Scott Perry Talks To Spotify: The Case FOR Day & Date Music Streaming

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Earlier this week a guest post "On Withholding Music From Spotify & The New Economics Of Album Releases" by Scott Perry of New Music Tipsheet and Sperry Media set off a heated discussion among Hypebot readers.  It also led to a call with Spotify that left Perry questioning his previous assumptions.

"I had an amazing conversation with the folks from Spotify this morning, really helped me see all this from another angle. So I'm gonna play devil's advocate – against myself!

I've been focused on my peer group, a set of hard-core music fans who are ultra-wired. And yes, their purchasing has focused more on the must-have releases, while their streaming consumption has increased.

BUT you have to realize that less than 1% of Americans use streaming services, so it is hard to tell what kind of impact streaming has truly had on purchasing habits for the country at large.

AND on top of this, streaming services are winning over age groups that have never spent a PENNY on music — you project the growth among the 20something music consumer by offering an easier, cleaner alternative to file sharing, and you can see the potential size of the market.

From what I was shown, keeping music off streaming services mainly leads to an increase in consumption via YouTube (which pays out less), P2P networks, and less savory streaming services.

And can you really measure what impact streaming has had on any of last year's #1 sellers, or any release for that matter? Did Spotify's 2011 chart topper, Foster the People, really suffer less sales because of more streams? Or were they able to get a larger fan base because of their ubiquity?

Conversations like this are happening at management and labels every day. How we move forward will be a delicate balance, since consumers are moving towards streaming models whether we like it or not.

The biggest challenge any of us have is to unilaterally foster the growth of this emerging revenue model, so that it grows from add-on revenue to being bigger than the revenue streams it will inevitably replace."- Scott Perry

Read the original post and get involved in the discussion here.

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  1. This conversation is about much larger and more interesting issues than money but as a data point, I thought it would be helpful to post an unsigned artist’s Spotify revenue for one month.
    FYI the only constant in the music biz is change, so this is my strategy today: half my back catalog is available on Spotify and for those who want to stream my newest stuff, they can from my own site.

  2. So do some people think Coldplay would’ve sold even more albums if they had debuted on Spotify as well?

  3. Thanks Zoe for sharing this info. I’m still puzzled by the variety in the unit price. Have you asked CDbaby for an explanation maybe?
    The strange thing is that my aggregator Zimbalam pays me a fixed (monthly) amount($0,0063) for every Spotify stream.

  4. Excuse me Zoe, but do you mind if I ask you if you’ve seen any increase in other avenues of your music? Have you booked more shows, sold more merchandise, etc that could be linked to the increased exposure from being on Spotify? Thanks for your time.
    Free album download at

  5. In reply to Chancius. I’m not seeing a big pattern in any direction. Looks like my iTunes sales for October were roughly the same as preceeding months but November was less. Amazon sales went up, but it was Christmas season. Bandcamp went down in October, and back up in November.
    I’m recording right now and not in a “new” cycle so things don’t spike that much. My agent is booking the same number of shows, although I’m deliberately sitting out a few months because I’m recording…and because I have a 1 year old!
    In other words, I don’t think I’m seeing any affect from Spotify, but 5571 streams in a month probably isn’t enough to warrant anything major.

  6. I’m gonna repost my comment from earlier here…
    Great Points Scott,
    I had a similar experience (though I had to dig through tons of online data) to come to a similar conclusion (both as a consumer and an artist).
    What I think Spotify is failing to realize, is that the way they work is so glaringly, deliberately different from the old model. Without a literal spoon feeding infograph cartoon (the kind you see on an airplane prior to takeoff) to explain to both consumer and artist how they actually work, we’re going to see ignorance, and backlash. Honestly, we’ll probably see that backlash either way at the moment the way things are in their current state of royalty structure.
    I’ll make a bold statement. 90% of people do not know how the service actually functions, pays out, and how it will grow. It’s not simple, and they’re not making it any easier to understand right now. But it makes sense once you understand it, and is actually exciting when one sees the potential if it did take off.
    In the end, it could take a decade to get up to scale, maybe less, maybe more. In the meantime there’s no metric to measure if it is cannibalizing sales (just a lot of peoples common sense and speculation), and even if there was it would still be a subjective, case to case basis just like how other sales work from artist to artist. However, if Spotify got more artists to champion the service, they would be it’s greatest asset. Right now it’s mexican standoff, and understandably so. People feel entitled on both sides. That’s a tough place to be, but I believe that transparent information can help smooth that over.
    Sidenote, I don’t think Foster the People is a great example as they had a major label push. The Spotify spins they had there were driven by massive pr and marketing, and were obviously in conjunction with an equally impressive physical and digital sales number. Show a relatively unknown artist that used the service, and gained some traction and visibility and that would serve the purpose of proving that point better.

