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Sunday, November 20, 2011

If £8 for 90,000 Spotify plays isn't enough, what is?


"Got paid £8 for 90,000 plays. Fuck Spotify." That was a tweet the other day from the musician/producer Jon Hopkins. You can see how opening an envelope containing that royalty statement might catch you on the raw. Apparently an increasing number of smaller labels are removing their music from the streaming service because the revenues aren't worth it and they fear that it could have a detrimental effect on the sales of their CDs.

I'm not seeking to press Spotify's case but how big would the cheque have to be to make Jon Hopkins think it was worth persevering with them. Double? Triple? Ten times bigger? At what point does it seem about the right sum of money? Presumably at a point where Spotify decide they no longer want to deal with the Jon Hopkins of the world and will stick to Lady Gaga.

This kind of thing's happening all the time at the moment. In the days of scarce physical product prices were high and the winners could make money. Now we're in the world of digital product, frictionless communication and limitless supply even the rest of the field are achieving numbers and numbers make people think they should be earning money which is commensurate with those numbers. But it doesn't work like that. Writers are getting paid far less money (if they're getting any money at all) to have their work read by far more people on a blog than they would have got for having it read by a relatively small readership in a paid paper product.

Nobody knows anymore what the numbers signify. Presumably those 90,000 plays aren't the equivalent of 90,000 plays on a radio station big or small. (With traditional mechanical payments you get a lot more for having your song played on Radio Two than you would for having it played on a small local station.) Presumably 90,000 represents the number of times any one individual has accessed the stream on which the artist's song can be found. What's the average number of individuals it would take to generate that kind of activity? This 90,000 presumably includes a handful of people who listen to one song obsessively and a lot more people who just click once out of curiosity and never go back. It's not 90,000 fans. It's not even 90,000 listeners. It's 90,000 clicks.

If you sold 90,000 records you might expect to have done quite well. And you'd have reason to believe that you might be on your way to selling 250,000 records. You'd be some kind of a hit. If you'd had your record played just once on a radio station with 90,000 listeners you'd expect to get, well, eight pounds?

22 comments:

Dead Radio Society said...

This is an interesting post, but I can completely see where Hopkins is coming from here. How generous you his £8 royalty cheque depends on how people are using Spotify, and in my experience there seem to be three main uses:

1) As an alternative to radio. Queue up tracks from a playlist, or some tracks that you're interested in, and just listen. You're still buying physical copies of artists you really like, so the artist is only missing out on radio royalties, not album royalties.

2) As a "try before you buy" listening post. People listening in this way are still going to buy the album, but not before seeing whether it's worth it. So here the artist is missing out on royalties from people who would've bought the album, but then decided they didn't like it. I think that's fair enough.

3) As an instant record collection. This is where the real loss of royalties comes in. Many people I know will listen to an album over and over on Spotify without buying it.

Now, Spotify have changed the rules so that there's a limit to how much you can do this without paying, which is fairer to artists in my opinion. But once you have paid that nominal fee, you can listen on your phone, so it's portable. There is absolutely no need for ownership any more, unless you want the artwork, or you just feel nostalgic. Even if these people are paying £10 a month for premium subscription, that's £10 for as many albums as they can possibly listen to in that time. Under the old model of CD (or MP3, or vinyl, or cassette) ownership, they would have paid near enough £10 for EACH album they wanted, a percentage of which (lets say 10%) would have gone to the artist (recoupable debts to the record company notwithstanding). So if more than eight people have listened to Hopkins' album on Spotify INSTEAD of buying it, he's lost out. By this view, you can see why he's frustrated.

Obviously this isn't flawless logic. Many of the people using Spotify in this way would have been illegally downloading before, thus depriving Hopkins of ANY royalties. Besides, it's impossible to know how people are using Spotify until someone does a serious study into it.

I'm not against Spotify, and certainly when compared to illegal downloading, it's definitely the better option. It's probably the best model we have for how the music business will work in the future. But the debate needs to be open as to how fair it is to artists. If I buy Hopkins' album, he gets £1 (probably at the very most). If his album has 10 tracks, I have to listen to it a good 100 times before he gets that.

Martyn Joseph said...

A good thought David and the first of any that has made me think in the opposite direction as far as Spotify is concerned. Don't think £8 is fair though unless it leads to much wider exposure for the artist both in true sales and bums on seats..which it might, though I'm not convinced that radio play does that anymore either.

www.martynjoseph.com

rivets said...

I don't want to rent my music because it can just vanish at someone's whim. As has just happened in fact. I don't necessarily want physical product however but I do prefer it. I much prefer the (old) emusic model to spotify, though I have no idea what money goes to artists from emusic. But even emusic has churn with labels for some reason - that may be due to it having lostt its specialist direction.

I am not sure but I suspect that £8 for 90000 clicks is about what the rental market can bear. Personally I think spotify is over priced and don't subscribe - there are way too many holes in their offering. When someone can give me guaranteed access to everything then I might consider it. It is not even slightly difficult from a technological point of view either.

Ian Shepherd said...

I agree with Dead Radio Society - there's a grey area where people use Spotify as a replacement for physical product, rather than a broadcast alternative.

I'm a big fan of John Hopkins, I found him on Spotify, but so far I haven't bought his albums.

However, I'm a subscriber to Spotify, *and* I still buy box sets & deluxe re-issues, and I'd happily pay more if the money went directly to the artists I choose to listen to - in fact I posted about it on G+ a couple of weeks ago:

https://plus.google.com/105987522254728728192/posts/ft2UL1DJCZW

It's a tricky balancing act...

Dead Radio Society said...

