Category: the future of music

Five Important Questions For Spotify from Artists and Managers

If artists and managers were to find themselves in a room in the coming weeks with representatives of Spotify there are some questions which should probably be asked and some issues which should probably be raised.

Spotify is working hard to convince musicians that they are not the enemy. We appreciate that the service is legally licensed. We also recognize that the major labels have a different relationship to Spotify than most artists ever will as it has been reported the major labels collectively have at least an 18% equity stake in the company.

What is particularly troubling about these equity positions (same for the Beats sale to Apple) is that we don’t know of any artists who benefit from their work being used as the leverage for the labels equity participation.

So with this in mind here are five questions artists and their managers could ask Spotify…

1) At what scale and price point is Spotify actually sustainable for artists? 

Daniel Ek says it’s 40m paid subscribers, but that math just doesn’t work. 40m Subscribers x’s $84 per year = $3.3b in annual global revenue to artists and rights holders (assuming they really are paying out 70% of gross). Here’s the simple math* : 40,000,000 x’s $84 = $3,360,000,000

* 10 a month per subscriber, x’s 12 months = $120 per year per subscriber. $120 per year per subscriber paying 70% to rights holders is $84 per year per subscriber.

The current domestic record business is bottoming out at about $7b annually.

When confronted with this fact, “Investor and Artist In Residence” D.A. Wallach recently responded publicly that “Itunes has more than 40m users.” Ok, fine. We showed you our math, how about you show us yours. Once that’s out of the way, let’s ask the second question…

2) When do you think Spotify can realistically achieve a sustainable scale for artists?

Given that Netflix only has 36m subscribers in the USA and that there only 56m premium cable subscribers in the USA why does anyone really think Spotify will have more than that anytime soon? Spotify is reporting only 10m paid subscribers, and that’s for the entire world. Sirius XM as a mature business, which is installed in homes, cars and is also accessible via the internet only has 26.3m subscribers across all platforms.

Does anyone really think that Spotify is going to ramp up to over 80m paid subscribers in the USA alone anytime soon? We’ve detailed this math before, it’s not pretty and it’s right here.

3) Why not publicly show the full tables of equity participation’s and the distribution of payments, including the rate of pay to all stakeholders? If Spotify is really paying out 70% of revenues, let’s see where it is really going and who is getting what share.

We already know that majors (and possibly Merlin) are getting preferred rates.  Say what you will about Apple but everyone knows that take a flat 30% across the board. It’s a transparent business. If Spotify wants to talk about transparency and openess, they should lead by fully disclosing this information.

4) Why should artist trust a business created by the same person who profited massively from the illegal distribution of artists work, without compensating them?

According to Wikipedia, Daniel Ek the CEO of Spotify was also “CEO of µTorrent, the world’s most popular BitTorrent client with more than 100 million downloads.” uTorrent makes its money the same way The Pirate Bay does, by monetizing the distribution of infringing works with advertising revenue.

5) Why not publicly and vocally join the fight against Ad Funded Piracy? Why not publicly endorse and support legislation (like SOPA) that would stop illegally operating businesses like uTorrent from destroying the lives of creators?

Well, this should be pretty obvious given that the CEO of uTorrent is now the CEO of Spotify. We all know there is a lot of money being made in the distribution of music online. Unfortunately that money is not being paid to artists in a meaningful and sustainable way. In the case of uTorrent artists don’t see a penny. Spotify paying fractions of a penny to artists per play is functionally of little difference to most artists.

The simple truth is that the fundamental problem with Spotify and other businesses like it, is that the cost of goods is grossly undervalued. In other words, the only way that streaming really works is to increase both the price of subscriptions and the number of paid subscribers. Of course we understand the appeal of having musicians subsidize their business, but in a word that is just unsustainable.

One last point… Stop with the misleading press and stories about Spotify growing the transactional business. It’s not. It’s not going to. Spotify is cannibalizing the transactional business into accelerated decline without replacing the revenue that is being lost. If this trend continues we’re knowingly pursuing a death spiral from a current $7b annual business in the US to a $3b annual business.

It’s not that complicated, it’s just math.

