Thursday, July 18, 2013

The Inconvenient Truth About The Recorded Music Business

While I've been away I see the "Spotify don't pay enough" debate has been re-ignited by Thom Yorke, who even says that if they don't raise their rates "new music producers should be brave and vote with their feet". (Seems to me that would be as effective as League Division Two threatening to walk out on the Premier League. "I'm leaving home, mum. I say I'm leaving home.")

This has attracted a "grow up" post from Tim Worstall at Forbes, which finishes by saying that if you're not making enough money on Spotify that may be because not enough people like you, and a similarly robust slap from music industry controversialist Bob Lefsetz who offers this piece of advice from marketing boffin Seth Godin:
"Send your stuff to ten friends. And if they don't tell others, if nothing happens, the problem is you."
Here's the inconvenient truth about the music business. It used to be you could only get music by buying it in units of 12 songs, only two of which you really liked. Bands did very well out of that system. Now that the album's unbundled you can buy the albums you truly love (which is why Adele sells in such huge quantities), buy the single-track downloads that reflect the moment (which is why sales of the big singles are as big as ever) and then taste and try a couple of songs from scores of other albums, most of which don't impress you enough to persuade you to buy the whole album.

If you think the gatekeepers of the music industry aren't fair then take it up with the general public. They're even less fair than the man with the big cigar.


  1. worstall's wrong though isnt he? spotify is not an alternative to radio. seems to me an alternative to buying and owning. makes me laugh the way he thinks he has it all sewn up nicely.

  2. For years the BBC and the music business behaved as if radio was "an alternative to buying and owning music", restricting airplay to a small number of hours a day. Then they convinced themselves that it was a way to encourage people to buy and own. Neither was true.

  3. One of the reasons I put out an EP instead of a full length album was so that Joe Public only had to taste and try 5 tunes instead of 10. And, no surprises here, according to my stats, Joe's interest waned after Track 2! But they really liked my Slade cover; proabably says more about Noddy than me.

  4. 'Fickle Public Speaking' - Vaughn Toulouse.

    is that available on Spotify?

  5. Hi David,

    A problem that a lot of artists have with Spotify is that they (Spotify) did 'the deal' with the major record companies early doors. Artists had no say in the deal, and many with large catalogues had no contractual proviso towards digital media. (esp contracts signed 80s/90s) When the Spotify deals were done obviously some artists would have been a lot more appealing than others. Perhaps there was a sweetener I wonder if some bigger artists have a higher royalty rate with Spotify than 'cannon fodder' artists. Luke Haines

  6. Whenever this discussion comes up I find myself referencing your point, David (IIRC), that if a play on Radio 2, with their fifteen million listeners is worth sixty quid, how much is a single streamed listen on Spotify worth?

  7. Numbers geek (and music consumer) that I am, I had to run my own numbers. At 50 and with shelves groaning with some of the finest CDs (and albums - put the 8-tracks & cassettes up for adoption a few years back) made, I am down to buying about 4 albums a year, most of these at gigs.

    At the mechanical rate of $0.0755 per track and 10 tracks per album, give or take, that's $3.02 per year the owners of the songs make off me.

    On the other hand, since subscribing to Spotify, I'd say I average about 20 albums a week. Again, at 10 cuts per album that's about 10,000 streams per year.

    Estimates vary because of Spotify's revenue model, but using the popular (and lowest) infographic estimate from a few years back of $0.00029 per stream, that's $2.90 per year - pretty close to even before you take into account I'll probably still buy two of those CDs.

    But wait! It gets better. Spotify's actual model from what I've read, is that the song owners get 70% of the subscription and ad revenue. That means they are getting $84/year from me instead of $3.02. Of course, you might say I'm getting 250 times the music, but not really. I'm just listening to the new Avett Bros album instead of "It's Too Late to Stop Now" for the 408th time.