BUT SPOTIFY IS PAYING 70% OF GROSS TO ARTISTS, ISN’T THAT FAIR? NO, AND HERE’S WHY…

Spotify is not paying sustainable rates for the cost of goods. Look – it’s like this, if something cost you $100 to make, and someone else sells it for $10… it doesn’t matter that you are getting 70% of the gross, you’re still over 90% unrecouped on a per unit basis. This is the problem with Spotify, is that it undervalues the true cost of goods (including R&D, etc).

Artists agreeing to streaming their music on Spotify are essentially agreeing to sell albums for One Dollar and Songs for Ten Cents… Oh Wait, Spotfiy actually pays way less than that… (calculated on a per stream basis).

This is why arguments about marginal percentages miss the point completely. It’s about simple math and simple economics.

The cost of music is not in the distribution of music (which is cheap). The cost of music is in the human labor of the CREATION of music (which is expensive).

The cost of goods is greater than the marginal cost to distribute those goods. Stop confusing the product with the container.

The CREATION of music is also more than the cost of RECORDING music. The cost of music is in the sustainable needs of the human labor for food, shelter, clothing, etc.

Spotify can not scale and work at current economics… One More Time…

SPOTIFY MATH FOR THOSE OF YOU AT HOME WITH CALCULATORS:

Just show us the math where streaming scales, we’ll wait. Spotify has 3m paid in the US at $10 each.

$10 x 12 mos = $120 per year. Pay out 70% that’s a gross of $84 per year per subscriber. Simple Math.

That $84 per sub is in revenue to all artists in rights holders. Times that by 3m and you get a whopping $252m a year in a $7b business.

Multiple that by 10, to get 30m subs @ $10a month and that’s only $2.5b a year… and that’s a big IF Spotify ever gets to 30m paid in the USA… and IF they do, that’s ONLY 2.5b in revenue against the $7b now…

So you effectively cut the revenue to everyone by 1/2 to 2/3rds… how does this math work without raising the price of subscriptions? It doesn’t.

It’s just math.

 

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RELATED:

Music Streaming Math, Can It All Add Up?

Who will be the First Fired Label Execs over Spotify Fiasco & Cannibalization?

Streaming Is the Future, Spotify Is Not. Let’s talk Solutions.

by trichordist

Icky. Spotify Goes From Heartbroken Boyfriend to Creepy Cyberbully.

A few days ago we learned that Taylor Swift had decided to “window”her new album and not release it on Spotify.  We also learned that she had removed her back catalogue albums from the Spotify service.

We learned this because Spotify posted this sad little note in which they  begged her to come back to their service.

This of course became a national news story with the press largely lecturing Taylor Swift on “depriving” her fans of her music; Mansplaining that she was making a bad business decision; And generally being mean and greedy.

Bad Taylor.  Poor Spotify.

And then it all turned out to be total bullshit.  Taylor Swift hadn’t pulled her back catalogue from the streaming services.   The albums are available on virtually every other subscription service!  A fact that only a single major US news outlet has noted!  According to Music Ally, Swift wanted her music only on the premium (paid) part of these services.  Spotify refused. They demanded Swift put her albums on the free tier.   Spotify not Swift played hardball.   They didn’t get their way.  She left.

Oh that’s a little different isn’t it?

I mean it’s a little like your friend who comes over to sleep on your couch because his girlfriend broke up with him.  So sad.  They seemed so perfect for each other! You feel bad for him. But the next morning you find out he slept with a flight attendant and tried to make her cat smoke crack.

Oh that’s a little different, isn’t it?

Still that hasn’t stopped Spotify from mounting what now resembles a cyberbully attack on Swift in order to get her to come back to Spotify.  Instead of privately negotiating,  Spotify decided to go public and mount a full throated PR campaign that even features Elevation Partners Managing Director and U2 lead singer Bono  weighing in. Add to that the absolutely unfiltered vitriol that Spotify is allowing in the comments on it’s company blog and it doesn’t look good.  It looks like cyberbullying.

Or  even a “Swift Boat” attack.

And if Swift’s only public interview since this whole thing exploded is any indication?  It doesn’t look like she’s coming back.  Here is Swift earlier today on Yahoo:

“All I can say is that music is changing so quickly, and the landscape of the music industry itself is changing so quickly, that everything new, like Spotify, all feels to me a bit like a grand experiment,” Swift told Yahoo. “And I’m not willing to contribute my life’s work to an experiment that I don’t feel fairly compensates the writers, producers, artists, and creators of this music.”