RELATED:

A Tale of Two Pirates? Daniel Ek (uTorrent) and Kim Dotcom (Megaupload)

 

A Detailed Explanation on Why Streaming Has Failed…

 

Streaming Isn’t Saving the Music Industry After All, Data Shows…

 

Sorry, Streaming Isn’t Saving the Music Industry In 2014…

by Trichordist Editor

The Hypocrisy Of BitTorrent Knows No Bounds… Matt Mason Speaks…

BitTorrent’s Matt Mason let this one loose…

““We’re not interested in streaming for the sake of lining the pockets of a few people at major labels. We’re interested in helping artists make money from their work in the long term… I’m not trying to bash the people at the labels, but it does seem like the senior executives at the majors have said ‘we give up, let’s just make some money on the Spotify IPO, then go home and let the next generation sort it out’.”

You’re kidding right? We can’t make this up. As if BitTorrent has done anything other than destroy the lives of creators to have a self empowered right to make their own choices with their own work… So in your mind Matt, BitTorrent are the good guys and Spotify are the bad guys?

What percentage of music is Spotify distributing illegally? What percentage of music on Spotify are artist not getting paid on? Ok, now ask the same questions of BitTorrent.  Research finds that 99%+ of files distrbuted via BitTorrent are infringing (see the links below).

Wow, just wow.

And there’s this line from Matt’s interview with the Guardian UK:

“We’re a technology company, we’re really good at moving files. We’re not so great at being a label, a film studio or a book publisher.”

We know Matt because being a label, a film studio or a book publisher would mean you would actually pay the creators for the work you are distributing and investing in developing their careers through financial advances, marketing, promotion, pr, and other resources. Obviously things BitTorrent is loath to do for artists.

But let’s ask, how much money has BitTorrent invested into developing artists and helping them “make money from their work in the long term”… ah, that would be zero.

READ THE FULL POST AT MUSIC ALLY:
http://musically.com/2014/09/29/bittorrent-thom-yorke-spotify-u2/

RELATED:

Record Labels Invest $4.5 Billion Annually In Artists… Pirates, $0… Any Questions?

“Options, not rules”: BitTorrent Profits from Piracy By Serving Ads To UTorrent Client

We’re All Waiting, BitTorrent

Just a Word About Thom Yorke and Bit-Torrent…

by Trichordist Editor

Just a Word About Thom Yorke and Bit-Torrent…

We’ve been here before. We know how this story ends as it did previously for both NIN and Radiohead. We remember those experiments too and we remember what was said after that fact.

Let’s be clear:  Bit Torrent Bundles is taking advantage of an installed base of 170 million plus users that they obtained for one reason and one reason only–they have a product that they have perfected into the best tool for piracy in history.  And understand, this is not just some kid in a dorm room who came up with some software.  This is a commercial company that improves and perfects its product and has done so for 13 years.  There’s nothing spontaneous about this company that suddenly are shocked, shocked that there is piracy going on with their application.  Check out Andrew Keen’s interview with Bit Torrent founder Bram Cohen and Cohen’s unconvincing regurgitation of the Lessig excuses for stealing from artists.

Bit Torrent has been struggling for years to commercialize that installed base whether it’s through selling over 5 billion ads a month in the uTorrent browser or now by a supremely innovative business model–selling downloads.  Selling downloads was perfected by iTunes over 10 years ago and selling ads to profit from piracy is as old as Google Adsense.  So what’s innovative about Bit Torrent Bundles?

What’s innovative is that having stolen the audience from a vast number of creators, be they artists, film makers, authors, photographers, illustrators, free lancers and others, and from investors in creators, be they record companies, music publishers, book publishers and others, Bit Torrent now wants to sell the distribution channel it stole back to those who are solely responsible for creating it.

This is a form of blackmail, pure and simple.  This is why there are unfair business practice laws to protect the public from people like Bit Torrent.

If the artists participating in the Bit Torrent Bundles program are able to overlook Bit Torrent’s history, that is their decision.  If they can sleep at night knowing they are profiting from the massive theft of other peoples creations, then bully for them.  If they think it’s good logic to compromise themselves for the opportunity to sell to a mailing list of shoplifters, then we’re also looking forward to their solution for 2 plus 2 equals -5.  Please show the work.

And most importantly:  If these artists think that it’s a good idea to legitimize Bit Torrent without requiring the company to do something about the massive theft they support, then so be it.  We get it.

These type of “experiments” generally only work if the artist is someone who has had the benefit of more than a decade of marketing and promotion paid for by a multinational corporation spending millions and millions of dollars.  Which is why these artists are also the top tracks being stolen using the Bit Torrent application.  If there is logic to this, please let us know.  It just looks like the typical Big Tech shakedown.

