Spotify Saved the Music Industry – Now What? | Hacker News Reader

Spotify Saved the Music Industry – Now What?

fortune.com

81 pointsprostoalex94 comments

Music market is almost perfectly competitive market. Extremely low margins should be the norm.

The supply is endless. Talent pool is huge. Millions of amateurs are making music even if nobody is paying for them and are delighted if someone wants to listen them. People are willing to take huge pay cut to earn living doing music and perform in lousy bars.

I think the best model is patronage. Music online is almost completely free and works as marketing to get people to listen. If people like the music and want to hear some more, they will pay in advance for musician to produce it and perform it.

Superstars are somewhat separate category. It's a showbiz and fashion industry where people like what others like to connect. The product sold is famous persona with music.

You have forgotten that most people like to listen to music they have heard before. That leads to music that is popular becoming more popular (since it is played in public places), and that music can then be sold for a high price because it is part of a small set of popular songs.

That totally stops working when people start YouTube autoplay or similar ML-based picker. It makes discovery of niche artists practically zero-friction.

Except the ML based picker soon learns that people like to hear music they've heard before too, so recommends popular tracks disproportionately often, amplifying the effect.

I used Spotify to find a bunch of great new artists with one of their "Made for You" daily playlsits. Now, either the shopping center near me has great taste, or they got the same "Made for Them" playlist I got. Because they are playing some great music, which has never been the case before. Normally malls, stores and other public venues have the same Top 40 playlist fed to them by a corporate subscription as everywhere else.

This makes me wonder if Spotify isn't a tastemaker, just like radio and television were. Not playing the hits, but defining what becomes a hit.

It also learns if you like rare music and somehow finds networks of people/videos that you resonate with. Every day I discover something interesting that I wouldn't have thought to click on (artwork + name), by just letting YouTube autoplay. Classic Zambian rock, Nigerian disco, rare 80s Italian or Japanese electronic music, some brand new French dub guy.

Invariably there are a bunch of other people commenting about how "the algorithm" surprised them again. There isn't a single algorithm.

Spotify’s decision to automatically go into “radio mode” after you reach the end of your album / playlist is the single greatest improvement to my life as a music consumer. It has exposed me to more new music in the past year than in the previous decade.

IMO it's more of a laziness and curation problem... I love discovering new music (most of my playlists are my own "finds") but it's incredibly time consuming, signal to noise ratio is extremely low.

Reading this, I found myself nodding along after I replaced:

- musician to developer

- online music to open source project

- performance to consulting/training/conferences

It’s funny thinking about all the similarities between the two.

Software business is service business pretending to be manufacturing business.

The main difference is that you can't easily substitute one piece of code for another leading to little reuse and huge demand for custom solutions. Songs on the other hand mostly substitute fine within genres, we could stop producing music entirely and people would still have more than enough music to keep them happy.

disagree. part of what makes art valuable is its commentary on the human experience. which is changing every day.

what a dismal dark musical world this invokes. I suppose this works for people who don't actually listen to music in any sort of appreciably observant fashion.

I get that some people basically just vibe along with music and don't hear the harmonic movement, the intervals, the tones of the instruments.

This point of view gives zero credence the possibility of any actually original music.

>the harmonic movement, the intervals, the tones of the instruments

Are you a boomer? These days nobody respectable listens to music where those things are present and IMO that's a good thing.

What music are you listening to that doesn’t have harmonic movement or intervals?

But there's a shortage of developers, and there's a big difference between building what FAANG wants you to build and what you want to build.

A better analogy is up-and-coming musicians and startups. You struggle in a garage until you're discovered, then you sign away most of your rights for bad working conditions and a three-year run.

15 years ago, a niche artist could earn tens of thousands a year by selling CDs and especially digital albums.

Not enough to make a living, but definitely an encouraging amount that enabled touring and buying more music gear.

Now in the Spotify days that same artist would earn essentially nothing.

This "saving" of the music industry is just a temporary patch that works by redistributing niche money to the mainstream.

It should be quite evident (or at least intuitive) that 90% of Spotify subscribers are niche (deep into rock, electronic, hip hop etc) and couldn't care less about saving the old industry.

Soon this will become unsustainable (even more than today).

Source https://www.residentadvisor.net/features/3511

Was going to say much the same here. I release trance music with a friend of mine (nothing serious, just a couple of friends who spend an evening a week working on music together), and have done for years. Pre-spotify, we used to make some money from sales of tracks - not a lot, but enough to have a few nights out here and there. Now we make literally nothing, due to the way that royalties are paid - we see tiny (£0.0001-scale) royalty payments for the hundreds of listens that the tracks get, where we used to sell a few tracks a week.