I agree with you that that's probably all that Spotify can afford right now, as by all accounts they're still losing money. But I don't think that it's "overpriced" by any stretch of the imagination. £5 a month for as much ad-free music listening as you want? That sounds like a bargain to me, and Spotify needs more subscribers if it's going to survive as a model.

Jimmy Martin said...
This comment has been removed by the author.
Hazy said...

As someone who uses Spotify as a way to share playlists with people, I am so glad to read this perspective. Yes, bands don't make much money when their music is played on Spotify, but they make less when their music is shared between friends in the old-fashioned way of sharing music. I use Spotify as a replacement for my college-era friends who used to work in record stores and would let me borrow records or play them in the store before I decided whether to buy the album or not.

Jimmy Martin said...

I'd recommend having a read of this, a fairly impartial look into how much spotify actually pays artists.

http://trustmeimascientist.com/2011/09/05/how-much-does-spotify-pay/

If John Hopkins is really being paid somewhere around 2-3% of what he's generally entitled to by spotify (which would seem to be a conservative estimate judging by this) then I would say he has every right to be perturbed.

John Medd said...

In the not too distant, when we will all be able to access 'The Cloud' and everything in it for nothing (cos that's the way it's going), £8 will be looked back on as quite a large hill of beans.

John Medd said...

Matt Priest too has a similar bone to pick.

Mathew Priest said...

Thanks John Medd (above) our thoughts were really on CDs and packaging but I don't mind being roped into this one

Spotify, and David's question, well it's certainly a good question and what we'd hope we'd get is certainly a lot more than we'd expect to get. Also good point is those three ways people use Spotify. As with most of these things, these music 'services' have launched themselves onto the scene and are working out the business model later. It's all interesting, we'll have a think and if we have a moment might even include a bit in a future blog.

Also, kudos to Jon Hopkins for getting quite a bit of coverage out of this *wink*, I'd certainly never heard of him before now, I'm sure that wasn't his intention...

Elnif said...

As Ian Shepherd I found Jon Hopkins at Spotify - became a fan - and haven't bought his albums, but streamed them instead - but! I would never have gone to his concerts if I hadn't stumbled upon him online.

I doesn't justify the £8's - but the way artists, media etc. earn their money has changed - it isn't as black and white as the Hopkins tweet suggests.

Josephine said...

I discovered Jon Hopkins through YouTube. Free of charge...

Very interesting topics about what artists are actually paid. I think apart from the reasons people have to listen to Spotify, you might also wonder what artists hope to get out of it. More fans? Less illegal downloading their songs? Earn money?

Keith Jopling said...

Assuming he's on say 10% royalty, then £8 makes sense. If it was a 50:50 revenue share on streaming then it would be closer to £45. So the answer to your question David is perhaps £45? Sorry to be so literal, but...

David Hepworth said...

Assuming you're right, Keith, and I've no reason to believe you're not, then I wonder whether the sentiment in the original tweet might be the same. That's what I'm getting at. I don't know what the market rate is for allowing your music to be available for streaming on a (presumably non-exclusive) music service but I wouldn't be surprised if most people would consider £45 for 90,000 plays as not being great money. And that's many times more than the original sum.

John H said...

I think the last paragraph nails it. People like to think 90,000 hits on Spotify is equivalent to selling 90,000 singles. It's *much* more like getting played on Radio 2 once.

michael said...

Instead of complaining about it, Mr Hopkins should be using his best endeavours to find out who these 90,000 people are, and maybe sell them a concert ticket, he could make a few quid then.

Lee Slator said...

This is a very interesting post David and Dead Radio Society's first comment at the top off this form hits the nail on the head about the three uses for the service.

As a consumer, Spotify is excellent value with access to such a plethora of music. The only issue I have is that if for any reason Spotify is no longer available to you, any albums/playlists that are saved on there have to be bought physically or saved again on an alternative streaming site. For that reason I decided to stick with my current strategy of buying music if and when I can afford it. I still trial an album on Spotify beforehand though.

Milton said...

It is impossible for an "on demand" service to pay anything like a half-decent rate per play, because it would simply destroy itself. The second one play of an on-demand service becomes financially worthwhile, then it becomes a cash-grab free-for-all that the service can no longer afford. If I got paid even a penny per play, I would simply set up a playlist playing my tracks all day every day, while I got on with other things, as would every other musician on earth. I doubt Spotify could afford that. Furthermore, its advertisers would quickly lose interest as the majority of its users wouldn't be actively listening.

Milton said...

...so, to conclude, if I were a professional musician I would wait at least 6 months after the release of any album before letting it get to Spotify. EPs? Singles? Sure! albums? nah, I'd focus on cultivating and maintaining a good Bandcamp presence. Bandcamp pages feel more like "albums" - you can add lyrics, downloadable artwork etc etc; plus Bandcamp take a lower cut than iTunes does.

Milton said...

One more comment...

"If you'd had your record played just once on a radio station with 90,000 listeners you'd expect to get, well, eight pounds?"

not sure how rhetorical this quote was, but getting played on a BBC radio station is probably the best net return a musician is likely to get these days: we're talking £50-£70 per play. An independant semi-pro solo singer, recording exclusively at home, who owns all their own publishing, could actually finance the release of a cottage-industry album off just 20 plays on BBC radio.

nobodaddy said...

As an artist signed to a small label, I'd rather people shared music illegally than use Spotify. The difference is virtually nothing to me, but the file sharer / torrent user is a)using their initiative and b)NOT contributing to someone other than the artist/label earning money, lots of money. It seems to be forgotten to most of us arguing about the rights and wrongs of Spotify that SOMEONE IS MAKING MILLIONS OF DOLLARS! (and it's not artists or independent labels whose earnings don't reflect plays received).