Why?  How much money has Bit-Torrent invested in Radiohead’s career? Zero. But hey, they have distributed hundreds of millions of copies of the bands catalog to consumers without compensating the band a penny. Not one cent. Ev-er.  And now they have the brass to charge artists a distribution fee for Bit Torrent Bundles?  If Bit Torrent gave the artists the service for free, that would at least make some kind of sense.  But as usual, Big Tech just heaps insult on injury on insult.

When BitTorrent takes care of the 99.7% of infringing material they distribute, that will be cause for celebration.

RELATED:

BitTorrent, “Not Designed For Piracy”… Really? Seriously? 99% Infringing…

BitTorrent 99% Infringing, 100% Disinformation… now with Ads.

BitTorrent’s Dictator Problem. Belarus is Worse than Russia, Why Does Bittorrent Operate Development Center in Minsk?

by Trichordist Editor

DMCA “Takedown” Notices: Why “Takedown” Should Become “Take Down and Stay Down” and Why It’s Good for Everyone | Nova Edu

We reported on this earlier this year and it’s great to see other voices stepping up!

by Stephen Carlisle

In other words, Google’s not going to do anything unless Google gets a slice of the profit. When asked, shouldn’t search engines have an affirmative duty to prevent the reposting of materials, she responded that it would be “impractical to enforce and it would chill online speech.” 19 This answer begs the question: since when is the repeated posting of “blatantly infringing” material online protected speech? To quote the Supreme Court of the United States, the First Amendment “securely protects the freedom to make—or decline to make—one’s own speech; it bears less heavily when speakers assert the right to make other people’s speeches.” 20 According to the RIAA, they have sent more than two million takedown requests to Google about the website mp3skull. Despite this, mp3skull continues to top Google’s search results for “artist+songname+download.” 21 Whose speech is being chilled here?

READ THE FULL STORY AT:
http://copyright.nova.edu/dmca-takedown-notices/

RELATED:

DMCA “Take Down and Stay Down” Is The Logical Solution to a Flawed Loophole [VIDEO]

 

https://vimeo.com/94514834

by Trichordist Editor

Spotify Doesn’t Kill Music Sales like Smoking Doesn’t Cause Cancer…

This just in from Digital Music News, we’re not surprised. The death spiral towards the $3b annual record business is accelerating… One word to artists and music executives reading this post… “WINDOWING”…

May 10th, 2013:

“We have data that’s proving and demonstrating the fact that streaming revenue is additional to actual unit download consumption or physical music sales…”

Katie Schlosser, Spotify Account Manager of Label Relations, speaking at NARM.

September 12th, 2014:

“Streaming consumers are buying few albums.  30 percent of consumers are music streamers and a fifth of these consumers pay to stream.  Streaming has driven new market growth in countries such as Sweden but in larger markets such as the US it is denting digital music buying.

READ THE FULL STORY AT DIGITAL MUSIC NEWS:
http://www.digitalmusicnews.com/permalink/2014/09/12/research-now-shows-streaming-kills-download-sales

RELATED:

Why Spotify is not Netflix (But Maybe It Should Be)

Spotify’s Daniel Ek is Really Bad At Simple Math

Merchants Of Doubt in Silicon Valley : What Every Musician Needs to Know About Ad Funded Piracy

by trichordist

LouFest 2014: Cake’s John McCrea Talks | MusicTimes

“As much as I hated major labels and indie labels, probably more than anyone I know, one thing you can say for them is that they were able to translate the success of one band and invest in a new band that no one knew about. And there is nothing currently that is actually doing that anymore. So that’s a structural problem. But you know who is going to fight to keep the current status quo are the tech companies that have grease running down their faces and hands from the fat of their plunder.”

READ THE FULL INTERVIEW AT MUSICTIMES:
http://www.musictimes.com/articles/9699/20140905/cake-john-mccrea-talks-follow-up-showroom-compassion-loufest-2014-distance-music-industry-tech-companies.htm

by trichordist

‘Piracy sites don’t love music – they love money’ | Music Week

“A pilot scheme saw a 12% drop in advertising [on piracy sites] from major household brands, the kind of big names that lend legitimacy to illegal sites,” said Javid. “It’s a small first step. But over time the list, along with action taken by payment facilitators, will provide a valuable tool for making copyright infringement a much less lucrative business.

“And that’s the best way to stop the career copyright criminals… Copyright crooks don’t love music – they love money, and they’ve been attracted to the industry solely by its potential to make them rich. Take away their profits and you take away their reason for being.”

