When you have followed the news about Spotify the last few weeks you could become afraid to start the client. It might well be empty. Hundreds of labels leaving and big acts like Coldplay, Tom Waits and Adele are refusing to release their latest albums on Spotify.
The news about 200+ labels leaving however is not as bad as it looks. It concerns small labels targeted at a small audience. Few Spotify users will have noticed that this music has disappeared. The reason why they left is more interesting. In this case the decision was made by the distributor of these labels, ST Holdings They released the music on several streaming services in Q2 2011. In Q3 they noticed that their sales dropped by 14%.. The songs were streamed about 700.000 times but that only generated 2.6% of the revenue in Q3. What a brilliant analysis! Blame streaming for this drop in sales! How about other many other possible reasons like the current recession maybe? Can’t wait for ST Holdings Q4 results.
I know streams don’t bring as much money as sales in short term. But 700,000 streams! Does ST Holdings realize how many new fans may have discovered their labels/artists this way? Isn’t that far more important than the short term revenue?
A band with millions of fans all over the world. These guys earn more in a single year than many of their fans will earn in their entire life. Now this band doesn’t want to release their new album on streaming services because there is a chance that this will bring them more money! It’s an outrage!
But will this non-streaming policy work? Will it generate more sales? I expect most Spotify users to pick up their old habit, illegal downloading. The group of former freeloaders is way bigger than the ones who are used to buying their Music at iTunes. Does Coldplay really believe that the freeloaders who are converted to legal Spotify users will now find their way to the iTunes Music Store all of a sudden?
Downloads: apples, streams: oranges
Some years ago when most of us were still into illegal downloading, labels couldn’t stop counting all these downloads as sales they could have made. Now there are doing the very same thing with streams. Please stop comparing apples and oranges. Paid downloads bring in money fast while streams will keep bring you income for as long as people stay listening to your songs. Call it long tail whatever, one hit song can bring you a source of income for life. This way the quality of a song is rewarded more fair than a hyped sale of CDs that are covered in dust because the songs aren’t that good after all.
Patience gets rewarded
Let’s take a look at an artist who joined Spotify from the very start. Early this year Ugress published an article with an overview of his Spotify and iTunes revenue over 2009 en 2010. As you will see his patience was rewarded. In the long run Spotify started to bring him more than iTunes.
Music label Kudos also paints a positive picture No sing of revenue decreasing because of streaming.
Artists and labels, would you please stop whining over low pay outs? Spotify has just started, they don’t make profit yet so how on earth do you expect them to pay far more than the €0,004 per stream they are paying now! The pay out still on the rise. Give it some time. Complain what you want, but you just cannot force your fans back to the CD store. Streaming is here to stay. Your fans are on the streaming services, so you have to be there.
And to all news sites that are all to eager to bring bad news, would you please dig a little deeper before you publish. If you had done some investigation the ST Holdings would not have made the headlines.
And I would like to finish this article by referring you to the best comment I have read so far.. 200 labels leaving Spotify? I will listen to other Music then . The article is in Dutch but Google translate will do the trick I guess.
Another excellent article was published today by The IrishTimes.com: Spotify and the blame game
Spotify is obviously not amused by all these negative publicity. They issued this statement today:
“It would take more than 100 years to listen to Spotify’s catalogue of around 15 million songs – one of the world’s biggest music libraries – and to which we add more than 20,000 new tracks every day. We have agreements with the four major labels and many thousands of smaller indie labels, and the overwhelming majority of our label partners are thrilled with the revenues we’re returning to them. We believe we offer the simplest, easiest and fairest music service in the world, and millions of our users across 12 countries would agree with us.
We are very sorry that a few labels and artists have chosen not to make their music available to their fans on Spotify, and will also therefore not reap the benefits of increased listener reach and buzz alongside revenue. We do however hope that they will change their minds, as the Spotify model is adding, and will continue to add, huge value to the music industry. Right now we have already convinced millions of consumers to pay for music again, to move away from downloading illegally and therefore generate real revenue for the music business.
We – alongside many artists and labels – dispute many of the numbers that have been discussed recently pertaining to Spotify. Artists can – and do – receive very substantial revenues from Spotify, and as Spotify grows, these revenue streams will naturally continue to grow. It is important to note that we do not have direct, contractual relationships with artists. We compensate collecting societies, who pay on to publishers and songwriters, and the record companies (who in turn compensate the artist) for use of a track. Spotify is now the second single largest source of digital music revenue for labels in Europe (IFPI, April 2011) and we’ve driven more than $150 million of revenue to rights holders since our launch three years ago.”