Gangster Streamin’

image from t1.gstatic.comOP-ED: Hailing Spotify as a legitimate alternative to piracy is like handing the responsibility of policing New York to the Mob. Spotify’s shtick is that they provide an important step forward in eliminating piracy, claiming they are legitimately monetizing music consumption. The reality is that the rewards for most are slight, and though there are many artists who provide content, very few benefit.

"The cardinal rule is to keep them playing and to keep them coming back. The longer they play, the more they lose, and in the end, we get it all." Casino

It seems utilizing this ethic is about as close to a racket as one can legally get. Urging you to come join them because they are eliminating piracy, when on the other hand they are doing different deals with different companies all under NDA’s. And the little guys – the independent artists – are not part of this negotiation. On the surface you are taking part in a legitimate service that hosts all the big acts, but in the back rooms where the real money is handled, it a different story.

“If you want me to keep my mouth shut, it's gonna cost you some dough. I figure a thousand bucks is reasonable, so I want two.” – Millers Crossing 

The Mob gains power because they have ownership in certain parts of town; they gain this ownership by offering protection. They bully their way in and force you to comply. With the Major labels forming this syndicate with Spotify, they are looking to gain control of the system; they are looking to run the town. 

They offer you the service of protection against illegal downloads, saying you get paid for your work. But the reality is you are giving up your rights, not for your own benefit, but for the benefit of the syndicate at the top. They are the ones sharing in the subscription fees and advertising revenue.

“Take it easy! The difference is, they're always gonna win. And you're gonna keep gettin' it up the ass.” – Once Upon A Time In America

All artists want exposure, and any talk of Spotify and the streaming model being the devil is often met with a cantankerous response. However, I have been keeping an eye on my monthly Tunecore earnings since Spotify launched, and thanks to their new analytics system it is very easy to track significant shifts. I have a number of releases that have generated steady sales for the last couple of years. The month of Spotify's launch saw a very definite 50% drop in income from these releases. That cut in earnings has continued for the following months. 

Coincidence? Maybe. But the streams have shown a definite increase in plays for that period as well. Have a look yourself and share your findings. Is this isolated or is it a trend?

“My father taught me many things…keep your friends close, but your enemies closer.”The Godfather

For the time being the only reasonable solution I can see to the Spotify problem (as I suggested in last weeks post) is to release a maximum of two or three tracks per album to the service.  The aim being that if someone likes your music they will seek you out and want to hear more elsewhere. This way you have the benefit of being part of the service, with an increased possibility of people straying away to actually invest in your album.

"I don't want to be a product of my environment. I want my environment to be a product of me."The Departed

Just because the Major Labels signed deals, doesn’t make it a legitimate service for all. Why would you join the mob if your only prospect were to clean up after them?

"Don't be callin' me no dishwasher. I kick you fuckin' monkey ass all over…" – Scarface

This post is by regular Hypebot contributor Robin Davey, Head of Music and Film Development at GROWVision. Follow him on twitter @mr_robin_davey


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  1. Talking about the mob is a juvenile allusion to the concept of streaming music services (which also offer people the ability to download music as well)
    Your not-quite-ready-for-business-school analysis of this “drop” of older releases income at a very rounded “50%” seems a bit “unscientific.” How many streams did each album have on Spotify? Have you checked Rdio? They have a counter that shows you how many times an artist, release or song was streamed. you’re making the conclusion that each stream took away a download sale?
    I love the case of the dance distributor ST Holdings that claimed a 40% drop in sales once they put music up on streaming services. Yet they won’t show any actual numbers. Did they lose sales at Beatport or any of the dance music stores that sell the vast majority of their music? iTunes accounts for a small percentage of dance music sales for labels like the one’s ST Holdings distributes. If streaming was such a cause for concern, why is Beatport’s new aggregation business signing up with Spotify, Rdio and the other streaming services?
    I’ve never heard of your company, I’m sure you do good work, but you don’t seem to be the person to be writing editorials about a subject you know next to nothing about and seem to have more of a vendetta against Spotify, for some unknown reason.
    Once again, these services tend to generate revenue from people that either do not buy music and wish to rent, like Netflix is for people that do not want to go to blockbuster or go to a theater, or people that have come in from pirating.
    It’s not the same type of revenue stream as a download sales. it is access to a library of music, of which one gets a pro-rated share of the revenue based on the number of times your music was accessed.