Tough luck guys.

by Dr. David C Lowery

RIP NARM

…Of Foxes and Hen Houses…

Music Technology Policy

There used to be a great organization called the National Association of Recording Merchandisers or “NARM.”  A few years ago, we watched them invaded by “digital retailers”.  (Check the board of directors photographs–you can spot them the same way you can pick out talent agents–especially the guys who drove BMWs when they were in the mailroom.  You know what I’m talking about.)  Now it is called the “Music Business Association.”

So now I get this crap in my email today:

NARM RIP

The idea that these people are buying into Google’s bullshit shakedown demotion scheme based on “preliminary results are in” just check Torrentfreak is such obvious shillery that it’s nauseating.  The answer to piracy?  Search engine optimization.

“Now would be a great time to refocus your efforts on SEO so your licensed offerings appear ahead of new and smaller infringing sites who will be working hard to improve their own rankings.”

View original post 30 more words

by trichordist

Why Do I Support Taylor Swift’s Decision To Pull Songs Off Spotify? Because It’s a Free Fucking Country.

I was asked to provide a 250-300 word comment for the New York Times on the subject of Taylor Swift, Spotify and whether streaming music is the future.  Apparently my thoughts on the subject were a little too “direct” and consequently they won’t be appearing there.  My friends thought they were amusing. Here they are:

Taylor Swift, Streaming and the Future of the Music Business. 

To quote Yogi Berra “It’s tough to make predictions, especially about the future.” In 2005 we all thought Myspace was the future.  A music industry without MySpace was inconceivable! You think I’m kidding? Go back and read the articles.

So is streaming the future?  It’s probably one part of the future for certain artists. But not all artists.  And what exactly is wrong with that? Since when are we all required to have the same business model?  And why are we having a national hissy fit because a pop star wants to conduct HER business as she sees fit?
It pains me to have to put this in these terms, but unfortunately the hysteria surrounding this issue requires it:
All artists have the right to monetize and exploit their music as they see fit.  Why? Because it’s a free fucking country.  Now, do we really want to stop being a free fucking country just so that we can have free music streaming?
If Taylor Swift doesn’t like the compensation that she is paid by a venture-capital-backed for-profit company she has the right to say no to that deal.   So do you.  You really want to give up that right?
No. I didn’t think so.  Let’s move along.

 

by Dr. David C Lowery

Spotify “Swift Boats” Swift: MusicAlly Reports Spotify Was Taking Hardline Position.

Turns out the biggest music story of the year is actually just a false “swift boat” style attack. And the truth is

Taylor Swift did not pull her back catalogue albums from all streaming services!  She is still available on Beats and other paid subscription services.

With the exception of a few Journalists (notably Stuart Dredge of the Guardian) no one seems to have noticed this very important fact.

Further Dredge is reporting (on MusicAlly.com) that Spotify took the hardline position:

So it’s about whether streaming services are willing to make some albums only available on demand to their paying subscribers, and not to their free users. Spotify is maintaining a hardline policy on this – it won’t take an album unless it’s available to all its users – and that’s the sticking point with Swift, as it has been before with some other artists.

by Dr. David C Lowery

Music Organization That includes Sony, Universal and Warner Declares Google Piracy Demotion Efforts Successful.

You know there’s not room for all of you to have jobs in Silicon Valley…  Right?…

Besides why would any Silicon Valley company hire the cast off dregs of the record industry?  They have the brightest students from the best universities in the world clamoring to work for them…   Why would they hire someone who thinks that The New York Times of torrenting  (TorrentFreak) is an objective source on piracy?….  You guys really are as dumb as you look.  Hey wait,  aren’t you the guys who got us into this shit anyway? … No,.I don’t know if Deezer is hiring…Yes you probably have to speak french….

Oh sorry.  I didn’t know this thing was on.

If you don’t know by now  The Music Business Organization (Formerly NARM)  just sent it’s members a letter proclaiming that Google has finally begun to demote pirate sites–wait for it— citing a TorrentFreak article!!!!!!  Hahahahahaha!  BTW this “fact” is objectively and demonstrably false.   Next the Music Business Organizaton presented to it’s members some sort of SEO (Search Engine Optimization) scam-er uh “service” to members.   Is MBO run from some call center in the Philippines?  What’s next? Will they be calling telling me my auto repair warranty is almost up?

The Music Business Organization is a clown car.   There are no grownups.  The entire recorded music business is run by morons.

On the bright side none of them will have jobs in 2 years.

