Is Spotify the music industry’s friend or its foe? | Hacker News Reader

Is Spotify the music industry’s friend or its foe?

newyorker.com

31 pointseroo50 comments

I think the issue with Spotify is that artists compare revenue to CD sales, when they should be comparing it to piracy. I listen to (estimated) one new album every day, as part of about 5-10 hours of listening to music each day depending on my work schedule. $10-$20 an album is just not a price I'd be prepared to pay on a daily basis to listen to new music, and before Spotify I wasn't spending that money; I was pirating them or streaming them on websites without a revenue share model for labels.

I still buy just as many CDs as I used to (probably about 10 a year), plus Spotify gets an additional $120 a year from me (70% of which goes to the music industry), which is a no brainer for me for the convenience of the service. In addition to the considerable sum ($2000+) which I spend annually on live music.

The best solution I feel is a two-week exclusive on all new releases for physical and digital purchases before they hit subscription services. If you really want the CD, you can buy it, or you can wait two weeks until it's free on your $10 a month subscription. Sure, piracy will go up, but it is not the music industry's business to stamp out piracy, it is their business to maximise music revenue.

This, along with the increased value-adds of physical purchases - deluxe vinyl editions, signed editions, additional goodies - the "Kickstarter" pricing model, if you will - is how the music industry will continue to make money. That and increased ticket prices for live music, and I anticipate most record deals includng a cut of live revenues for major labels in the future (if they aren't already).

For the record, I do not think major labels are inherently bad for music - if you cannot afford to record and promote your album, a major label can do it for you, at the cost of a large chunk of your profits if you're a hit, but not leaving you in the red if you aren't - a major part of record label's profitable artists must cover all the ones who are not also. If you don't want to do such a profit split, the option is always there to finance the record yourself and pay labels up front for distribution and marketing.

My only issue with Spotify is that it tricks listeners into thinking they're supporting artists when they so totally aren't. I equate Spotify to piracy. Yeah I give them $10 a month but so little reaches artists I might as well have stolen the music.

And I'm fine with that. If people want to support an artist then they should buy their album, go to liveshows, whatever. As long as we don't incorrectly assume that Spotify is supporting the artists we enjoy then everything is fine.

The artist's contract with labels is not the consumers responsibility.

If you compare the price of spotify with average consumer behavior, you see that money spent on spotify is in every sense more than reasonable. Many album deals in the past have had pennies on the album reach the artist, so I fail to understand your argument that spotify is cheating artist. But that logic Walmart are cheating artist who doesn't have a fair record deal.

If artist don't receive money from consumer spending it is the label that is cheating the artist, not the distributor.

I'm not talking about that. Labels don't make shit from Spotify either. More specifically, rights holders don't make shit from Spotify. I don't care if that holder is an individual, a band, or a big ass record label.

70% of spotify revenue is paid to rights holders.

So? Spotify pays $5,210 per million streams [1]. It would take an individual artist about 8 million streams to make a mere $40,000. A band of 5 artists would require 40 million streams for each person in the band to make a $40,000 salary.

That's jack shit. It's not enough to be a meaningful revenue stream for any artist at any level. It's not enough to help, support, or incubate indies. It's not enough be a drop in the bucket for a mega star.

[1] http://thetrichordist.com/2014/11/12/the-streaming-price-bib...

Those numbers seem fairly comparable to CD's to me.

Let's run some numbers. After subtracting manufacturing, shipping & retailer cuts, a label makes about $3-5 from a record, and sends about $1 of that to the artist. So for the sake of argument, let's say you need to sell a thousand CDs to make the same revenue as a million Spotify streams. Given ~10 tracks per album, that means that the crossover point is 100 album plays. IOW, if I play an album on Spotify more than 100 times, I give the recording company more money than I would if I bought the CD.

That seems like totally fair pricing. I have no idea how many times the average CD is listened to but I bet it's above 100. The median would be below 100, but the mean above. The albums that are listened to 10's of thousands of times would really skew the average.

And yet Taylor swift received 500.000 USD for the last single month she was on Spotify.

Looking at price per stream does not make sense. Looking at average consumption does. Spotify is way above average album consumption per person and it (or similar services) has the potential to cover a very large part of the population.

I pay my monthly primarily fee for the convenience and legality of the service. I used to buy about 30 CDs a year, and then a similar number of albums on iTunes, and now there's Spotify, and that's all I use now.

I am probably the Worst Person On The Internet for the following view, but supporting the artists falls fairly low on my priority list, and certainly wasn't the reason I was buying CDs. For smaller acts, I'd have thought (citation needed) that the promotional power of Spotify for concerts and so on is worthwhile.