  7. Thanks Zoe for posting your numbers . . . .
    I did some calculations and here’s what I came up with.
    Currently, Spotify is available in 12 countries. The population of internet users in those countries is 590 million. Spotify has 12.5 million of those users. From those 12.5 million users + Rhapsody/Napster streams, you made $32 in a month. If we scaled the membership of Spotify/Rhapsody up to just half of the 590 million, 295 mil, you would receive $755.00.
    If you further heavily marketed yourself on streaming services, I wonder what the potential would be for monthly income? What if you had 5x the listeners scaled? That would be $3,776 a month.
    Seth Godin said something to the effect of, “the online model is about spreading, the offline model is about scarcity”
    My educated guess would be the more your presence spreads online, the more you’re worth offline, i.e. vinyl/deluxe cd’s, merchandise, concert tickets, appearances, master classes, licensing, endorsements, sponsorships . . . which still results somehow in more sales. As it stands, the most pirated music/movies is the most sold.
    Back to Seth Godin . . . the online model is about spreading, which is what will ultimately happen with streaming services, as they are viral themselves. Spotify’s success is being built off it. And Cee-lo is slated to make 20 million in 2012 where very little of it will be from album sales. All signs are pointing to a new road.

  8. @ Gaetano. I’m with you on this again 😉
    Good to see a gradual shift in position towards streaming services among artists. It takes a little or maybe a lot getting used to. One example: a lot of artists put their music on Spotify but on their homepage they don’t add links to the songs on Spotify? Why, are the afraid it may hurt sales or do they just don’t know you can do this?

  9. Hey Hans,
    The shift is not an easy one for anybody, and for me it was actually getting all the info to understand how the services could potentially be more sustainable and profitable in the end. But it’s still a big maybe. I have confidence in it, but we still don’t know.
    It took a decade for Netflix to get their service to 26 million subscribers, and every major retail dvd rental company went bankrupt in that time. We might see something like that, though we might not.
    I understand the plight of the little guy here. When you’re only selling hundreds of physical or digital in the first place and you see even a tiny bit of that go away, it hurts. There’s still more tangible return in a physical or digital sale. The end. Even if we got to 20 million paid users streaming there would be a more immediate palpable return that an artist can easily comprehend and factor into their lives.
    There’s line of thought that I understand but again, sales shift for many reasons, and there’s a lot of things we can point fingers at, Spotify is just the easiest and most logical all things considered.
    I’m very lucky that I can survive as an artist, whether it be working as a sideman or music supervisor or teacher to keep my head above water (barely) and keep the lights on, not everyone has that luxury. That said, as someone who can’t afford a lot of music, and obviously has a moral conflict of interest blatantly pirating works, Spotify is a way to experience artists that I just wouldn’t be privy to.

  10. Hey Deke,
    I always loved Spotify as a consumer. My main beefs have always been as an artist, their lack of transparency and how consumers demonize artists for not streaming.
    I still stand by the latter beliefs. What I did find out in recent days (via Jeff Price) is how the system actually works. As an artist I was able to take all the data and extrapolate that Streaming at potential scale is a more sustainable, consistent system for artist revenue. This could take years, or even a decade.
    It’s a dynamic thing, and it’s very different from what we’ve seen.
    The problem still lies that until that ever happens the potential for streams to cannibalize sales is there. I get that, it sucks, and it’s real. I stand by every artist who speaks out against it. But I also suggest they look to truly understand how streaming does, and could work.
    At the end of the day for now, this is here to stay, it will not go the way of the 8 track or minidisc, and though 1% of the population uses it, that 1% deems it superior to purchasing music conventionally.
    There are some potential horror show scenarios that could happen, but in light of the info I’ve acquired, it behooves me to hope for the best rather than expect or hope for the worst.

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