Read the Full Story at Music Week:
http://www.musicweek.com/news/read/piracy-sites-don-t-love-music-they-love-money/059475

by Trichordist Editor

Sons of Anarchy’s Kurt Sutter Is A Rock Star for Creators Rights

We love Kurt Sutter’s unapologetic response to Google and Silicon Valley’s assault on creators. Below are links to Kurt’s two editorials that are essential reading for all creators to understand what the “internet economy” means for artists of all disciplines.

Kurt Sutter Attacks Google: Stop Profiting from Piracy (Guest Column) | Variety

Google is in the process of systematically destroying our artistic future, and more importantly, the future of our children and grandchildren. They’re spending tens of millions of dollars each year on eroding creative copyright laws. I believe that if the creative community doesn’t intervene now, and by now, I mean, fucking now — we will be bound to a multigenerational clusterfuck that will take 40 to 50 years to unravel.

The last time this happened was in the 1950s, when the tobacco industry spent millions to hide the truth, and convince everyone that smoking cigarettes wasn’t really dangerous to your health.

Earlier this year, Kurt took to writing a response in Slate to an editorial by Google Lobbyist Marvin Ammori (which lead to a later editorial disclosure of Mr. Ammori’s relationships).

Not-So-Zen and the Art of Voluntary Agreements | Slate

Every writer, producer, actor, musician, director, tech wizard, and fine artist working today needs to be aware of what this all means for our future—we will lose the ability to protect and profit from our own work. Every kid out there who aspires to be an actor or musician or artist: This is your future that’s at stake. More importantly, everyone who enjoys quality entertainment: This impacts you most of all. Content excellence cannot sustain itself if it loses its capacity to reward the talent that creates it. Consider this clunky analogy: If your local car dealership started selling your favorite luxury car for $1,000, then $100, then started giving it away, what do you think would happen to the quality of that vehicle? Before long, the manufacturer would be forced to let go of the skilled laborer, the artisan, and the craftsman, and eventually cut back on everything in the production process. And before long, that fabulous, high-end car you so enjoyed will be a sheet of warped plywood on top of two rusty cans.

Yep, it’s cheap, and it’s shit.

Among the arguments that Kurt brings to light are the use of Merchants Of Doubt tactics by Silicon Valley interests, the mechanics employed by Google and YouTube detailed by The Digital Citizens Alliance and the ability for creatives of all disciplines to join Creative Future for a unified voice against these forces of exploitation.

by Trichordist Editor

The Future Of Music According to Gene Simmons and Jaron Lanier…

Gene Simmons may not be the most sympathetic figure in conversations about artists rights in the digital age but there is something to be said when he and Jaron Lanier make essentially the same observations about the future of music and artist revenue streams.

Simmons is quoted in a new interview in Esquire Magazine, “Rock Is Finally Dead”:

“The masses do not recognize file-sharing and downloading as stealing because there’s a copy left behind for you — it’s not that copy that’s the problem, it’s the other one that someone received but didn’t pay for. The problem is that nobody will pay you for the 10,000 hours you put in to create what you created. I can only imagine the frustration of all that work, and having no one value it enough to pay you for it.

It’s very sad for new bands. My heart goes out to them. They just don’t have a chance. If you play guitar, it’s almost impossible. You’re better off not even learning how to play guitar or write songs, and just singing in the shower and auditioning for The X Factor. And I’m not slamming The X Factor, or pop singers. But where’s the next Bob Dylan? Where’s the next Beatles? Where are the songwriters? Where are the creators? Many of them now have to work behind the scenes, to prop up pop acts and write their stuff for them.”

Simmons goes on to state that music and culture have stagnated.  He asks what great bands and artists have emerged in the post internet era?

Jaron Lanier made essentially the same observation back in 2010 in an interview with The New York Times, “The Madness of Crowds and an Internet Delusion.“

“…authors, journalists, musicians and artists are encouraged to treat the fruits of their intellects and imaginations as fragments to be given without pay to the hive mind. Reciprocity takes the form of self-promotion. Culture is to become precisely nothing but advertising.

It’s as if culture froze just before it became digitally open, and all we can do now is mine the past like salvagers picking over a garbage dump,” Mr. Lanier writes. Or, to use another of his grim metaphors: “Creative people — the new peasants — come to resemble animals converging on shrinking oases of old media in a depleted desert.”

It speaks volumes when two people of such different backgrounds and perspectives make the same observation.

by Trichordist Editor