  2. And yet Michael Buble is on the service AND has the #1 album in the country selling 479,000 this past week alone.
    I think the Black Keys blew it, and would have done just as well, if not better, with their album on streaming services. Oh, well, they can always change their minds down the road. Remember that those who use Spotify Free can’t take their music with them, and if they really love something, will go over to iTunes and buy so they can load it on their iPod.

  3. An anonymous post from “someone who knows”, whose first agenda is to discredit my writing. You would do better to make it not so obvious you have an agenda. Either that or just be honest with who you actually are.
    I note in the article that the drop in sales could be isolated and coincidental. But it does raise alarm bells for me. I can tell you for 3287 streams I got paid $16.48. This is why I say it is fine to put 2 or 3 tracks up but NOT the whole album. It is a very simple premise. When Spotify want to cut you a deal because you are doing high volume streams then put the whole album up. Until then why would you give away everything and run the risk of damaging your own album sales?

  4. Drake’s album leaked a month early…was on Spotify the day of release…and still SOLD 600K units in the first week. Just saying…

  5. Robin,
    Another great post sir.
    I always find it interesting when people use already established major label artists with ridiculously inflated and seemingly endless marketing, pr, and distribution budgets invested in them to prove a point. Same goes for “Legacy” artists that cemented themselves and their fanbase decades ago.
    Spotify will simply never work for some artists, and the idea that it’s a great service across the boards for everyone (whether it be for recognition and visibility or otherwise) is , and will always be ridiculous in my opinion. It’s campaign to completely restructure the way consumers think, act, and spend is in many ways on par with political propaganda being spewed in other aspects of our lives.
    I’m incredibly proud of the Black Keys for doing what they did, and stepping up and personally explaining why they did it. On the other hand we have people threatening to now steal the work, or whining about how this has alienated them. Chances are, these same people will be alienating themselves from a lot of music in the future, not too dissimilar to those who only listen to terrestrial radio…
    In the end It’s their choice to take such a position and the artists choice to do what they see fit for themselves. However, it appears that over 200,000 people did not feel the Black Keys decision was alienating, or that 10 bucks was such an insurmountable luxury that they couldn’t support them….

  6. Robin, interested to know if those streams were evenly spread across entire albums or if it was a small handful of songs.
    Spotify pays out differently than other sites. But Rhapsody and Rdio paid out a penny per stream at one time. The free tier of service of everyone pays substantially less, somewhere south of three tenths of a penny. But again, those people are listening on their computer only and many of them buy music and are basically paying to stream music they already own or wouldn’t go out and buy the CD. Even if someone spent $200 a year on CD’s, which is double what the average is, how else will many people hear all the 42,000 records that come out a year?
    Should artists abandon platforms that give people access and pay them or potentially turn someone into a buyer, maybe not of a CD, but a t-shirt or a concert ticket?
    I applaud your willingness to try a track or two, but isn’t that like being a “moderate” christian. I believe in the bible, but not all that crazy stuff about whipping children, slavery and killing non-believers.
    The beauty of these streaming sites is you get more money when the number of subscribers goes up. so the money will go up, just like it has in places where spotify has been operating for a few years already.
    Gaetano, sorry, but you sound like a robot that spits out every non-sequitur you read.

  7. So, you’re obviously someone who knows some things. Your apology, while appreciated is really not necessary, in fact, I’ll switch up my steez to less automaton here so we can get into it.
    I really have to ask, (aside from who you’re working for) which one of my non sequiturs did you like the most? Just pick one for now and debunk me, let’s hash it out here.
    You’re totally right, I read a lot. I also play a lot, record a lot, talk a lot, and have experienced a lot. It’s so strange though, some of the things I want to read, I never see: how Spotify calculates royalties, why that’s not transparent to artists, or consumers, and why it’s deals with majors are so NDA’d.
    While we’re at it, I’d like to see the actual study that shows that Spotify itself has single handedly reduced piracy…also while not cannibalising sales in the process….
    Spotify’s worst nightmare is an educated, aware artist and true fan. The clock is ticking, and if they don’t start to scale, and make money, it’s over. Things like Coldplay or the Black Keys windowing, or even other independent artists pleading their case is a threat, and that’s why you’re here trying to manipulate even the tiniest shred of controversy.
    If this company and service is as wonderful, fair and revolutionary for everyone as it is claiming, then why demonize artists that just claim that it’s not for them? Every artist has a different style, demographic, marketing plan, label and publishing agreement and fanbase, so Why wouldn’t you accept that for what it is and hope that potentially they’ll come back when things scale and potentially make more sense if they ever do??
    The reason is because this is a huge time sensitive gamble that a lot is riding on, and the artist has the power to potentially tip that in one direction or the other.
    No Relevant Content=No Relevant Service, and not that many people will pay full price to stream back catalogs.