Most spotify listeners assume that their monthly payment goes to the artists they listen to, but that couldn't be further from the truth.

For a long time the industry relied on an external cultural of independent producers and distributors - all genres, not necessarily "indie" music - to keep the system running.

The indies generated, promoted, and distributed the next generation of music. The majors would then either sign the bigger artists or buy out the bigger indie labels. Both would get rolled into the big machine and the cycle would start again.

Spotify has killed that. Never mind earning money - indie artists can't get significant exposure. Not from unit sales, not from touring, not from streaming, not from anything.

Sooner or later someone is going to realise that an indie-Spotify has to be a thing, because there's always going to be a significant market for people who want to discover non-mainstream music and music is going to stagnate and choke on its own products if the main distribution system is a monopoly.

I don’t understand this take. Can’t indie artists get their music ok Spotify? How is the situation worse for them?

Big labels negotiated good deals for their own artists so royalties from streaming benefit them, not the indie artists.

Although, music industry is even worse. A pyramid scheme where old, still living artists negotiated big deals and the label gives peanuts to new.

> Most spotify listeners assume that their monthly payment goes to the artists they listen to, but that couldn't be further from the truth

Yeah I assumed the pay a flat rate per listen to the artist.

> Spotify pays about $0.006 to $0.0084 per stream to the holder of music rights.

Which is pretty flat, and you should have got at least a dollar surely. Is this not the case?

> For example, Spotify says that its average payout for a stream to labels and publishers is between $0.006 and $0.0084 but Information Is Beautiful suggests that the average payment to an artist from the label portion of that is $0.001128 – this being what a signed artist receives after the label's share

https://www.theguardian.com/technology/2015/apr/03/how-much-...

This seems to clear it up

> We aggregate all of this revenue from these two streams, and distribute back 70% in royalties based on a pro rata share in accordance with the popularity of a piece of music. For example, if one of your songs has been streamed 1% of the total number of streams in a month, you will get 1% of the 70% of royalties we pay out to rights holders.

http://www.musicthinktank.com/mtt-open/how-does-spotify-pay-...

If the latter is true, let’s assume everyone pays $15 a month for Spotify and there’s 1 million subscribers each listening to 1000 songs a month

900k listen to Ed Sheeran exclusively 1000 times

100k listen 1 times to each of 100 indie bands.

Total revenue $15m Total royalties $10m

Ed Sheehan gets 900m listens

Each indie band gets 100k listens - total 10m listens

Ed Sheehan gets $9.9m Each indie band gets $1k

You’d think that the $15 the Indy subscriber would pay would go equally to the 100 bands - giving 15k per band, and 9.4m for Ed, but it apparently doesn’t work that way.

Those who binge listen are subsidised by those who listen rarely.

That’s my understanding anyway, but it seems to be based on a line from an “artist in residence”

It's obvious when you think about it. Artists get paid per stream but users only pay per month. When someone listens to more streams than they have paid for, the money has to be taken from someone who has listened to less streams than they paid for.

I guess the confusion comes when 10 fans only listen to Band X, but band X gets less that $100 a month.

I listen to say 1,000 songs a month on Spotify, at $10 a month royalties that’s 1c per song. If I listen to song K 10 times I would think they’d get 10c from me, but they don’t neccersarilly - it might be 1c, it might be $1.

There’s a sad effect - if I listen to 2 hours of Band A and 3 hours of Band B, but Band A has an average track length of 2m and Band B has a length of 4m, Band A would get more than Band B!

A fair algorithm would look like this. A user pays $10 per month. They listen to music for 1hr per day. That is 1,800 seconds. The bands they listened to should be paid 0.55c per second.

You need a per user second rate (Calculated monthly), applied to the streams they actually listened to on a per second basis. Yes, it is a large calculation, but simple compared to most ML problems.

3600 seconds a day, or 108,000 seconds a month, but the point stands.

That would be 1 cent per 108 seconds, so listen to an 8m35 version of American Pie and Don McLean gets 4.75c. Listen to Heartbreak Hotel, 2m08, and Elvis gets 1.18c. Listen to a 1 hour podcast of "The Infinite Monkey Cage", and the BBC get 33.3 cents

If you listen 24/7, or 2,592,000 seconds a month, then your $10 means that Elvis gets a mere 0.05c

Oh yeah, hehe - that should have been obvious to me. 108000 seconds a month.

