the artists with a legal copy, but I wonder how much people would ACTUALLY pay for just that. (Taylor Swift thinks it should be more.)

There’s Nothing For You To Do! (Besides the ever-so-minor, I’m socially embarrassed to even have to mention it, let me grovel for a bit, $10/month fee. Why, that’s only 90 minutes of minimum wage — only 1% of your raw salary! What else would you do with the money — Save? Eat? Pay bills? How pedestrian!)

So, surprise! If it’s worth it to you in relationship to everything else that’s available, you purchase. If not, you don’t. If the price goes up, more people (probably) won’t. If it goes down, they probably will.

Taylor Swift could help us all out greatly by making LOTS and lots more music — thus lowering the rarity and price for us all. 🙂

Graewulf says:

So far off the mark

They are so far off the mark here it isn’t funny. They assume that the listeners are all looking for that latest album. Most of us are just listening to music, any music. If it takes a few weeks or months to hear that new song, it makes little difference. Most of the time I choose an artist radio and hit play, with little thought as to what songs I’ll actually hear. The artists only hurt themselves with a move like this because it’s that much longer before I might discover that I enjoy their work through the random choices in the artist radio selection.

I doubt piracy will go up either for the same reasons. Most of the listeners don’t need that latest release right now.

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