Spotify: The Good, The Bad

Spotify is a commercial music streaming service that originally launched in Sweden in 2008. They provide their 20 million customers with digital rights management protected content from record labels.  However only a quarter of their consumers actually are subscribed to Spotify, of which pay a monthly fee that is determined by their location. As someone who works in the music industry and who has also become a Spotify convert over the last two years, I am both intrigued and torn in relation to all of the turmoil surrounding the service over the last few weeks.

Similar to Pandora’s current dilemma, the argument is whether the revenue paid to artists is a substantial one or not, especially for small artists. Rock music superstar Thom Yorke of Radiohead and Atoms for Peace, along with AFP collaborator Nigel Godrich, have been leading the crusade from the artist perspective, boycotting the service and pulling AFP records and Yorke’s solo material from their extensive library. They are just two out of a number of artists, however, to have spoken out against the popular music subscription service, “claiming that the ‘freemium’ streaming model simply doesn’t generate the revenue that indie artists are owed.”

SoundCtrl also stated that, “the record labels are really making the money in this new revenue model, not just because of the royalty deals they have in place with Spotify but also simply because they have large catalogues which are heavily streamed.”

The New Yorker recently reported, “… Streaming arrangements, like those made with Spotify, are institutionalizing a marginal role for the recordings that were once major income streams for working musicians.”

From the other end of the spectrum, Music Ally posted, “Streaming music cannibalizes piracy more than it does sales, and while the individual per-stream payouts are much less than for CD or download sales, paying out every time a track is played will add up in the long term.”

And for big name artists, this is true. But what about emerging acts?

Making your music available on Spotify could do wonderful things for your career; although it tends to be a gamble, just like any other marketing endeavor. There is a chance to increase your fans and listenership two-fold, which will inevitably bring in revenue. Increasing reach could bring bigger and better opportunities, especially if streaming services share more data with the artists on their fans. Music Ally reported that potentially the biggest way streaming services can help new artists will be through being a discovery tool that bridges the gap between potential fans/listeners and those bands they might not otherwise hear of.

I agree with this wholeheartedly, as Spotify’s Discover page is the tool I use most often when utilizing the service and I have discovered countless amounts of new music through this. They even partnered with Songkick to alert the customer when a band they’ve been listening to is playing nearby. Continuing to promote artists this way and branching out even further by partnering with other music sites could very well be the kick start needed for a young band’s career. Exposure is ultimately what every artist seeks most.

Either way, this is a debate that is sure to not find resolution anytime soon. Being still such a startup company, Spotify will have to work hard to ultimately figure out a way to make both the artist and consumer as happy with their service as possible. However at this point in the game it will have to be trial and error in order to see what may work and what will not.