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Friday, January 9, 2015

Spotify and Artists (#19b)

(This is Part 2.  You're going to want to read Part 1 if you haven't.) 

You’ve no doubt heard that Taylor Swift reignited the “Spotify doesn’t pay the artists enough” meme when she pulled her music off the service, spoke out against it, and sold a million copies of her new album in a week.  The first question should be, “doesn't pay enough…compared to what?”

To compare Spotify reasonably, we must remember how the music industry was before streaming was mainstream.  The era of $3.49 LPs in the 60's ($20+ in 2015 dollars) and the era of $12 or $15 CDs were great for record labels, but have both come to an end except among collectors and audiophiles.  One can literally count the number of artists who went platinum (sold 1 million+) last year on one hand (Sam Smith, Ariana Grande, Jason Aldean, the Frozen soundtrack, and Taylor Swift).  Total album sales are down from over 700 million in 2001 to less than 150 million in 2014.  iTunes’ rise last decade was a last gasp of the $1 single/$10 album standard, and even then album sales were noticeably declining.  This BillBoard article shows a stark contrast between last year and 1994, when 38 albums had gone platinum by September.  And its not just streaming that took sales from CDs, but illegal file-sharing.  We might forget how huge the problem was last decade: in 2009 NPD group reported that 63% of music acquired by U.S. consumers wasn’t paid for. 
 
So there won't be nearly as much money in selling albums moving forward.  Yet Spotify and its competition have found a solution: offer a user experience so much superior to file-sharing that it's worth paying for music again. And luckily for the artists, Spotify has committed to paying 70% of its revenue back to them (or, more accurately, the labels that control them: hopefully the democratization of content post-internet will change this).  Remember that Spotify’s target is people who were paying little or nothing for music; now artists are sharing the $7 of each subscriber's $10/month.

Is the average artist rolling in Spotify dough?  Definitely not.  70% of revenue averages out to around 3/4s of a penny per stream.  Time.com’s Spotify calculator would suggest the number of artists making millions off of Spotify are in the hundreds (and Taylor was definitely one of them), and an artist would need at least 4 million streams a month to make minimum wage from Spotify alone.

The real winner in $15 CDs.
Spotify is not enough for the millions of aspiring artists to make it.  But what bothers me is the pretense of Taylor Swift representing the average artist.  I’ve spent thousands of hours playing music, but if I released an album, sales would probably be in the dozens, not millions.  If I chose to play music as a career, Youtube and Spotify would be my only options outside of live concerts.  Considering Taylor Swift’s new album has already sold over 3.6 million copies, I trust Taylor has made the right decision for Taylor, but to suggest other artists should boycott Spotify is ridiculous. Spotify just became profitable in the second half of 2014 (Pandora and iTunes Radio have never been profitable), so it's portrayal as a corporate villain is misguided.  The great crime is well-off celebrities and entertainment industry reps lamenting the good old days when consumers paid through the nose for music while refusing to accept that Spotify is the best today’s artists have got.

To the aspiring artist: put your music everywhere.  It is at worst free advertising and at best supplemental income with no marginal cost.  While success from music sales alone is no longer an option for anyone but the Taylors of the world, the digital age will never replace demand for the in-person experiences you provide at each gig and performance.  Now if you’ll excuse me, I’m going to go find out if any of the artists in my playlists are touring.

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