  8. @”Someone who knows” I didn’t think a Spotify debate would enter the realm of Pascals wager. Well, being an anti-theist and feeling that organized religion is a bad thing, you will have to forgive me for not wanting to subscribe to the notion that my life will be saved by Spotify. That’s not to say I don’t enjoy partial elements of numerous belief systems. Having sundays off, enjoying christmas, and eating pancakes once a year (it’s an english thing) are all things I have been known to partake in.
    Basing my presumptions on your own analogy, you are obviously religiously subscribed to Spotify as being the truest way for one and all. Even to the extent that you suggest one should throw themselves into it in an extremist fashion.
    It is interesting that you do employ the tactics of organized religion in you debating of the subject. Your first move is to discredit and attack, you can ask the Scientologists about that one. You then belittle and assume the position of being of higher knowledge, that one is courtesy of the right wing Christians. The third is trying to convince me that my money situation will improve if I subscribe to the Spotify notion, how very evangelical.
    They all employ these tactics because they need you to add weight to their cause in order to give those at the top more power and more control. Oh you see what I did there I took your very own words to make my own point even stronger. So we come full circle, in you defending Spotify, because presumably you are their pay roll, you have applied all the tactics of the Mob to make your point heard.

  9. Hi Someone who knows
    I have followed rob davey and his brothers bane for years and would much rather listen to him and the hoax than some corporate scumbag dismissal of their great body of work.
    All artists deserve to be heard and to be be paid for what is listened to.

  10. Robin. Have you ever thought about how many people actually use Spotify? about 10 million as far as I know. Spotify is available in 12 countries with maybe 500 million inhabitants in total.
    That means 2% of all these people are using Spotify. How on earth can such a small group hurt sales? And doesn’t that explain the small revenue of streams also?

  11. I know Robin will have his own stab here, but I just have to chime in.
    This is kind of hilarious. So, You, Spotidj, who runs an ad supported blog that promotes Spotify and related services should know that the company’s traffic has jumped by 30% in the past month, to 10 million paid users. If this keeps up, and Mr. Ek gets his dream of “music like water” this could be a potential paradigm shift in the way the average consumer sees value in regards to purchasing, and accessing music.
    What makes it more ridiculous? I’ll bet that your income from running such a site would improve from a service such as Spotify becoming more widespread…
    Also, on your site you state that “Still you will not find The Beatles or Pink Floyd to name a few big names. Not Spotify’s fault, some artists and labels just refuse to allow streaming”
    This is in fact Spotify’s fault. If they offered revenue that was on par with other distribution services, you would see these artists streaming. Spotify can’t offer those rates because it’s literally impossible with their current business model, and there is no promise (or even specific information regarding potentially when and how) that the model will scale or change.
    Another thing to chew on, as an artist, of that 2% you speak of, if they are 50% of YOUR demographic converting to Spotify, you see a significant difference in your revenue streams…that are in most cases already small.

  12. @spotidj It is an irrelevant point you make because the people who use Spotify are the ones who want to listen to music. The core demographic are going to be the people who do regularly buy music, or at least have done. If they are under the impression it is a fair and just service then they are going to stop buying and start streaming. It may just be a drop of a few hundred record sales as a result, but for the independent musician that can mean a few thousand dollars which is vital for their survival.
    You and your site are either funded by Spotify or you have a day job and are blogging for a hobby. I suspect the latter, therefor you will have no clue how hard it hits independent musicians to lose even just 20 album sales a month. That little bit goes to them scraping by and paying the rent and eating.
    I am not talking about kids complaining because they want to be famous and nobody is buying their album. I am talking about the effects it has on the professional musician who sells a few thousand records. Are they supposed to bow to the great spotify or should they take a stand and keep a tight hold on their content, and by doing so at least they make their music have some worth to themselves and the fans they generate.

