D.I.Y.

Artists Confront Spotify At Soho House Meeting

Spotify-iconBy Chris Castle from Music Technology Policy.

Spotify is conducting a artist relations charm offensive in New York, Nashville and Los Angeles. (This is a time to be thankful I live in a flyover state–they won’t be coming to Austin!)

The idea was there would be a meeting at the toney Soho House in New York, a membership only location that costs more to join than most artists make in a year or two. Of course, Spotify no doubt has a corporate membership for impressing…business people. Right. Business people.

What Spotify wasn’t expecting was a bunch of feisty artists who were not on the payroll who came expecting actual answers and not shillery.

Here are three of the many issues that Spotify were confronted with:

1. “The Per-Stream Royalty Will Never Increase“: There was a big dustup over royalty rates that boils down to why should artists take it in the shorts while Spotify executives get rich. The answer? If you just give it some time you’ll make more money. Not because the royalty rate will go up–no, no.

Spotify’s Mark Williamson told the small invited group that the way that artists will make more money from Spotify is to grow their audience. You know, make it up on volume. Why? Because Wiliamson confirmed what we all believe: the per stream royalty will never change.

Never.

2. Daniel Ek Just Helped Create Bit Torrent: It is not widely known, but Spotify’s CEO Daniel Ek was an early employee of Bit Torrent and helped to make Bit Torrent and its uTorrent software a raging success. Spotify’s representatives seemed prepared for this question and pointed out that uTorrent and Bit Torrent are not pirate sites they are data transfer platforms that happen to be used for piracy. A lot. Mr. Ek evidently left Bit Torrent’s employ early on to found Spotify, a legal service.

So why would they say that Ek left Bit Torrent to found a legal service if…Bit Torrent…was…legal….hmmm.

This is kind of like Alfred Nobel inventing dynamite and then funding the Nobel Peace Prize…Just wait, people will eventually be so taken with the pursuit of the Peace Prize, they stop using the dynamite we sell them.

3. Our Product is Spotify not Music: The Spotify representatives seemed to be unclear about what the are selling. They seemed to be thinking that they were selling Spotify. This is kind of like Interscope thinking they were selling Interscope and not the music of artists signed to Interscope.

4. Why Doesn’t Spotify Go After Brand Sponsored Piracy and Google’s Profit from Piracy? Oh, right. Google’s on their board. Sorry, sorry.

The general takeaway is that Spotify has handed out money and/or stock to a bunch of artists and their managers who are now being tasked with selling the company to quiet down the artist community. Probably because the company needs to quiet down investors.

What was plain was that Spotify was not prepared for the withering fire from the audience of actual artists who actually make a living from music. The best counter Spotify can come up with is that artists should just wait wait wait and in the long run streaming will save the music industry. You know…wait for Spotify’s next round if financing, wait for the initial public offering and follow on offering (like Pandora), and then wait for Daniel Ek to finish cashing out (like Tim Westergren)…then, then streaming will have saved the artists, songwriters and producers. And the Hale Bopp Comet will return.

Big trouble in Little China baby.

 

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12 Comments

  1. I won’t pull any punches about Spotify being a bad deal for artists, but BitTorrent is legal and not anymore responsible for piracy than the internet itself is. They are both platforms that enable the transfer of content, and both are used to pirate that content. You could use BitTorrent to make Netflix a faster service, or any other number of uses. The fact that some people use something for illegal gains doesn’t make that thing inherently bad, lest we have to throw away all of our kitchen knives and crowbars.

  2. To your first point. Spotify is going to need a lot of money to secure the rights to play the music they are gonna need to make it and I’m not referring to copyright payments. Spotify is following in the foot steps of Napster and hoping to pull off. It is starting to dawn on the artists that supporting Spotify, unless they’re an arena act and don’t care about music sales, is a dead-end.
    To your second point. Bit Torrent is a digital delivery service that almost exclusively provides pirate sites with bandwidth. In their case they are delivering unmarked knives and crowbars. The handles wrapped with tape to prevent fingerprints from being left behind.
    I don’t think it’s simply guilt by association, I think when you have a service that is almost exclusively used for illegal traffic, you have a problem. Kind of like being married to a guy in the mob, who one day will ask you to hide the murder weapon.
    I do find it interesting that Spotify used to operate on a bit torrent network and have recently started migrating away from bit torrent. If Bit Torrent can’t get Spotify to stay with them, that doesn’t bode well for their desire to go mainstream.
    There just may be too many bodies buried everywhere to ever gain respectability or trust.

