15 April 2010

Putting Spotify on the Spot

There has been some criticism that Spotify doesn't really bring in much money for the artists concerned (the labels, of course, do fine). But here's an interesting point that's worth bearing in mind more generally:

Moving on, the data claims that to make minimum wage, an artist would need 4.6M plays on a streaming service like Spotify. While that might be technically true, it's a pretty meaningless calculation. It does not take into account the promotional value of streaming -- and unlike selling 143 CDs, getting 4.6M plays of a digital track would certainly lead to significant revenue elsewhere. Surely an artist would be able to translate that much attention into successful live shows or their own CwF+RtB offering. After all, we've seen time and time again that focusing on something as narrow as money earned per track sold (or streamed play) is a limited way to view a musician's earning potential.

Follow me @glynmoody on Twitter or identi.ca.


guy said...

Aren't we reaching the point of finding that the majority of material produced by the majority of artists is simply not *worth* what they think it is? The market sets the price. If you can't make a living from your 'art' you need to get a different job and either stop creating it (was it really that important?) or continue anyway.

glyn moody said...

@guy: yes, good point. Much of the tension comes from this sense of entitlement that so many industries have (newspapers, music, films etc.). Technology changes many things, including who gets paid what...

Crosbie Fitch said...

The artist expends no labour in the streaming of their music, so has no right to any share of whatever the streaming service was able to charge for its labour in streaming the music (if anything).

Spotify helps demonstrate that the artist may even be losing out, because the listener has been indoctrinated to believe that the artist doesn't need paying for their work since Spotify pays them in full.

It would be better for the artist if they made it clear to their audience that their published works were unconstrained by copyright (free), and that if anyone wanted to join in commissioning their further production they should visit their site to do so directly. In other words, the artist is paid for their art by their fans, CD manufacturers are paid by their customers, and selection/discovery services by theirs.

Anonymous said...

I've never used Spotify.The funny thing is that there is no Spotify support for Poland, but to my surprise thepiratebay doesn't discriminate my IP - that's really amazing. Truly egalitarian approach.

The Mad Hatter said...

Yes, I read the original before Mike commented on it, and I'm in the middle of writing an article which is going to cover, in detail, where I think everyone is wrong.

And being me, well I do think everyone is wrong!


glyn moody said...

@Anon: yes, this is the problem with "official" services: their coverage is poor...

glyn moody said...

@MadHatter: look forward to reading it.

hank said...

The unfortunate result of this argument is that it links music creation with music performance. One could argue that the traditional 4 piece band emerged from an economic model based around a recorded-object industry. Therefore, the death of traditional recording industry could signal an upcoming decline in that form of music.

Crosbie Fitch said...

hank, a thousand fans can pay a musician to record a studio performance (and publish it) even more easily than buying a ticket to persuade them to perform live.

The market for copies of recordings may dry up (apart from vinyl say), but there's no reason why the market for recordings should dry up.

It's vital you recognise the significant difference between a recording and a copy - one is expensive and valuable, and one can be made by a kid for nothing (see Music/Recording/Copy).

hank said...

I totally understand the difference. But theoretically if no one paid for copies of the music then there is no revenue for musicians who won't or can't play live.

The thousand fans idea is nice, but in order to earn even your average middle class wage plus recording plus marketing (yes, even if your music is great you will still need to market it) you would need an income of at least 100,000 a year.

In practice, it only really works if you're Trent Reznor or people as established as him.

hank said...

(plus a whole bunch of other costs I havn't factored in, manufacturing, distribution etc..)

Fact is, it's a whole lot harder to be a professional musician now than it was in the 1970s!

Crosbie Fitch said...

hank, I'm glad you understand the difference between a recording and a copy.

However, why do you believe it is impossible for a musician to sell a recording to a thousand (or so) fans at $10 each? $10,000 doesn't seem that insignificant to me. Sure, you can't buy a 100 foot yacht with it, but you might charter it for a day.

Do you still insist that irrespective of selling studio recordings for $10k, a musicians' audience must still be forced (on pain of excommunication) to pay for copies despite being clearly able to make them themselves for nothing?

And yes, let's assume this is a musician who doesn't play live (yet), and has built up their fan base entirely via word of mouth (virally online).

A year ago this artist had 500 fans and sold each recording for $5,000. Before that, 250 fans, etc. Their fan base helped promote them, given their music was freely copyable and license free.

Crosbie Fitch said...

I should add (in case it's not obvious to others) that a musician can reach $100k per annum if they produce 10 recordings a year in exchange for a commission from their thousand fans @ $10 each.

hank said...