You calculation are bang on. Elvis getting a mere 0.05c seems fair in the case of this super user when the user needs a flat rate to consume and all the content providers need to be fairly compensated. If this doesn't seem fair then your issue is with the flat pricing per user per month. Which, without this, I'd bet the pie is much smaller.

> It should be quite evident (or at least intuitive) that 90% of Spotify subscribers are niche (deep into rock, electronic, hip hop etc)

Not at all evident or intuitive

People who care enough about music to pay a monthly fee, surely are also invested enough to develop their own tastes?

IOW, who pays for listening to "radio" (Top 40) music?

There's an audience for Top 40 music, but they will typically belong to the ad-supported tier of Spotify, not the paying tier.

I exist as a counterpoint. I pay for Spotify because I have terrible taste in music, zero idea how to cultivate it, but want to listen to music when I do things.

I pretty much just search a vibe and let some rando’s playlist take it away.

Same here, I'm not deep into music, but I have it playing in the background all the time. And I hate ads.

So I have gone from buying 1 or less music CD per year to happily paying a monthly subscription for over 10 years.

And mostly for playing songs from the 90s and current charts. Without adds and offline on my mobile. It is the hassle-freeness I pay for.

Though the previously good suggestions and Discover Weekly has turned rubbish since my kids started to use my account on my ipad. Hurry up 2027 when my youngest turn 13 and they can all legally have their own Spotify acounts...

you may not have sophisticated taste, but i suspect the top 40 fare played on FM radio stations wouldn't cut it for you.this is what op meant

It seemed like they used "top40" as a denigrating shorthand for anything that's not "interested in specific niches", given that was the context they replied to.

Yeah, I can't see where the GP got this from. Spotify is perfectly mainstream around these parts at least.

> And even more perniciously, I think, are the playlists curated by utility. Like "showering music." I mean, that's offensive. It's an offensive concept. And so that's one level of it. I push back against that notion, just because I think that it's offensive and barbarian.

Yeah, fuck Spotify for catering to different ways that people like to enjoy music. I guess he finds traditional music radio offensive as well, never mind mixtapes or the shuffle button on a CD player…

This is foremost an article about Spotify, not the music industry.

The #1 streaming service is ad-supported Youtube, barely mentioned.

https://www.musicbusinessworldwide.com/more-music-is-played-...

Isn't the audio quality usually worse than spotify?

My understanding is Spotify (premium?) can also serve low quality audio when the user has a poor connection? YouTube compression is horrible but passable for many people, I think. People listened to music on AM short wave and medium wave just fine as well. The key point was that radio was readily available.

320 kbps mp3 is not horrible at all. You wouldn't use it to archive your music, but it's barely distinguishable from FLAC.

Pretty sure youtube only use 128 kbps, which is a lot worse.

As you say, 320 kbps is nearly perfect.

FWIW youtube serves 128kbps AAC though, not mp3.

For non-audiophiles such as myself the YT music videos are more than ok, I used to listen to YT music videos almost all day long until not that long ago while doing office work. The good thing about YT was that you could find almost anything on it, from that rare Italian giallo album to traditional Tajik music. Not sure if that’s still the case or if Spotify doesn’t offer the same huge variation of choices.

99% of people don't care. And the hardware they're listening on is typically the bigger bottleneck anyway.

#1 in the terms of time listened maybe (though your linked article indicates some doubt about that claim) but where's most of the revenue coming from? The article you link states YouTube has the highest total listening time but also has a graph showing audio streaming brings in over 5 times the revenue $5.5bn vs $0.85bn. I think we can safely say the majority of the $0.85bn is YouTube but how much of the $5.5bn is Spotify?

> how much of the $5.5bn is Spotify?

The record labels will take all of that, so I'm not sure what your point is.

It's common to bring up the decline in profits that the music industry saw but no-one seems to ask the question as to how their profit margins were so high. As I understand it, cassettes and CDs were dirt-cheap to produce but the average consumer hadn't caught on to the fact and on each sale of either the profit margin was tremendous.

Another tangent, maybe it saved the music industry but what effect did it have on our culture? I believe Spotify fundamentally changed our previous read/write-relationship with music to be a read-only type of affair for most individuals.

That's interesting...that's my theory about recorded music in the early 20th century when folks figured out how to commoditize music and stamp it out as a product to be consumed instead of a culture to be shared.