  13. 10 million paid users! Where did you learn that? As far as I know Spotify has 2.5 million paying subscribers and about 10 million active users at most.
    Can you publish a link to the info you are referring to?

  14. Thanks Robin,
    My site is not funded by Spotify it’s just a hobby.
    In a few years time streams will generate more income than sales. The public wants streams. Most of them may not know it now but they will switch in the near future. Streams will give you more a steady income than sales. Need an example? Check http://www.ugress.com/post.asp?id=1571

  15. http://www.appdata.com//apps/facebook/174829003346-spotify
    My typo, that’s 10 million active users.
    That said, you’re claiming that streams will eventually pay more than sales. How do you know this? How have you seen the actual number/equations that are used to calculate royalty, and more interesting to me the stat that shows how and when this will change incrementally as the service begins to get to an appropriate scale, there has to be a very direct correlation between the two that’s just not being revealed, why is that??
    Why has there been no prospectus in regards to this info? Don’t you think that would be a powerful tool to set our minds at ease and get us on board?
    Is it another 5 million? 15 Million?, 20? Nobody seems to know or want to share.
    Lack of transparency and bold statements and promises from a company in entrenched in business with Labels who are already notorious for lack of transparency, shady accounting and overall less than savory tactics.
    Can you see why that would make artists skeptical?

  16. So you are telling me that pay per stream will leap a gazzillion percent to match the 70c from one iTunes sale? Never gonna happen.
    The majority of people buy one album a year, why are they gonna pay $10 a month? It targets the core music fan and tells them its ok not to buy records anymore. Subscriptions will reach a point and then not grow. And all the money from those subscriptions go to pay off the Major labels. For anyone other than the majors it is not a viable model. Spotify it would seem is not a sustainable model.
    This guy you give as an example had a gold album and was featured on the front page. Therefor he must have done a deal with Spotify. It is not representative of average artists.
    With Spotify as your plays go up the income stays flatlined in comparison. Plus it is now easy for people to rip music off Spotify – it has done nothing to prevent Piracy.

  17. I’m not sure if the data you are referring to show that Spotify has 10 million active users. As far as I can tell the App data service only tracks usage of the Spotify Facebook app. This could mean that Spotify has far more than 10 million active users, but does using the Facebook app imply usage of the Spotify service?
    I don’t know if streams will pay more than sales. It’s just a prediction. Probably the pay out per stream will not rise dramatically, but the number of streams will as Spotify attracts more users. And it’s way easier to get someone to listen to one of your songs than to get them to buy it. The potential number of listeners is far bigger that the number of potential buyers. If you take that in account and the fact that good songs will draw listeners for ever. That’s the basis of my prediction that streams will provide more revenue in the long run. A hit song turning into an evergreen could mean an steady income for life.
    As much as I like Spotify as a service, I also hate the lack of transparency. That is exactly why I started to release songs on Spotify myself, just to be able to see with my own eyes what they actually pay.
    Of course I can understand that artists are skeptical about the rise of streaming services. But I don’t agree with the easy conclusion that streams are hurting sales. That’s exactly like considering every illegal download to be a missed sale. You really cannot compare these two.

  18. You are right about that. The pay per stream will never match the 70c of on iTunes sale. Most likely the pay per stream will never be much more than one cent. (It has almost reached that point BTW) This means you just need 70 plays to match a sale. You are telling me that this is impossible? It’s way easier to get someone to listen to one of your songs than to get them to buy it. The potential number of listeners is far bigger that the number of potential buyers.
    Spot on. The majority of people buy one album a year. But do they listen to the same album fro a whole year? Of course not, they listen to a lot more music and when they use Spotify for that they are paying for this even when they keep using the Free version. How cool is that!
    I’m no fan of big labels either. Spotify had to bring in the big labels to be able provide a service that appeals to the public.
    If Spotify is a viable model for an artist like Ugress it can be viable for any indie artist. It just takes time and making good music.
    You don’t want your music to be on Spotify? Fine with me, it’s your call. Personally I think it is stupid not to have your music on a service that is used by millions of music lovers.

  19. “they are doing different deals with different companies all under NDA’s”
    and this is different to how Walmart, iTunes, HMV operate how?

  20. Someone else cottoned on to just what Davey is…Davey doesn’t like that kind of thing…He’ll have you blocked so you can’t make any-more criticising comments!

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