Why The Major Labels Love Spotify

complete works

complete works

Oh yes, another blog post about Spotify. Just what the world needs. I’ll try [edit: and fail] to keep it brief.

There seems to be, at the moment, a massive gulf between the opinion of many artists-still-making-music and the labels that many of them are signed to. The major labels LOVE it. But artists are talking about Spotify as a wholly bad thing for artists – not enough money… ‘free’ music is bad… Rosanne Cash (a woman for whom I have an enormous amount of respect as an artist, writer, thinker and human) called Spotify ‘legalised piracy’. Why the gulf?

Here’s my take – The financial world of the major labels has, for a LONG time, been focused on back catalogue – music that’s already been successful. Reselling something that’s already in the public consciousness is WAY cheaper than marketing new, untested music. Licensing old tracks is also easier, because people know them. And there’s the simple question of scale.

Reality check: for the Majors, the vast majority of the music they will ever release has already been released.

Their model is weakening, the explosion in creative output over the last decade hasn’t been due to them, and hasn’t happened in their playing field. They still control the biggest selling artists, because they control the budgets and channels that allow artists to sell that many copies, but it’s almost tautological. They make the most money because they spend the most money on making money. They then siphon a lot of it off for executive bonuses and salaries. Some goes back into artists. Most records still fail to recoup on their advance.

So, what do those labels have as their primary asset? From the time when they released the vast majority of music, they own our nostalgia. They own our memories, the music that we grew up with.

Except, they don’t. Cos we ‘own’ it, mostly on CD and vinyl, some of it on cassette, much of it now ripped from CD to MP3. Which is worth what, to them? Nothing. They don’t get paid for us playing CDs.

So Spotify, which houses all that already-sold music, becomes a MUCH cheaper and easier way of getting paid for nostalgic listening than trying to re-format (selling us minidiscs/SACDs/remasters/any old bollocks). 500,000 songs paying $100 a year each is $50million. If you’re the label and publisher who earn that money in aggregate, from people listening to music they already own, you win massive. Especially if you’re still paying your artists a tiny ‘sales’ royalty on that stream, as though you’ve actually done anything, made anything, helped in any way.

What of new music? Well, sticking it on Spotify, for the labels that were spending BIG money to get things in shops, distributed on CD and marketed in the handful of big-box retailers that drive most high street sales, is a MUCH safer bet… you spend your ad-money online instead of paying thousands for prime positioning in Walmart or BestBuy. iTunes is great, but expecting people to pay a flat fee for an album by someone who’s painting themselves as a massive success, who is demonstrably rich, is a tall order. Why? Because it’s really hard to argue that not buying a Taylor Swift or Kanye West album is hurting the artist. It may at some point be true, it may be that they end up hiring less people because they sell fewer albums… there may be some kind of knock on economic damage down the line, but it’s a REALLY hard sell to the kind of people who buy music after seeing it on the shelves of Target or Asda.

So you stick it somewhere where the maximum number of people can hear it, you use back catalogue as the snare to get people into a listening environment, and then you do the same shit you’re doing with the old stuff, and keep the majority of the money as though the ‘stream’ is a sale. As part of your aggregate income, it works. The labels are doing GREAT out of this. They’re also the majority share holders in Spotify, having done an equity deal in exchange for their back catalogue in the first place (all without the permission of the artists).

How useful is this for any one individual artist on a label? Not so great. If you’re an indie artist, own your own recordings and publishing, and put them up there yourself, the streaming rate isn’t *terrible*. It’s not great, and you’d still need HUNDREDS of listeners for every normally-priced sale on Bandcamp, but it’s actually better than most of the headlines would make out. It can probably work for some kinds of enterprise. But if you’re signed? You’re fucked. Your label are making out like bandits on back catalogue and pretending that they have your interests at heart.

They don’t.

If your concern is the ongoing viability of new music, Spotify’s economic model is not one that supports innovation and sustainability for independent artists, on the whole. I’m not sure any other model is specifically geared to that either – it’s ALWAYS been hard to make a living as a musician, and the reduced cost of making and distributing music makes now the best time ever to be a recording musician, if you ask me, but this ‘the future is streaming’ nonsense only works if you’re only concerned with gross figures and the viability of massive record labels, and their ability to pay MASSIVE exec salaries and bonuses. For the record, I have no interest at all in supporting any industrial model that has ‘paying people millions of pounds’ as one of its primary outputs. I don’t think anyone has the ‘right’ to earn that much. Sustainability for the masses is way more important to me than riches for the few.

Last point – ad revenue. Spotify has two sources of income – subscriptions and ads. A LOT of their money, and their viability still comes from ads. Ditto YouTube and most streaming services. That means, in order for you to make money, the people listening to your stuff need to be clicking on ads for shit they don’t need, and buying things in sufficient quantities that the companies buying the ad space keep doing so. I’m not happy with that as a model for arts funding. I’m not happy with that as a model for ANYTHING funding.

So let’s find another way, eh?

Steve Lawson

Another excellent article from Steve Lawson on the music industry.

Originally posted by Steve Lawson on his blog, and reposted here and and on Medium.

Taylor Swift is the latest artist to remove all her material from spotify.

When I find artists, especially indy artists on spotify, I ask please remove your music, persuade other artists to remove their music, and ask music fans, please do not use spotify.

Please do not act as bait for spotify.

If everyone pulled the plug, spotify would collapse, and it is questionable if spotify is financially viable.

When indie artists are on spotify they are at best encouraging their fans to go to spotify, giving it a seal of approval.

The chances of anyone finding them on spotify, if not already known, is zilch.

The boss or founder of spotify recently speaking on BBC Radio 4 admitted, there may be bucket loads of indy music on spotify, but when users do a search it is for well known artists, for artists they already know.

Indy artists are often indy artists for a very good reason, they have wised up to the fact that major record labels will rip them off, chew them up and spit them out. And what do they need a record label for anyway, if they have the wherewithal to go into a recording studio, record their own music, release on bandcamp, release as physical CDs or on memory sticks, sell at gigs through bandcamp?

Steve Lawson, Amanda Palmer, Zoe Keating, Imogen Heap, Jewelia, are but a few of the many many examples I could give of artists successfully recording their own music, without the need of a record label.

There is a reason why record labels are mining past catalogue, because what they are peddling now is complete and utter garbage.

That is not to say there is not good music about, there is, but it is not mainstream.

Steve Lawson is a bass player with an extensive back catalogue. He is not on a record label. He does not release on spotify.

Synchronicty: Last night over dinner, singer-songwriter Jewelia and I were discussing this very subject, that and not being on a record label and using crowd sourcing to finance release of an album. I suggested check out what Steve Lawson may have to say, as he knows what he is talking about. And as if on cue, yes, he has something worthwhile to say.

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