How do you see Spotify as promoting a read-only consumption of music?

If anything, it feels like digital platforms have increased the accessibility of broad music distribution and making a name for yourself without signing your soul away to a major label - and we've seen a Cambrian Explosion of genres and subcultures as a result.

I don't understand this at all. If you're talking about the culture of making mixtapes/CDs, it's as easy or easier to make and share a playlist on Spotify. And in terms of creating music, free or cheap recording software and distribution platforms make that exponentially easier as well.

It's not about the object - "a playlist" - it's about the means of distribution, the networks that are created, and the relationships between artists, middle-men, and buyers.

Spotify is an example of the consolidating and centralising tendency of Internet technology.

Physical media with low cost of entry make it possible to create your own channel to buyers. In the 80s you could set up a short-run cassette label from a back bedroom, send a tape to an indie DJ like John Peel and get some priceless attention with your music highlighted on national radio. In the 90s you could make your own white label 12" pressings and distribute them personally to record shops.

That's no longer possible today. Spotify (YouTube, etc) are all oligopolies that own the most important channels between new artists and customers/fans. They don't curate, they ingest.

Established artists can bypass them, but newcomers have no choice. They have to go through one of the channels - at which point they're immediately competing head-on with hundreds of thousands of other artists. There is no other way to reach an audience now. And the rewards mean it's rarely worth the effort.

>> In the 90s you could make your own white label 12" pressings and distribute them personally to record shops.

This, beyond other physical and fashion products, is essentially the business plan for my music label. It's certainly still doable and is one of the best ways in to local meaningful exposure in your city, or at least in my city of Toronto.

Vinyl sales are huge, especially in terms of profit.

cassettes and CDs were dirt-cheap to produce but the average consumer hadn't caught on to the fact and on each sale of either the profit margin was tremendous.

The fundamental collapse in profits is because once you could sell an album with 3-4 good tracks and the rest filler, but that’s much harder to do now. People will prefer to buy just the songs they like, so you might get 3x0.99 whereas previously you could have sold the album of 10 tracks for 10.99. The cost of producing the filler tracks was negligible anyway.

It's worth noting that this was the case even before streaming services arrived. I distinctly remember reading an article about how Kelis and Norah Jones were the top-pirated artists of a given time period, but their album sales widely differed, since Norah Jones had multiple popular tracks while Kelis just had her one hit single.

Norah Jones had multiple popular tracks while Kelis just had her one hit single.

I made the mistake of buying Gwen Stefani’s solo album, which is literally one decent track, which was the single, and all the rest filler. That was the turning point for me and I expect many others have had similar experiences.

The music industry saw revenue increases when iTunes was at its height.

I wonder how much of that was people re-buying rather than ripping existing tapes and CDs though. The music industry also successfully persuaded people to buy again on new media remember.

Well Jobs said in his “Thoughts on Music” essay they only 4% of music on iPods was bought on iTunes.

>the average consumer hadn't caught on to the fact and on each sale of either the profit margin was tremendous.

Normally businesses charge whatever the market will bear, in this case however the music industry was found guilty of collusion in price fixing...

> In 1999, ... the global recorded music industry logged a record $25.2 billion in revenues... (For perspective, Starbucks had just under $25 billion in sales last year.)

USDs in 1999 do not have the same value (purchasing power) as in 2019 and comparing them over time without acknowledging inflation does not really create perspective all that well.

Now the music industry will manage to kill itself by being totally incompetent and extremely greedy.

50% of the industry seems to be centred around talent show participants to make a quick buck (no need to pay for marketing).

The other 50% is trying to bite the hand that feeds them, while thinking we are still living in the golden days of music when the coolest thing you could own was the latest Beatles record.

Meanwhile, I have started listening to the British wave music, generating them zero sales...

It is different business model. If this does not keep the industry going something else will find their way.

Sponsorship for individual artist only work for continuous production. It is hard even for Beethoven to survive in his era of that business when only concert get you money. (Handel get most by doing his concert in England. Beethoven complaint he will starve to death when London symphony society immediately commission no 10 with prepayment. Still meant he was not ok).

The industry moves on.

"saved" = streaming model, which, given the layers of brokerage, provide nearly no money to artists popular enough to generate millions of streams/listens.

The tech world has colonized a succession of industries, from publishing, to music, and the net result is dead industries whose shells serve as mere promotional funnels for the illusory big gig in the sky in which the artist will make their money, despite the fact that said artist makes quiet music people like to listen to in their homes and will never likely be able to pull off large concerts.

