Monday, 2 May 2011

Spotify is dead... long live Spotify

I wrote this for the Student Paper's last issue of the year and it's a little long, so here's the full text (it will be appearing in a much-edited form)...

I have had it up to fucking HERE with people slagging off the recent changes to Spotify's terms of use. All you fucks going “wah wah wah, I don't get free on-demand music anymore” do you realize how spoiled you sound? The service has been changed because Spotify was losing money- not just a little bit of money, but £16.6 million pounds. Recently they passed a milestone of having one million subscribers, or about fifteen percent of its total active user base, and yet they are still losing money. They are a business, and it's therefore a no-brainer that they had to change their terms of use in order to survive. With the paid-up service, you can stream to a mobile device with no advertisements, and all for the price of three pints at the pub (or, to be fair, six in the union); that's incredible value.

More interesting perhaps is the argument I've seen a lot which goes something like this: “now Spotify is charging me to listen, I'll go and illegally download instead- that's lost money to the artists!” No, it's not. Lady Gaga reportedly makes something like £30k a year from streaming revenues, and she's the biggest artist in the world right now. Most artists are a lot smaller than that, and a cult musician who can tour the UK is still going to be lucky to make more than a quid here and there from Spotify or similar services. At a digital insider brief at the MIDEM conference in Cannes, figures were released that suggested a fan base of 105,000 regular streaming fans listening to an artist's record on a frequent basis with a one-and-a-half year record cycle were required to make a minimum-wage level income from streaming. Lest we forget, there's more than one person in a band, and there are families, agents and all the necessary detritus that comes with the industry that are going to need paying. In sum: your streams are not making anybody any money.

“Surely some money is better than no money?” Well, I'll admit you have me there; but if you really wanted to support artists then you'd pay the tenner. Better still, you'd sack up and buy some merch at a gig, but here's the kicker: not many people actually love music. Lots of people say they do, but you can use basic economic concepts like price elasticity and opportunity cost to expose them as liars. To wit: Spotify now costs £10 per month. All those who don't value the service will leave, as there is a high price elasticity of demand. I'm prepared to concede that the service rather than the music might be at fault, so let's go to a more concrete example- the CD (or vinyl LP, as if you're a canny internet dweller, there's not a huge price difference these days). A CD from a band you like is five pounds; you're interested. £10? Not so much.

This however is not what's happening. People have got so used to getting music for free that it's no longer a question of relative price, but of actually purchasing at all- opportunity cost. If you value the pints more than the CD or Spotify subscription, then you will pay for those instead, simple. This brings me to my final point; the reason the industry is on the ropes is because the size of the music market was overestimated. In the bad old days of overpriced CDs, you had to buy an album to hear that one track you caught on the radio; now, you don't. All of those lost sales have left a bloated industry struggling to shed fat in order to survive, because for most people, music is functional. Why pay £10 for a CD to listen to while you cook dinner? For that matter, why pay £7.99 for the download from iTunes? I can understand the reasoning even if I don't share it.

Ultimately true music fans want to support the art and artists they love, whether that means buying a CD or buying merch like t-shirts- there's always going to be a small market of people who demand these things. The key is that those who will leave Spotify on account of £10 per month for more music than they could ever want or need aren't really music fans at all, and it fucks me off that anybody could get self-righteous because for a little while they chose to get something for nothing semi-legally rather than outright illegally. Well done, give yourself a fucking pat on the back.


  1. From the artist's side of things, I think I'd rather people illegally downloaded my songs than listen on Spotify, because Spotify gives off the impression that the artist is being paid, when as you say, it's next to nothing unless you're getting millions of streams.

    If someone downloads the songs at least they know the artist is getting nothing and I would hope that at least some people would keep that in mind, then maybe they'll be more likely to buy a t-shirt at the next show or tell their friends about me. Perhaps that's wishful thinking, and I'm sure many people will just download it and never pay me anything, but that's no worse than them listening on Spotify.

  2. Artists can put their music on Spotify AND have it available as free downloads - Spotify is a great platform for finding new music and at least it's being made available ad-free and can be transferred to phones and ipads etc.

    If you are very successful then you will get royalties - this assumes that you already feel handsomely rewarded by the returns you get from itunes et al - at least your music is effectively streamed (or properly protected), rather than given away for the paltry sums you get for a download through the biggest music retailers in the world ?

    I made a point elsewhere that people are prepared to pay £30 for a designer T-Shirt, 10p for a text or 35p a minute on their mobiles, but feel that 33p a day for access to an unlimited library of music, some of which is at 320kps and available across platforms, is a rip off...

    I don't necessarily like paying for music (especially when it turns out to be disappointing) but..

    Wake up...!!