For larger acts, how much extra monetary support do they need, especially given how much cash concerts bring in? Would they stop producing music if they were making a decent middle class wage instead of millions of dollars?

Would we be in a better place if libraries didn't exist, and authors made super-normal profits as a result? Probably not. I pay for books for the same reason I pay for Spotify - the convenience of having the book I want, when I want it, rather than trudging down to my local library, and getting a dog-eared copy that smells of tobacco. But I note the cost of a book - especially for the Kindle - is really quite different from most CDs I've seen.

I have a friend who's a very talented backing musician who tours around playing guitar for the latest TV contest winners, and I note he's compensated on similar terms to talented developers I know who show up at companies and solve other people's problems.

I have a friend who's a very talented backing musician who tours around playing guitar for the latest TV contest winners

"Session musician" is a good gig to get, but it's like "pro athlete" in that there aren't enough of that kind of job to make a difference.

Well they are supporting the artist. $500,000 paid to Taylor Swift is better than what she would have received if people listend to her albums on Grooveshark, or torrented the album, or whatever. Sure, half a cent per stream is not much, but it is something. It's not on the same level as buying a CD, but it's better than piracy, where revenue for the artist is zero.

The other thing is, it's not like Spotify is making bank off their service either - last I checked they still haven't posted a profit. They can only charge so much because people will only pay so much for a monthly music subscription, and 70% of revenue paid directly to artists/labels doesn't sound unreasonable to me.

I guess fundamentally the problem is "people don't want to pay much for music" not "Spotify is allowing people to not pay much for music". Artists seem to be placing the blame at Spotify's feet, when it is less people being willing to pay for music any more.

I think the thing people are missing here is that the $500,000 paid to Taylor Swift doesn't go directly to her, that is the gross royalty which presumably the publishers and label take the majority of. The artist themselves will receive a fraction of that. The situation is different for indie artists who are effectively the publisher and label too, but they have the opposite problem of lack of scale, and the per-play royalty is far more important for the long tail than for the hits, so the negative impact is greater. Taylor Swift could survive on magazine photoshoot revenue alone, an option not open to The Amazing Snakeheads or whoever.

Spotify may not be "making a profit" as a corporation but they still presumably have hundreds of salaried staff and their business model is basically jam tomorrow - their fixed costs are mostly the same whether anyone has signed up to paid subscriptions or not, so they all definitely get paid and the artists may or may not, but Spotify will sell their product in the meantime regardless. That isn't ethical. "Exposure" and "discovery" still work to the advantage of the large labels - Spotify is a new gatekeeper and being playlisted on the right Spotify list can make or break careers. There doesn't seem to be much transparency around how level the playing field is and how much influence the shareholders have.

For an artist, the contrast with iTunes is stark. Apple didn't turn round and say "we'll pay you if this is a success" - they paid the full royalty from day one. Spotify should have been regulated in the same way that radio is, and royalties should have been on a par with that, as a minimum, with a premium for the on-demand aspect.

To be honest, YouTube's history is far more ethically dubious but they don't seem to get the same heat from artists I guess because they are seen as too big/powerful to be criticised.

But like I said - that's the deal with signing to a major label - you agree that they will take a lot of the profits for your album in return for shouldering the costs of recording and promoting it. Artists can always remain independent and just pay a unit cost for distribution, but that means taking the risk of spending their own money on recording, and doesn't necessesarily come with the marketing opportunities that come with being signed to a major label.

I don't see Spotify as ethically dubious at all - they've had agreements with major labels from day one, and have only ever streamed music which they had a license for (unlike, say Grooveshark). Spotify only pays you if people lsiten to your music, in the same way that iTunes only pays you if people buy the music. It's the same deal, just on a 'per listen' not a 'per purchase' basis. The only issue with Spotify as I see it is that they don't pay artists (or their representative labels, which again, the artists signed up for) all that much, but like I said, they're not actually earning that much money either.

While your point is true in general, in the case of Taylor Swift she has a bit more sway. Not only is she, by far, the biggest act on a small indie label, she was the first artist signed by that label and her father was one of the initial investors. So while she doesn't own her own label, she is on a small indie label and no doubt has quite a bit of influence.

You are right that Spotify is lose/lose/lose. It's helping crush the industry, they're losing money hand over fist, and artists aren't being supported. Awesome.

Like I said, I'm totally cool if people want to not pay for music. That's fine. Great. Continue to not pay for music! I won't even blame you. Just don't falsely believe that Spotify supports artists you enjoy. If you want to support an artist you gotta do it yourself.

the issue is that you only make $500k if you are a name like taylor swift who ironically doesn't really need that money since she can make much more from touring. if you are an indie artist, you are making basically $0.