Lets just pretend we're talking about Joe the musician who can't or won't tour- he lives in a world where he can't make any money by selling digital recordings of his songs. He would like to be a professional musician and have a
"normal" life (house, family, pension, insurance, send kids to college).

Quick crash course on harsh realities: The minumum amount one would have to earn to have this blessed middle class life would be similar to say the earnings of your average city accountant- 27,000 out of college and sparing a horrible disaster retiring comfortable earning around 75,000.

So he decides to sell special edition "valuable" recordings for 20 bucks each.

So, how many units would you have to sell to earn that amount?

It would have to be a nice package, say a printed booklet, vinyl copy and cd copy, Blu ray video accompaniment, Blu Ray making of, signed, includes poster, in a hard box, designed by a young hot designer, featuring imagery by a young hot artist etc etc..

So to earn 27,000 how much do you need to sell?

OK, this is all LOW BUDGET production rates- IF your lucky and know the right people you may be able to hire talented people. But most people don't, so if you don't hire a creative agency chances are what you will get in the end will be quite bad indeed.
(where a manager/production company comes in handy)...

Production costs-
Agency: 10,000 (they're expensive)
20,000 budget for 2x low budget bluray docs+visuals video
15,000 budget recording album.
designer, artist - 3000
music video - 3000

manufacturing costs:
tricky because the more you make the less it costs. but lets say you decide to make 10,000 and secure yourself for future purchase:
cds - 500
bluray - 2000
packaging, posters etc - 10,000
assembly: 1000

so all this happening, you will need someone to manage it- why? coz your the musician! you write music! the time you spend on this crap, your music suffers. any artist will tell you the same.

so lets not even pay them a lot, pre tax 40,000 per year.

and dont forget the musician pre tax 40,000.

then there's rent for a room to manage/store everything, sundries, equipment, insurance for your place etc etc etc...

lets say, extremely low estimate, 5000 per year.
so total estimate of revenue needed for the FIRST year:


this is assuming that Joe as well as being a musician is also constantly maintaining his website, online distrubtion, online presence, press etc etc...

so you made 10000 units.

you would have to charge 14.10 per unit and sell them ALL to make 27,000. and increse that by around 2000 units per year or increase the cost per year to make it to retirement.

Of course, you could just be an artist, be poor, masturbate every night and die alone...

hank said...

by the way I would LOVE to see fans commisioning artists to make stuff. in fact, i've experienced this in a very limited way myself. but in regards to the making an object and selling it, you can see my point above.

query: do you have any example of bands who are establishing themselves from fan commisions etc?

or bands supporting themselves comfortably from fan commisions?

glyn moody said...

@hank: first, thanks for your interesting comments.

I think that Jill Sobule is a good example:


"she has made four more critically acclaimed albums, Happy Town, Pink Pearl, Underdog Victorious, and 2009's California Years, which Jill released on her own record label, Pinko Records, after collecting over $85,000 from fans who funded the project."

hank said...

thats cool she manages to do it. she tours a lot tho... my original point was about how linked performance and music creation is.

glyn moody said...

@hank: indeed; and some might argue that's as it should be - music is a living, live art...

Crosbie Fitch said...

hank, firstly we're setting a rod for our backs if we start off with a family guy making a career change who needs to instantly meet bills afforded by another. Making music is not a welfare programme for the wealthy.

I'm simply pointing out that there is a business model available to a musician who is good enough to build up a fan base over a few years (through the natural promotion that occurs by unhindered file-sharing, recommendation, etc.).

This musician might start this as a hobby, say, with just a PC, an Internet connection, a USB microphone, a banjo, and some free sound editing software. They can improve this 'home studio' as their revenue builds up.

Somehow I don't think you have recognised the difference between a recording and a copy. A recording is that thing that's produced in a recording studio. A copy is a CD or mp3 encoding thereof.

There is no need for a musician to sell copies (nor any ability - especially if RIAA members are finding their own ability lacking).

So, this musician makes a recording, publishes it for nothing, and eventually gets 10 fans who love it so much they offer $10 each for the next recording.

Note that no CDs have been pressed. The musician needs only pay their modest bills from bar work.

With the offer of $100, the musician produces and publishes another recording and collects $100 from those ten commissioning fans. Word spreads and there are now 20 fans. $200 for the next recording.

Eventually, with a thousand fans he's looking at $10,000 for the next recording.

He'll soon be able to give up bar work, especially at a recording per month.

NB This is a crude example, just to point out the difference between selling recordings and selling copies.

This business model is the same as the old one, it's just that the fan has taken over the role of record label. The fans now commission the musician to produce recordings, and, as usual, the musician sees nothing from the sale of copies. The audience makes their own copies/CDs/MP3s etc.