I was ten years old when I pirated my first track..
During one of the Pokemon commercial breaks, my best friend at the time showed me this cool new program that allows you to download whatever you want. He asked me what I wanted to hear. I can't remember what I said, but I'm sure I'd be embarrassed now. He entered his name in the search bar, clicked download and ten minutes later we heard it..
This was my introduction to Napster. After Napster came LimeWire. Then it was Warez-BB and finally torrents. I never made it to Usenet.
I was twenty-two when I was introduced to Spotify . In the previous twenty-two years he had spent almost nothing on music. In the two I've followed, I've spent at least $200. Excluding concert tickets, that's double what I spent in my entire pre-Spotify life.
For those who don't know, Spotify offers two tiers. You can sign up for Spotify's free plan Music Streaming With Spotify:What You Get For Free Music Streaming With Spotify:What You Get For Free The long-awaited music streaming service, Spotify has arrived in the US however Unlike other streaming services, Spotify offers an ad-supported free option, making millions of albums and songs available to you through... Read More I started with the free plan, but with the lure of having Spotify on my iPhone. Spotify:the best way to listen to music on your iPhone. Spotify:the best way to listen to music on your iPhone. In the list, we will take a closer look at what you can get by using Spotify on your iPhone. You can select between the free or... Read More Within a few months I signed up for the premium package.
Now let's see what the fuss is about...
Taylor Swift has pulled her music from Spotify, inspired countless headlines, and reignited the debate over streaming music services. Her latest album is “1989” It was released in October. As with any breakup, there are some nasty words thrown around.
In an interview with Yahoo Swift explained her problem with Spotify:
Swift is one of the most successful musicians in history. She is the only artist who has had three million selling weeks. Her singles consistently reach number one. She has worked hard and deserves all the success. She is wrong about Spotify.
I think in Swift's case getting her music off of Spotify may have been a good move, but she's an exception; for 99.999+% of artists, what she did would never work. So let's see why Swift is wrong about Spotify.
Right out of the gate, Swift dismisses Spotify as a "great experiment." That's a low blow..
Earlier this year, Spotify announced that they had reached 40 million users in 56 countries around the world. Now it's up to 50 million.
Spotify has been growing steadily since its launch in 2008. From 2013 to 2014, the number of paying subscribers nearly doubled. In Europe, artists get an average of 13% more from Spotify payments than from iTunes royalties. That's right, Spotify is bigger than iTunes in Europe..
These are not user numbers from a mere experiment. Spotify shows all the signs of being the future of the music industry..
The second issue is more thorny. Swift feels that Spotify does not "fairly compensate writers, producers, artists and creators." One problem here is that Spotify doesn't directly compensate anyone other than the owners and publishers of the music; Not the writers or artists, but, in most cases, the record company. Spotify might be compensating the record company, but if the artist royalty rate is too low, they won't think about it.
Fair compensation is a concept that has been studied for as long as economists. An intangible product like a song, especially when delivered digitally, has no inherent value. At least you can see a CD as a frisbee. The only value it has is what we put on it. And unfortunately for Swift and many other artists, the value that some people (including me in the past) place on music is zero. Twenty years ago this was not a problem, but today there are legal and illegal ways to listen to music for free.
Spotify responded to Swift's comments with a blog post from Daniel Ek, the CEO. "Taylor Swift is absolutely right:music is art, art has real value, and artists deserve to be paid for it." write Ek; he continues, “Piracy doesn't pay artists a dime [while] Spotify has paid over two billion dollars.”
Two billion dollars? That's a lot of money, but is it a good amount of money? To fix that, we need to look at how that $2 billion breaks down.
Spotify pays rights holders (read as "record companies") between $0.006 and $0.0084 per stream. That's between a little over half a penny and a little under a penny per listen; The exact rate depends on a number of factors. The money comes from the ads. Free subscribers are subject to premium member subscriptions. On iTunes, Swift's latest album sells for $12.99 with each of the 13 songs selling for $1.29. Depending on how you split the numbers, each song needs between 85 and 150 listeners on Spotify to achieve the same revenue.
While 150 listens may seem like a lot, it really isn't. Getting personal game data from Spotify is hard, but Walt Hickey managed to do it for FiveThirtyEight. In his eighteen months in the service, he heard her most played song. - I don't know how For Best Coast, I will not judge - 138 times. Even at the lowest royalty rate of $0.006 per listen, that's $0.82 paid to Best Coast's label. If he had bought the song on iTunes, the label would have $0.90 ($1.29 minus 30% from Apple). The rest of their top ten also have high play counts.