 
Dear Cathy TurrYou may have already read about the latest Google anti-piracy report and their commitment to modify the demotion signal to make it more effective. If not, we encourage you to do so that the link below:http://googlepublicpolicy.blogspot.com/2014/10/continued-progress-on-fighting-piracy.html

Preliminary results are in and it looks like the recent changes had a meaningful impact.  Many of the pirate sites that consistently appeared at the top of mp3 and download searches are no longer in the top results.  You can read more at http://torrentfreak.com/googles-new-downranking-hits-pirate-sites-hard-141023/

We are optimistic that Google’s changes in the demotion signal will cause persistent infringers to move down in search. However, this will only be meaningful if legitimate results are there to take their place.

Now would be a great time to refocus your efforts on SEO so your licensed offerings appear ahead of new and smaller infringing sites who will be working hard to improve their own rankings.

Tips for how your music site or service can do better in terms of Search Engine Optimization can be found in the following two infographics released by Music Biz:

If you have any questions, please feel free to reach out to a Music Biz staff member.

Thanks!

 

by Dr. David C Lowery

Why Taylor Swift Is Winning The War On Streaming – It’s About The Math Silly, not Technology…

Streaming is Good, the Economics are bad – Get It?

There’s a media pile on claiming that Taylor Swift is going to lose her war on streaming… really? Is there a war on streaming? No. There is no war on streaming. The battle is over economic injustice, not technology. We’ve written about this before…

Streaming Is the Future, Spotify Is Not. Let’s talk Solutions.

and

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

The record business would do well to look at the solutions and marketplace that the film industry has developed with varied and robust consumer options in the streaming landscape. These include different access and payment models, not one business for all.

So let’s get this straight, and go right to the heart of the issue. It’s just math, and it’s simple math at that. We’ll ask again if anyone can show us how streaming scales to sustainability for artists and rights holders. Let’s see it, because this is how it looks to us…

SPOTIFY MATH FOR THOSE OF YOU AT HOME WITH CALCULATORS:

Spotify has ONLY 3m paid in the US at $10 each.

$10 x 12 mos = $120 per year. Pay out 70% that’s a gross of $84 per year per subscriber. Simple Math.

That $84 per sub is in revenue to all artists in rights holders. Times that by 3m and you get a whopping $252m a year in a $7b business.

Multiple that by 10, to get 30m subs @ $10a month and that’s only $2.5b a year… and that’s a big IF Spotify ever gets to 30m paid in the USA… and IF they do, that’s ONLY 2.5b in revenue against the $7b now…

So you effectively cut the revenue to everyone by 1/2 to 2/3rds… how does this math work without raising the price of subscriptions? It doesn’t.

It’s just math.

So please get your arguments right. No one is arguing against streaming as a technology or distribution mechanism. They are arguing over the fact that these piss poor business models can not exist or operate without artists subsidizing VC funded or publicly held companies.

If these business models are so bad that they can not afford to pay for the cost of goods to maintain a sustainable ecosystem it’s time to go back to the drawing board and start over. That has nothing to do with streaming, technology or distribution and everything to do with exploitative economic injustice.

It’s just math silly.

 

 

by trichordist

Rut Ro: @taylorswift13 Leaves the Spotify Cult and Proves the Rule: Spotify Needs Hits, But Hits Don’t Need Spotify

Spotify Needs Hits… But Hits Don’t Need Spotify…

Music Technology Policy

If you’ve been observing the media campaign opposing Taylor Swift’s decision to withdraw from Cult Spotify while having the biggest first week sales of any record in a very long time, hopefully you haven’t been distracted by the bright and shiny object.  Taylor Swift has proven the rule that we all knew, but was very unpopular to actually act on:

Spotify needs hits, but hits don’t need Spotify.

Check it out–if you can find the Billboard chart that deals with people who actually sell stuff, you’ll see what happened very plainly.

Everyone from the LA Times to The View has been acting like the invasion of Bob Lefsetz.  The breadth and scope of this media concentration leads me to one conclusion:  It is being orchestrated.

And who benefits from such a campaign?  Spotify.

So think about that for a minute.  Imagine if you decided that a certain record store didn’t…

View original post 557 more words

by trichordist

Profitable Female Artists Being Told By Money Losing Digital Services They Don’t Understand Business

Does anyone else find this infuriating?

Three female artistes,  Adele, Beyonce and Taylor Swift have now withheld their music from Streaming services.  We have to assume that this was at least partially a business decision.  As should be all artists right, they have chosen to monetize their music without using the streaming services.

Objectively these three female artists are enormously successful and run profitable businesses.

Yet these money-losing streaming services and their (mostly male) journalist supporters seem to be telling these women they don’t understand business?

It would be funny if it was an Onion article.  It’s not.

 

RELATED

Music Streaming Math, Can It All Add Up?

Who will be the First Fired Label Execs over Spotify Fiasco & Cannibalization?

Streaming Is the Future, Spotify Is Not. Let’s talk Solutions.

by Dr. David C Lowery