Labels Dropping Out Of Spotify Are Totally Missing The Point
from the it-ain't-about-direct-revenue dept
Spotify tried to stem the criticism by noting that users don't pay per stream, and that it's just selling access, and thus "it does not make sense to look at revenues from Spotify from a per stream or other music unit-based point of view," and later that Spotify is generating significant revenue for labels. To be honest, this response is a bit tone deaf. Even if Spotify isn't a per-unit business, it's always going to be how musicians view the service. Of course, the bigger point, made by Jay Frank, is that if indie bands don't make much money, it's not Spotify's fault -- it's the fact that not many people listen to their music.
And that actually gets to the bigger point, and shows why it's short-sighted (bordering on braindead) for labels to drop out of Spotify, claiming the payments aren't high enough. We noted in our original post that depending solely on direct payments for music is simply a bad (or, at least, incomplete) business model for musicians. But, making it more difficult for anyone to hear you doesn't help you get any money either. As Frank notes in his piece:
The issue is that you then encounter the one thing worse than getting paid peanuts and that’s obscurity. People want to be entertained by music, not have to hunt things down. It has to be easy, which is why Spotify has gained so much traction. If you manage to get an average music fan’s attention on your band (out of the THREE THOUSAND others that released something that week) for 2 seconds and they look on Spotify and it’s not there, do you know what they do? They move on to another song. And you’ve lost your chance of gaining a fan. And the royalty. The number of people who would then spend time searching for alternative listening methods is miniscule.So taking yourself out of Spotify means you get no royalties, which seems worse than little royalties, and you make it harder for fans to find you, learn about you... and decide to support you in other ways. So, how does it benefit artists to not be in Spotify? I don't get it... Complain about Spotify's royalty rates all you want, but you can still leverage the platform to make money in other ways (direct to fan, shows, merch, etc.). And then laugh as Spotify gets none of that revenue, despite helping you build your fanbase.
In fact, some competing indie labels have already noted that Spotify has helped other parts of their business. The label Earache recently noted that Spotify appears to have increased their iTunes revenue:
While none of us have a crystal ball to see exactly which way the future of this business is going to turn, we have been actively embracing all possible legal outlets for our artists and their music. We have given away free album downloads by both Gama Bomb and Wormrot and like to think we keep an open mind on the latest ways people “consume” their music.Exactly. That's a record label who understands the bigger point. Those leaving Spotify in protest aren't doing themselves or their artists any favors.
I do not believe for one minute the record industry is dying but evolving (as it always has) and it is up to us as record labels to find, develop and build careers for our artists utilizing our accumulative years of experience.
I think it is no coincidence that when Spotify launched here in the USA, we also had our best ever month of sales on iTunes. Spotify is just one of the many new ways that fans can find and listen to new music by our recording artists and should be seen as that and nothing more.”