I happen to know a few indie artists in my area and I can tell you that after equipment, travel costs for gigs, printing media, hosting a website, etc, almost all of them are losing money.

If it is not worth it for the artists, why are they participating on Spotify? I think it is their problem to work out. It's not my job to work out the finances of artists.

As I mentioned elsewhere, I think in theory the economics could work, as people spend roughly the same on Spotify as they would have spend for music otherwise. How the money is being distributed is for the artists to negotiate. And of course it also depends on the distribution costs Spotify has, and the efficiency of their operation.

Well, Spotify bribed the labels by giving them ownership. This, notably, appears to have zero chance of flowing through to the artists. So said artists are right to feel aggrieved.

I'm willing to support artists who are being ripped off by their label (like boykott their label if they make it plausible it's evil). But ultimately, picking the right label is the artist's business, not mine. If the label doesn't pay them, they should switch the label.

> but so little reaches artists I might as well have stolen the music

To paraphrase: "but so little reaches the boy who sewed my jeans that I might as well have stolen the pants."

Yes, capitalism is messed up, but this doesn't mean we should start doing irrational things to clear our minds.

Spotify is not tricking listeners, the recording industry is. Yes, listeners are getting tricked and your main point stands, but it's important to not let the recording industry get away with their blame shifting.

> Yeah I give them $10 a month but so little reaches artists I might as well have stolen the music.

And buying physical albums is much better in that regard?

I agree with you that they're misunderstanding Spotify and how its revenue model isn't about CD sales. Artists and labels should _really_ forget about CD's or anything physical. That's a long time ago that was a working business model now and belongs to the past. And so does the type of sales you can expect.

I think that Spotify is competing with radio and avoiding piracy in the process. So they should find Spotify useful; it's a very efficient bullet against piracy, much moreso than sending cease and desist letters. It works on huge masses, millions of people, and it doesn't need lawyers to be paid. And it often works.

As for payments, It hink we're moving into the radio comparison. It's about streaming, not ownership, so obviously they can't compare Spotify to sold CD's. Every time a user listens to a song on Spotify, the artist/label is paid. Not so with a CD. So a CD is more expensive, and better compared to iTunes. The iTunes with a business model in trouble and rumors that Apple is intending to change, where they have already started with iTunes Radio. Coincidence? No, I definitely think not and refer to my first paragraph.

So: Beat piracy, and provide radio for the 2010's. It's part radio where music is chosen at Spotify's discretion, part chosen by the user via playlists. So it's a net loss for music labels since the user is given much more control, but hey, times are changing. Users now have this today, so they will expect it tomorrow. If they stop supporting Spotify today, many of their users will be more inclined to move into piracy than ever tomorrow.

These times when they can go back... They've already passed.

"AM/FM radio pays the writer of the song on a per-play basis, but gives the performer and the owner of the recording of the song—generally, the record label—nothing. On digital streaming services like Spotify, the situation is nearly reversed: the owners of the recording get most of the performance royalty money, while the songwriters get only a fraction of it. Songwriters, who can’t go out on the road, are particularly hard hit by the loss of publishing royalties. As one music publisher put it, “Basically, the major music corporations sold out their publishing companies in order to save their record labels. Universal Music Publishing took a terrible rate from streaming services like Spotify in order to help Universal Records. Which, in the end, means that the songwriter gets screwed.”"

It seems to me in theory it should be possible to make the economics work. I suspect few people would buy more than one new CD per month, so if the monthly fee is roughly equal to the price of a CD, the money flow could remain kind of the same.

Maybe so far the industry depends on whales (people buying a LOT of music all the time), on the other hand subscription services might also make money from people who would otherwise have spent less.

Being free, people might listen to more music on Spotify than they would have listened to otherwise. But that only means the money could be distributed more evenly. Maybe I don't listen to Lana Del Rey 150 times, but overall I will listen to 150 songs, so those 0.99$ will still flow into the system and be distributed.

I used to buy a CD or two every month. Then I started pirating all of my music (mostly out of convenience). Then pay-per-download options came along (iTunes), and I used that a bit, but it was still inferior to pirating. Then services like Spotify came along and I'm paying for most of my music again.

In total I'm paying less for music than I was paying back when I was buying CDs. But I'm paying more than I was when I was stealing. And in the process we've gotten rid of stamping and distributing CDs, running stores, etc. If record labels can't make money now, their whole business model is screwed.

I suspect that the real problem is competition, though, and not profit-per-song.

