What Does Spotify Really Mean for Musicians?

Spotify Logo

Damon Krukowski, of Galaxie 500 and Damon & Naomi fame, recently wrote an editorial for Pitchfork in which he explains how musical streaming services like Spotify and Pandora have benefited him as an artist. As it turns out, they haven’t done a whole lot for him.

My BMI royalty check arrived recently, reporting songwriting earnings from the first quarter of 2012, and I was glad to see that our music is being listened to via these services. Galaxie 500′s “Tugboat”, for example, was played 7,800 times on Pandora that quarter, for which its three songwriters were paid a collective total of 21 cents, or seven cents each. Spotify pays better: For the 5,960 times “Tugboat” was played there, Galaxie 500′s songwriters went collectively into triple digits: $1.05 (35 cents each).

To put this into perspective: Since we own our own recordings, by my calculation it would take songwriting royalties for roughly 312,000 plays on Pandora to earn us the profit of one – one — LP sale. (On Spotify, one LP is equivalent to 47,680 plays.)

Or to put it in historical perspective: The “Tugboat” 7″ single, Galaxie 500′s very first release, cost us $980.22 for 1,000 copies — including shipping! (Naomi kept the receipts) — or 98 cents each. I no longer remember what we sold them for, but obviously it was easy to turn at least a couple bucks’ profit on each. Which means we earned more from every one of those 7″s we sold than from the song’s recent 13,760 plays on Pandora and Spotify. Here’s yet another way to look at it: Pressing 1,000 singles in 1988 gave us the earning potential of more than 13 million streams in 2012. (And people say the internet is a bonanza for young bands…)

More:

When I started making records, the model of economic exchange was exceedingly simple: make something, price it for more than it costs to manufacture, and sell it if you can. It was industrial capitalism, on a 7″ scale. The model now seems closer to financial speculation. Pandora and Spotify are not selling goods; they are selling access, a piece of the action. Sign on, and we’ll all benefit. (I’m struck by the way that even crowd-sourcing mimics this “investment” model of contemporary capitalism: You buy in to what doesn’t yet exist.)

But here’s the rub: Pandora and Spotify are not earning any income from their services, either. In the first quarter of 2012, Pandora — the same company that paid Galaxie 500 a total of $1.21 for their use of “Tugboat” — reported a net loss of more than $20 million dollars. As for Spotify, their latest annual report revealed a loss in 2011 of $56 million.

Leaving aside why these companies are bothering to chisel 10,000ths of a cent from already ridiculously low “royalties,” or paying lobbyists to work a bill through Congress that would lower those rates even further– let’s instead ask a question they themselves might consider relevant: Why are they in business at all?

Krukowski is no Luddite — in fact, he’s even a Spotify subscriber and recognizes its benefits for him as a music listener. However, he’s under no pretenses that Spotify will really benefit him as an artist. He’ll still make most of his money via actual album sales, a model that services like Spotify and Pandora are undercutting.

I’m not trying to make you drop your Spotify subscription, but I do want to make a simple point: Spotify, in and of itself, does not help musicians. Some people argue that it brings musicians more exposure, which can translate to more sales — which seems plausible. But so far, I haven’t seen any numbers to that effect. (If you know of some, please share them in the comments.) From what I’ve seen to date, the musicians who benefit from Spotify already have a devoted following prior to blowing up on Spotify or they were in a niche audience and the label had to take extra steps to bring about sales.

If you hear something you really like on Spotify, don’t assume for a minute that simply listening to it a lot is going to result in any real, material benefits for the musician. If you really love a musician’s music and want to support them, then nothing is going to beat actually buying their CDs from Amazon, iTunes, Bandcamp, etc., or buying some physical merchandise like a t-shirt. Better yet, track down the musician’s website and buy something from them directly.

Certainly, services like Spotify are here to stay. Consumers clearly like the convenience and ease of use that they offer, not to mention the vast musical library that is now at their fingertips. But these services are changing the way in which consumers think about music. Music increasingly becomes a commodity, something more akin to financial speculation, as Krukowski notes. The irony, though, is that those who benefit the least from these services are those who make the services’ existence, popularity, and even necessity possible.

