Is Spotify Bad For Business?

Yes, people still buy CDs. Shit, some people still buy records and cassettes. I know, right? I am one of those people. I have been a purist for physical copies of things. This is not to say that I don’t dabble in digital media, obviously I do. As someone who reviews things on the Internet (and is poor as shit), it is not really feasible to be constantly out buying new releases. That is where online services like Spotify come in handy. There is a debate on this matter though. Are digital distributors, especially streaming services, helping or hurting?

The biggest problem facing services like Spotify are coming from the labels and artists. The way a lot of them were at issue with iTunes and eMusic, they are now at issue with streaming services. The difference being, download services offer a very tangible thing. Your product was downloaded this many time, we made this much money selling it, we split the percentage this way. Streaming seems a bit more nebulous. The royalty percentage is there, but it is based on streams instead of hard sales. While a band is almost certainly going to get more streams than downloads, they are going to get less in overall payment. This makes sense from the perspective of the people running the service, but seems damaging to the people making the content. I have three playlists on Spotify right now. They are three things I am going to review (new releases from Classics Of Love, Lucero, and Dan Vapid & The Cheats). My streaming of those is not the same value as me purchasing those. While it beats the hell out of me illegally downloading them, it does seem unfair. But, from a strictly pragmatic view, something is always better than nothing. It just seems weird to me.

But, to provide better context, we need to go back (way back) to the late 90s. See, I grew up in a time where music was not free online. I mean, yeah, illegal downloading did exist pre-Napster, but it wasn’t so fucking ubiquitous. Now I can do a simple Google search and find anything, but you had to do work to find things back then. Napster came along in 1999 and shifted the way music was consumed. It has only snowballed from there. The industry was never able to rebound. They simply did not adapt. They still haven’t. Now we have a generation of kids who have never had to buy music. Suddenly, music went from being something you actively sought out, listened to, and enjoyed to some passive thing that didn’t mean anything. The best visible consequence of that being the mass closing of retail record stores. People stopped buying music, the industry shit the bed because they couldn’t figure out how to adapt, and music became just another thing to be consumed and disposed. While eMusic has been around since 1998 (and the original a year prior), they primarily dealt with smaller independents instead of playing games with the majors. The biggest innovation in paid for digital music came when the iTunes music store launched in 2003. But, by then, the tide had already turned. Illegal was still king, in digital media.

Streaming as a way to fight illegal downloading is nothing new. Rhapsody has been around since 2001 (with roots going as far back as 1999). It was the first major program that offered unlimited streaming for a flat monthly price. The problem then was that there was no mobile application for it. This was pre-smartphones. So, it was stunted from the get go. If you weren’t at the computer, you couldn’t use the service. It still didn’t have the obvious upside of downloading. Rhapsody is obviously still around, and has made various mobile versions of it’s service. But, there was never as much hype around it as there was around Spotify. The problem is, the issue of artist payment is still a fucking issue a decade later.

There is an interesting quote from an article by Mark Mulligan on Music Industry Blog. It is from a post called “Making Freemium Pay: An Artist’s Perspective.”

“The simple fact is that the disparity between paid downloads and streaming is unsustainable. It just isn’t tenable that 3 paid downloads from Amazon can still deliver 50% more revenue than all the streaming services combined over the same period and yet have less than 1% the activity level of those services.”

 Of course, there is always a counterpoint to that. There was an interview with Ryan O’Neal, from the great Chicago band (and Team Reasonable favourite since 2001) Sleeping At Last, over on Hypebot. Apropos streaming services and illegal downloading he said:

“I’ve noticed over the last couple years that within 24 hours of Sleeping At Last releasing new music, it will pop up in google searches as pirated download links. One click and the record starts downloading. Crazy how fast things get distributed illegally now, and it’s definitely a bit of a bummer.. but I like to believe that the majority of music listeners are well-versed in the right and wrong’s of downloading music illegally and choose to access music through popular and legal options (ie. Spotify, Pandora, iTunes, etc) Honestly, Spotify is a huge help in this department – It gives instant access to an enormous selection of music, and although artists don’t get much money from it, it probably nets people that used to just downloaded it entirely free and illegally anyway.”

So, there is the argument. In the debate, kids who want free music are going to get it. It is really a matter of how. It is a false argument though. To say that “hey, it’s better a band gets a few cents instead of nothing” seems logical, but it isn’t fair. Obviously it is up to the individual artists and labels to decide if they go down this road, but I can see why the wouldn’t.

Articles to read:
The Awkward, Unanswered Questions That Led to Coldplay’s Spotify Embargo (by Mark Mulligan)
Musician Ryan O’Neal On Spotify, Kickstarter & Leaving Interscope To Go D.I.Y. (by Tyler Hayes)
Beggars Group passes artists 50% of streaming revenue (Music Week)
3 Reasons Spotify May Never Be the OS of Music (by Kelland Drumgoole)

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