I mostly listen to albums start to finish from my own largish collection (~90 GB when encoded as 192 Kbps AAC), so I can't really comment on the consumer experience. As for the artists, Taylor Swift's stance reminds me of Metallica and Garth Brooks. It kind of saddens me that they focus on this kind of nonsense, rather than the myriad ways the industry screws its own artists.

I'm the same way. I consider the album to be the fundamental unit of musical expression (although there are obviously plenty of exceptions). The Spotify interface on iOS is absolutely unusable for this. There is no way to assemble a music library and browse it by artist and then album.

Google Play Music does this, and any music missing from their catalogue can be uploaded and is seamlessly integrated with their streaming music (a big deal - spotify just creates a folder of Local Files which don't even show up in searches).

The only downsides are the web-only interface and the mobile app's excessive caching which seems to use at least double the data of Spotify.

There has been since the latest UI update. On the desktop, every track or album has a "save" button that looks like a +, which will add it to your library, which can be sorted by either album or artist. On Android it's under the menu button for each track. I can't speak for iOS, though.

I tried it on iOS last week, and wasn't able to find any way to do it.

You can "save" both artists and albums in the iOS app.

I pirated music when I was younger, I used Pandora for a while, for a while I only listened to podcasts, and I rarely listen to music and yet I'm a happy Spotify subscriber. They've made the experience so easy that I'd happily pay double the price for the maybe 4 hours a week I listen.

The Apple reference sound less like a business plan, and more like typical hype of Apple exceptionalism. Apple makes the top dollar by selling devices with a nice profit margin. Would they really want to add several hundred dollars to their price, thus cannibalizing their sales – just to donate most of that to record labels? (No!) Yes, they would get their cut, but most of it would be away from iTunes revenue. (Not all Apple buyers use Spotify or similar services – and if Apple could raise their retail price without diminishing their sales, they would.)

And if they made the inclusion (of music) optional, why would record labels settle for much less than what Spotify pays? For no reason, and they wouldn't.

I think the title of this article hints of a great misconception of what Spotify is. They (as well as other digital music providers streaming or not) are part of the music industry now.

The olgopoly has changed, get over it.

They have a superior music listening & discovering functionality to any other competitor by a mile. Is there really anything else needed? I can't see how such a superior product can fail. But it just seems there are so many people in the music industry that are living in the past and are slowing down the pace instead of everyone going all in on it. If Spotify had 10x their subscribers no one would question the model. The problem is that it takes too long time to get to those numbers due to all the friction.

> They have a superior music listening & discovering functionality to any other competitor by a mile.

How is their discovery any better than anyone else's? And how is the player better than anyone else's? I like Spotify, but the only perk I see is that I can play any song without directly paying for it.... What am I missing?

Yeah, hmm, as for me those advantages are intertwined. To get anywhere close to great music discovery, I need to be able to easily listen to everything I can discover in the first place.

I'm really unfamiliar with Spotify's reimbursement model. Is it based on the flattr model? Your $7 being split between the artists you listen to?

Am I the only one who's wondering why we're reading an article that is supposed to be published/had been published 7 days from now?

It's from the physical issue. The publication date on magazines is usually between one week and one month behind the actual release date. I'm not really sure why, but most magazines do this.

That happened because every publication wanted to have an edge over the others. So some monthly mags started sending their february issue to the stores in january 28th, and the others looked "late", being the one "01" issue in a see of "02"s, scheduling future issues a bit earlier to retaliate. Now they're all nearly a month early.

Similar for weekly publications.

That's interesting to know. Thanks.

I think we haven't seen what Spotify will do. You can't run pirated music in public.

Integration with Spotify and Uber is super smart, there's no competition for that (not from pirated music anyway) -> extra revenue, extra attention to the service

Increase the monthly price to 25$ / month for streaming in public... (eg. a doctor's waiting office, ...) -> extra revenue.

This is already a thing, see Spotify Business.[1]

[1]: https://www.soundtrackyourbrand.com/business

The closest thing to Spotify is Radio. With that in mind, 500k "listens" is a drop in the ocean. Radio 1 has shows which attract 5 million listeners a WEEK [1].

[1] http://www.bbc.com/news/entertainment-arts-24650892

I wonder how much research Spotify has done with their pricing. I assume they must have done at least some. But they could double the monthly fee and I wouldn't blink.

Disclaimer- I am an outlier in terms of music consumption.

Well, I would blink. I use Spotify only for discovering music. Once I like an album, I get it physically or on iTunes.

I think they could tie it to hours / month. A cheap, limited account for people like me, and an unlimited one for hardcore consumers.

Sorry you're downvoted. Your response is totally legit.

Reply on news.ycombinator.com