Per the commenter below "there's loads of talent, let them eat cake", well friend, I like good music made by people who cared enough to study, play multiple instruments fluently, collaborate with others, and sometimes form large ensembles that are economically unfeasible. Where is big band? there is a reason bebop and rock and later singular dj's took over = simple event economics...

Meanwhile, the elephant in the room is how our industry preaches lovely lies about freedom and how other peoples products should be free, while our vampire industrial sector sucks the remaining blood from various markets we first destabilized and weakened. I know that I certainly participated in plenty of music sharing (and creation) and I am not denying the positive benefits of being able to find loads of different music through the magic of text searches, but simply urging my fellow tech zealots to back the XYZ up a bit and aknowledge the absolutely devastating effect we have had.

Spotify, incidentally, is one of the worst offenders in treating the artists poorly, compared to something like Bandcamp, let's say.

I seriously doubt that Spotify saved the music industry. If anything, Bandcamp is the one that could claim such thing. Having an easy way to pay for music where I buy an album or song is the way to go if you respect musicians. Downloading ALAC is the same as buying a CD but a digital way. Using a streaming service is a much more complicated way where niche artist are not going to be too happy. (Some examples from musicians below).

Never heard of Bandcamp. Been paying for Spotify for a decade, though (since oct. 5 2009).

Edit: Cannot find a single mention about Bandcamp on any news site in my country (Norway), and virtually no results in some more countries I checked. Do they have a European presence at all?

You’re probably listening to mainstream music. You won’t find Rihanna or Beyonce on Bandcamp. If you prefer listening to such artists then Spotify is perfect for you.

Bandcamp is for more nuanced, underground content. E.g. ¾ of reviews on Pitchfork link to the Bandcamp page of the artists.

Maybe you should check it out. Plenty of music available even from your country.

If the music industry had started selling an album for a dollar instead of fighting Napster they would be making more money than now.

Spotify pays very little to the artists but I'm not sure the margins are there. Tidal promised to be more generous and everybody saw how that went.

I have a subscription to YouTube Music (premium). But I still download my music the old way because most of the time my data is off on my mobile. And it's how I like to listen to music for more than 20 years :-)

It would be nice to have a bot that could pretend that I am listing to some of my best artists so that they can get their pennies from the streaming companies.

Is there anything like that? It would help music fans to pay their favorites artists through the streaming companies?

If there was anything like that, every manager and marketer would be using this tool to artificially inflate their streams (who says they're not already?).

just fwiw as an independent musician and someone who is trying to get by on monetizing my creative output, I certainly have spoken to many creatives who will just keep their music on loop on Spotify all day to accumulate royalties. there are also loose groups based around making playlists of music by independent artists that the entire group then commits to streaming all day to help generate those streaming royalties. just figured a bit of relevant information might be nice to share :)

We need more DRM-free music instead.

DRM free music is widely available. You have to buy the songs/albums though, not a subscription.

Or record it from over the air sources.

It is, but not always. And it's harder to get it in lossless at times.

Seeing as DRM music is lossy in practically all of the cases, getting lossless music has always been synonymous with getting DRM free music.

I don't have a Spotify subscription. For me, bandcamp saved music.

Same here. I buy almost all music on bandcamp nowadays, the site is amazing :)

You can always buy a CD/LP/tape (I hear these are making a comeback). Rip them if you want, or not.

Sometimes I do that, when it's the only way to get the lossless source. But physical media is slowly becoming obsolete. At some point no one will be selling it that way.

C90 cassettes are objectively terrible

Most LPs come with download cards these days anyways. At least about 50% of new LPs I buy, anyways.

All of the mainstream digital music stores where you buy music have been DRM free for over a decade.

Not all sell FLAC, and some music can be only available for rent, not for buying.

Selling FLAC and selling DRM music is completely unrelated. Which musicians don’t sell their music and only stream?

I need both. And most of those who don't sell FLAC also don't want to sell DRM-free. Since there is no reason not to sell lossless if someone is already selling DRM-free.

In my past experience, trying to find some music that was announced on Spotify didn't give any results anywhere like Bandcamp and the like.

So you can tell the difference between 256kbps AAC and FLAC?

It's not about the difference. It's about ability to encode to anything you want transparently. You need to have lossless source for that. For portable devices I prefer all of my audio in Opus.

Reply on news.ycombinator.com