Spotify and other streaming services were the talk of the Midem conference which just wrapped up in Cannes. During the gathering, U2 manager Paul McGuiness labeled Spotify as nothing more than a “promotional medium”, while Sony’s Denis Kooker claimed that streaming services “do not cannibalize sales”. 2011 saw Spotify's reach widen and it subscriber base increase considerably, but how does this affect independent artists?
THE REAL STATS
Tunecore’s new simplified dashboard makes comparing your different revenue streams an easy and revealing task. So I would like to share stats from a couple of releases for different bands for the year 2011. These are separate albums from separate acts. I have used releases that have been out for a couple of years so that they do not have new release peaks in them, as a result the streams were pretty consistent through the year.
- ALBUM #1 - For Jan 2011 to Dec 2011
6764 Spotify Streams: $34.48 ($0.005 per stream)
- ALBUM #2 - For Jan 2011 to Dec 2011
4833 Spotify Streams: $25.34 ($0.005 per stream)
Here are the difference in royalty rates from the first 6 months of 2011 and the second half.
- Spotify Royalty for first half of 2011 $0.0046
- Spotify Royalty for second half of 2011 $0.0056
If I compare the royalty from the first month of plays to the last month it looks like this:
- Jan 2011 - $0.0036'
- Dec 2011 - $0.0043
WHAT DOES THIS TELL US?
Well firstly, for all of Spotify's growth in paid subscribers in 2011 and introduction into the USA, the revenue paid out to indie artist grew only $0.001. In the meantime the majors have been happily skimming a nice fat royalty check off the top, as a result they of course tell the world it is the way forward.
The big question is, when did the major labels ever lead the charge when it came to brilliant new ideas. The majors are not led by visionaries anymore, they are not led by Zuckerberg or Jobs, they are led by people who have been very rich for far too long, and barely know how to use twitter, let alone integrate a whole new way of listening to music effectively.
They went for one thing, and one thing only, and that was money. Here was a quick fix to bring in quick cash and make them look like heroes again. Spotify needed them onboard for the content, and with every band under the sun ready to stream their music free on Myspace, they knew they would undoubtedly have a influx of indie acts eager to be on the service.
With around one million new subscribers leading to such a slight increase in payout rates, the assumption that it could have a devastating affect on indie artists becomes more realistic.
Rumors are that Spotify is looking for another big influx of cash, so one has to wonder where all that subscriber money is going. But from the evidence on hand, we can pretty much be certain it is not going to find its way to the Indie artists using the site.
I have said it before and I will reiterate this point - use Spotify as you do all other free streaming services like Reverb Nation, Myspace, Root Music and Soundcloud. Put two or three of your songs up and try and entice people to your own website to discover more.
It seems for once Paul McGuiness is right; at this stage Spotify is really just a promotional tool.