Now you'd be right to argue that these are just Hickey's favorite songs. He has listened to 1735 different songs, many of them will have only one or two works. These songs, however, are not the ones Hickey would have bought. They are the songs that he would have heard on the radio, seen on YouTube or not even bothered. Hickey listening to them is not a lost sale. However, allowing him to listen to them has the potential to make him a fan. Have you heard of Vokab Kompany? I hadn't until I stumbled across them on Spotify. I've listened to them hundreds of times since then..
Even the songs Hickey heard thirty or forty times, the ones he could have bought, still make money for the record label. Even though they would have stood to earn more at first if he had bought them in advance, they might end up earning more from Spotify in the long run. I still go back to the same songs I listened to when I was growing up.
As I write this I am listening to Blink-182. I've listened to all the songs they've done. I've listened to my favorites thousands of times over the years. Since 2012 I listen to them exclusively on Spotify, it is where I have created my music collection Spotify Your Music Collection:The end of iTunes. Spotify Your Music Collection:The End Of iTunes. Spotify is no longer content to compete with radio. , are now competing with the idea of even having music. Read more . I'm not going to stop listening to Blink-182 anytime soon. In the next two, five, 10 years, as long as Spotify is still going, I'll keep revisiting my teenage years and Blink will keep getting money from me. The same goes for songs that I only listen to a couple of times a year. The label would like to be paid cash up front, but twenty years from now, they will have earned four times what they would have today.
So back to Taylor Swift. With the legion of fans of hers, she can surely make a fortune from all the streams of hers. Spotify considers that she would have earned more than $6 million this year and double that of next year..
Why would it make sense for her to get her music from her Spotify from her??
There's a reason I can think of and it's a good one. Swift is a very popular artist and one of the few people who continues to sell CDs in mass quantities. She wanted to break records with her latest album. To do that she needs upfront sales. She would rather someone buy a CD now than pay her twice as much over the next year. Spotify doesn't make your album platinum. If even 1% of the people who planned to listen to her new album on Spotify bought it, she wouldn't lose any income any time soon and would have a huge boost in sales..
Taylor Swift is a massive exception. Most of the artists are not selling many records. Some of the most successful artists in the UK have a day job. Swift is totally wrong to write off Spotify just because it doesn't fit her current market strategy. Half a penny per game isn't much, but over time it becomes a significant source of income. Smaller bands with dedicated fans can do a lot more with Spotify over time than initial album sales, especially if they own the rights to their music.
The question shouldn't be whether Spotify offers fair compensation to artists, it's whether the music industry does. In the short term, Spotify does not provide the same value as a single album sale, but in the long term it offers much more. It seems fair to me.
Finally, Swift seems to have a misconception that Spotify is completely free. That's news to me since I pay $10 a month for it.
Spotify offers a free tier but it's limited; There are ads that generate revenue that go to the rights holders. It scratches the surface and is a giant trap for those who pirate music or listen to it on services that pay artists nothing. Once you're in the door, Spotify starts paying royalties for everything you listen to. The fifth time you hear the same ad, you want to hit your computer. The tenth time, you want to hit someone. The fiftieth time, you want to pay Spotify ten bucks to stop it. I know, I've been through it..
Of Spotify's 50 million users, 12.5 million pay. 80% of them started at the free tier. Spotify is not free. It's great to pretend it is and tempt people like me who actually listen to free music to try it out. Once they have you, the artists start making money and the bonus starts to look like a better and better deal. Swift shouldn't be upset. Spotify is free, I should be thrilled that some service is finally making people who listen to music pay for free. Spotify is killing music piracy..
I am optimistic that Taylor Swift and Spotify will reconcile. Once the dust of a record-setting album drop settles, Spotify's long-term economics will once again make sense for Swift. While in her specific case it made sense for her to get her music out of it, the comments she made of her on Spotify were wrong..
Spotify is the future of music and dismissing it as an "experiment" that doesn't "fairly compensate" artists is short-sighted and completely misses the point. The value of a single sale on iTunes today might generate more immediate cash, but the long-term value of a Spotify subscriber is far greater. I have never spent as much on music as on Spotify..
What do you think? Is Taylor Swift right and am I wrong? Or do you remember that Spotify is the future?.