About Jason Morehead

Jason Morehead lives in the lovely state of Nebraska with his wife, three children, zero pets, and a large collection of CDs, DVDs, books, and video games. He's a fan of Arcade Fire and Arvo Pärt, Jackie Chan and Andrei Tarkovsky, "Doctor Who" and "Community," and C.S. Lewis and Haruki Murakami. He's also a web development geek, which pays the bills — and buys new music and movies. Twitter: @jasonopus. Web: http://opus.fm.

  • Brad Williams

    Anecdotal evidence that Spotify works: I have bought both Mumford & Sons and Avett Brothers albums because of it. I even attended an Avett Bros. concert because I love them so much on Spotify.

    I cannot say this is normal, but for me, it has exposed me to way more music than I would have otherwise listened to, and it has translated into more profitable sales for some of those musicians already, and when I get more money, I will be making more purchases down the road.

  • http://opus.fm/ Jason Morehead

    Hopefully, more people will follow in your footsteps.

    I’m curious, though: Did you know about Mumford & Sons and Avett Brothers before you were on Spotify, or did you discover them through Spotify?

  • Brad Williams

    I ‘discovered’ them via recommendations from folks, and Spotify was my easiest course to test the waters before making a purchase. I have not yet randomly discovered a group on Spotify itself, well, except Katie Carroll. I heard an advertisement of her music on Spotify, and I am kind of digging her song “Paper Girl”, but it has not translated into an album sell yet.

  • Brad Williams

    However, I suspect that if I had a functioning iPod I would be broke from all the single song purchases I would have made from listening to Spotify.

  • http://stustation.wordpress.com StuartB

    Spotify is my main music delivery service while I’m at work, but I can’t say I have discovered any new bands or artists from it. I have however had recommendations from other people (The Dear Hunter and Porcupine Tree come to mind) that have led me to discover their music on Spotify, with subsequent album purchases eventually (always through Amazon, never through iTunes).

    If it’s music discover you are looking for, I’d recommend Turntable.FM. I can’t get it to load at work, some window won’t work with our proxy despite full blessings from the IT department to use it, but at home, it’s simply the best for discovering things you’d never have heard before.

  • Richard Clark

    Your IT department is nuts for giving you full blessing to use Turntable.FM at work. That thing is a productivity killer.

  • Ryan

    Derek Webb had a great post on why you’re better off giving your music for free than streaming it on Spotify: http://derekwebb.tumblr.com/post/13503899950/giving-it-away-how-free-music-makes-more-than-sense

  • snooze

    just reading and one idea come to me … 15 years ago you will go to shop, small of huge, fancy or dark… but you could spend hours there listening to the new music, and you will not pay a cent. on the cost of the shop owner which along the way loose their money, and have to close shops, and then you will go to the internet and get this music for free. today situation is changed, no more shops, now you have to pay 10 bucks a month to listen it on some steaming service, and if you like music / you could hardly steel it as there are outside on the net services you pay and they remove tracks from illegal download sites. so to own music, you will have to buy a cd or vinyl. then you own something. and most of the music which is on streaming services u could find on u tube 4 free … so question will be what we are willing to pay for music, and how, or which channel. i am not sure are u aware that every shop u enter, every haridresser, gym, or hotel …pays money to collecting societies, for music u listen there, and actually they caluclate that cost in the price u pay. so now with services as a spotify, we getting at least some order in almost free music we listen. and maybe its OK. as nobody is discussing is it few cents we paying for empty media, or in gym, which are going to collecting society, small or big, and actually how its distributed and are the right people get the money …. we are in the begining of the shift of paradigm in the music industry, or maybe shift already happen …

  • Pingback: Listen to our Favorite Music of 2012 on Spotify! BONUS: Our Personal Favorites!

  • Steven Schulman

    Pandora often runs in the background. Mine runs all day even though I’m probably only listening to it for an hour or two, maybe. Similar to the radio.


CLOSE | X

HIDE | X