August 10, 2011

Link

After Century Media Records yesterday loudly pulled its content from streaming music service Spotify, another indie label head has publically come out against the popular new service. Brian Brandt, owner and operator of contemporary classical and jazz label Mode Records, posted his own anti-Spotify rationale on the blog NewMusicBox.org.

"New streaming services like Spotify… have the promise to squeeze smaller labels out of the picture," he writes, citing low payments again as an issue. Here's an excerpt:

"On a typical CD sold through a distributor (yes, still the bulk of our sales are wholesale), we may make a profit of $3-4 a unit. Already that is not much considering the total sales of a typical niche CD. Sales through iTunes or similar service can yield a similar profit. But this all gets turned on its head with the Spotify model. For example, in June 2011, Mode had a total of 11,335 streams through Spotify; our income was a whopping $36.98! A big individual seller that month, by composer Luciano Berio, was streamed 1,326 times through Spotify; our income $4.18. So, we earn about 1/3 of a penny per stream. And these meager amounts should be split with the artists and composers."

His point is that while larger acts and labels can profit through from streaming music costs by virtue of volume alone, smaller niche labels don't stand a chance, and the model will eventually squeeze such companies out of the business.


It raises an interesting question. Yes, the streaming model is going to be a challenge for smaller acts/labels. But if that's what customers and fans want, then should that be something to challenge? Granted, it's not even remotely clear that the streaming model will completely replace ownership. But if it does, should smaller artists and labels fight that, or should they find a way to adapt as well (such as through consolidation or some other tactic)?

Dude might want to take what he can get. Because if they end up making too much noise and causing Spotify to close down, people are gonna just flood back to illegal downloading in droves, where they'll make NO profits. At least this way they do get paid somewhat.

Spotify Responds to Indie Criticism

August 10, 2011

After being slammed by two different indie labels for what they consider to be paltry streaming payments, Century Media and Mode Records, Spotify today responded in a statement that highlights the positive contributions it makes to the music industry overall.

"We are sorry that Century Media have opted not to offer its music to their fans through Spotify. Spotify has one of the biggest music libraries in the world - of over 15 million tracks - and is committed to offering our users the widest possible selection of music across artists and genres from around the world.

"Spotify was launched out of a desire to develop a better, more convenient and legal alternative to music piracy. Spotify now monetises an audience the large majority of whom were downloading illegally (and therefore not making any money for the industry) before Spotify was available.

"Spotify is now generating serious revenues for rights holders; since our launch just three years ago, we have paid over $100 million to labels and publishers, who, in turn, pass this on to the artists, composers and authors they represent. Indeed, a top Swedish music executive was recently quoted as saying that Spotify is currently the biggest single revenue source for the music industry in Scandinavia.

"Spotify is now also the second single largest source of digital music revenue for labels in Europe (IFPI, Apr 2011). Billboard reported in April that Spotify territories saw an average digital growth rate of 43% last year. By contrast, neighbouring countries (without Spotify) saw only 9.3% digital growth.

"We are very proud of the positive contribution that Spotify makes towards growth in the music industry."

This certainly won't be the end of the argument. And as this plays out over the coming months and years, more numbers and stats will be thrown our way. A few things to keep in mind as this progresses:

- Quoting the amount made from streams of a given song in a given timeframe isn't exactly the most accurate way to value the difference between the streaming vs. downloading model. One would have to value the cost-per-stream over the lifetime of that fan for a true comparison. If a fan plays a given song hundreds of times in their lifetime, is the cost per stream in total more or less than the one-time, 99-cent download?

- Also, the cost-per-stream differs depending on whether the track was played under the free Spotify tier or the premium tier, with more going back to labels under the latter. Also, there are different rights associated with different markets internationally. What one rightsholder receives may not be the total payout of a given track's earnings, but rather just the portion that one rightsholder was due.

http://www.billboard.biz/...2742.story