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Thursday, 24 November 2011

Why the current backlash against Spotify?

[Short link to this article if you need it: or retweet me]

As I've said before I'm happy to pay for music streaming but this week I've seen an increase in issues for streaming services such as Spotify and We7. This has been bubbling under for a while and the primary issue is that of the per-stream royalties that an artist/label/publisher gets when their music is played through spotify. However the whole concept appears to have blown up recently with some high profile acts like Coldplay shunning streaming services claiming "the album needs to be listed as a whole and not as individual tracks" and distributor STHoldings finding that over 98% of it's represented labels wanting to avoid having their music on spotify.

There are valid arguments on both sides. Lets take three typical scenarios:

  • I've mentioned elsewhere that I've bought more music than I did before getting my (paid for) We7 subscription, because of the amount of new music I've discovered and also because I've been able to try first and be more confident about making good purchases. So I'm probably an ideal customer from the perspective of everyone concerned (and so I have a clear consciounse)

  • If you used to buy, say one CD a month, and you're now putting that £10 into a streaming service, why should I put money into continuing to buy music when you have it in the streaming library? You've only got limited amount of money right?

  • If you like variety, buying and listening to everything just a couple of times doesn't work. I would agree with that, but it's a significantly different model, and the charging needs to be worked out to support that, because that's not there at present.

A pro-streaming argument is that it stops people downloading illegally (unless you're streaming on Grooveshark) - you have everything readily available via one interface and it's simply a better user experience to stream this way than finding, downloading, and playing things from unauthorised sources. So for people that move to streaming from BitTorrent, the industry is doing better than they did before. What would not be smart would be to alienate the people that streaming servces have weened off piracy and send them back by dropping their support for the legal alternatives.

The problem is the balance between the two. Headline drivel like "only £100 for a million plays" doesn't tell the full story, but it's not simple. Firstly, that is only insufficient revenue if you assume that someone would have otherwise bought it, as opposed to someone who might not otherwise be able to hear you. The potential for sales ought to be more important than the lost revenue stream. You might get played £50 for a single play on a main radio station, but your number of listeners is far higher than a single personal spotify user. Treat it as revenue per listener and it's not as one-sided as people are making out.

So here's my three-point plan of how that I think the music industry could move towards resolving the issues and I'm excluding the trend that I hope will stop regarding artists removing their music from legitimate services:

  1. Reduce the bitrate of streaming music. If the quality is listenable but lower than what you get if you buy a track/album, then there's an incentive to pay for something you like and regularly listen to. Spotify sort of do this by restricting free and "standard" £5/month accounts to 160kbps, but premium £10/month users can get 320kbps except on the mobile streams. And yes a lower bitrate might push some back to illegal downloading, but I think basic spotify has gained enough support to show that people are accepting a low bit rate compared to music purchases.

  2. Limit plays. The revenue streams being lost by the labels are when people are repeatedly listening to a track or album via their streaming accounts. In this case the artist probably deserves to get more money for it since it's a repeated listen they wouldn't be able to do any other way without paying, and so I don't think it's asking too much for people to pay to own that music. Limit plays of any track/album to five a month (i.e. more than adequate to evaluate it) and that problem is alleviated.

  3. Instead of charging extra for mobile use (as Spotify/We7 do) how about we have a basic £5 charge, and if you want to release tracks to replay over and above the 5 plays/month limit I'm proposing you can do it either on a "pay per play" basis, or have the £10 "unlimited" option. In both cases the pay rate to the rights holders becomes much higher. Lets say 2p per track (including the 5 that got you to that limit). Or even better, just split the extra £5 equally between all the artists/rights holders you've streamed in any given month, or possibly a small amount to the streaming provider. If you could exclude extra payments for tracks you have legally bought (using a cloud music storage system, or even something like iTunes match) then all the better. I'd certainly support that, but I believe the streaming services only have a universal royalty payment for any stream, as fixed by the PPL in the UK.

Wouldn't these be enough to satisfy everyone's requirements? Let's find a sensible solution to these problems instead of devaluing them!

It seems Spotify are going to make some sort of related announcement next week ...



  1. You lost me at "Limit Plays" - The whole point of spotify is that I can play what I want, when I want as often as I want for a monthly fee. Put the fee up, take a bigger chunk but don't tell me I can't listen to a track I like because I played it far too much. Limit me and you're asking me to download it from somewhere else - free.

  2. @Fuzzycat I understand that, but if labels/artist are going to choose not to put their music on Spotify because of the perceived low royalty payments, what would you propose to make them happier? That amount of usage wouldn't affect me, and I said those restrictions could be removed for the higher tier (Spotify+We7 already have 2, I'm proposing using the higher one, not introduce more above that).
    We have to be realistic to everyone's needs, this is simply my feelings on a solution for everyone, and I'd be interested in hearing any alternatives that keeps all parties happy.

  3. UPDATE: Seems Coldplay have now agreed to allow Mylo Xyloto to be available on We7 and Spotify as of today. About time too - a good marketing ploy to maximise revenue by waiting until sales have started to die off? Maybe ...