  3. As one of the members of the audience for this event, i believe that this was ultimately an extremely healthy interaction between local artists and Spotify. Every discussion has its arguments, especially the passionate ones. with that said, i believe that without the arguments that were presented that night, it wouldn’t have been nearly as impactful on me as one of the local musicians. Both sides presented valid and interesting opinions and facts. Some of which helped me understand the business so much better, as well see the raw passion behind local artist and their work. Something that seems to have faded in a lot of other places in this world. Overall, i truly believe that the Featured Artist Coalition, Spotify and all of the artist who attended this event should really be thanked for coming together and discussing the important issues, providing a Q&A and enabling people to just network. I forgot how great it felt to have some actual face time with other musicians, and not just comment on their status or like their page while sitting behind a computer screen.

  4. I think many people are really losing the plot on the Spotify situation. Many of us believe that streaming is the way of the future, and will become an increasingly valuable way for Musicians to get paid in the near future. Ultimately, it has been and will remain the Artists responsibility to navigate and develop their own careers, not the Record Label, or the Distribution services. Regarding the Illegal downloading industry….why is it that certain countries like Germany have been able to stop illegal downloading and file sharing….and the USA can’t ?…….The real answer is Congress and the corruption of Lobbyists. Blaming Spotify and iTunes is a huge Red Herring, and demonstrates an almost non believable mindset….sadly, by some of our most creative and talented Artists…who do deserve to be compensated for their work. We have the technical ability, but not the Political will to stop illegal downloading and file sharing….that is the only way Artists will get paid what they deserve

  5. Spotify, a representative of the streaming retailer community, is trying to explain the business model to artists.
    It should be labels explaining to their artists as to where the money has gone via the deals they have made with retailers.
    Until all stakeholders understand the supply chain and who signs with who, who pays who etc there is little chance of getting a meaningful understanding of the situation.

  6. It used to be that the medium that music was presented on was a product like any other product. I’m thinking LP’s. It’s vitally important to realize that it was the medium that was the product and not the music itself per se. All LP’s cost pretty much the same, regardless of the music that was printed on them. Artists and record companies made money on the volume of sales. This is different from say the automobile industry, where different models of cars sell for different prices. When the music industry saw that they could re-release their entire catalog and make money all over again they jumped on cd’s without realizing the implications of digital data. Cd’s were, and still are, a physical product (that costs money to make), and so it is still the medium that is being sold, not the music. However, with the advent of ‘streaming’, we are now in a world of pure data. 0’s and 1’s. No more physical product. So why is money changing hands? What is the value of a piece of music, and is all music equal? As a musician I have invested thousands of dollars into my equipment and thousands of hours into maintaining and perfecting my playing technique. You might call it R & D (research and development). In the business world research and development can cost millions of dollars and is factored into the final cost of the product. I, and probably many other musicians feel the same is true of our product which just happens to be music. The average listener is oblivious to just how much time and money can go into making a piece of music. And I’m not talking about some kid in their bedroom with a laptop and Garage Band (that’s a whole other can of worms). What we have here is a complete shift in paradigm. I’m old enough to remember the excitement I felt when I bought Pink Floyd’s ‘Dark Side of the Moon’ LP. The unwrapping of the shrink wrap, the liner notes, the smell of fresh vinyl, the slight ‘pop’ as I put the needle on the record etc etc. It was an experience around a physical product, kind of like driving a new car. That’s gone. Now, it’s just data. And data is data is data is data. The 0’s and 1’s of music are the same 0’s and 1’s of a picture or a video or a Hyper Bot article. Is there a monetary value in data? I would say that now it is the physical player that has the value. So I have to say that I need to look at this music ‘business’ in a new way. The ‘business men’ haven’t changed, nor will they ever. They, just like the early record companies, want to make money. Lots of it. And whereas before they had a physical product to sell, now they are selling ‘rights’, and in a way I can understand why they would pay .001 of a cent to an artist because in their ‘techy’ minds it’s just data. What they are selling to the listener is the ‘right’ to listen to music. So where is the product? What is the product? What is a musician selling? In a world swamped by Garage Band where is the quality control? How is a musician to be compensated so that they don’t have to take a second job working at Lowes? Can you even sell sound?

  7. Steve Brooks: your post is one the best commentaries I’ve read on this thorny topic. To further complicate: what differentiates the value of a classic painting hanging in the Louvre from a similar object hanging in the lobby of a Best Western Inn? They’re both pieces of canvas. The notion of quality has never been factored into sonic value since, as you correctly point out, it has never been (can never be?) divorced from the media platform through which it is delivered. Unless we come up with another form of patronage, art music is dying and will be dead soon. Future generations will look back at times in human history where commodity sonic backgrounds were once deemed worth of artistic attention. Right now, the bottom line is that even the indie artists who manage to scrape together some sort of meager subsistence-level living are spending valuable time on the business side. Time that they absolutely need to spend on creating their art. There will be no more Joni Mitchells or Miles Davises. Society simply doesn’t value that level of musical contribution.

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