7 ms·

The authors central point seems to be that Spoitify is at the mercy of the record labels. Because the labels have the music. And that Spotify can't cut them out

by TekMol 9y ago

The authors central point seems to be that Spoitify is at the mercy of the record labels. Because the labels have the music. And that Spotify can't cut them out because they don't have enough users to attract artists: Notice how little power Spotify and Apple Music have; neither has a sufficient user base to attract suppliers (artists) But he does not explain his reasoning behind it. How big is their user base? Why is that not big enough? And how big would it have to be to attract artists?

Cenk 9y ago
What about back catalogs, though? Only the labels can provide those. Edit: Just remembered that Spotify may already be doing something like this[0] for certain areas where name recognition and back catalog don’t matter. A very clever approach, if they commissioned more tracks like these and filled their playlists with them, and concentrated on growing the areas of their user base that listen to those kinds of playlists, they could decrease their dependence on the record labels. [0]: https://www.theverge.com/2017/7/12/15961416/spotify-fake-artist-controversy-mystery-tracks https://www.theverge.com/2017/7/12/15961416/spotify-fake-art...
- ehnto 9y ago
  My understanding was the vast majority of listens come from popular artists, and those listening to niche artists (of which there are tens of thousands) are the minority (~10%). But on researching this comment it would seem I may be way off base https://insights.spotify.com/no/2017/11/02/listening-diversity-spotify/ https://insights.spotify.com/no/2017/11/02/listening-diversi.... I really hope that is the case. I have more than a hundred artists in my saved list and a huge spread of genres and styles. I enjoy Spotify constantly for giving me some of these insights. I am just as likely to get a suggestion for an artist with 1000 followers versus someone with 500,000 thousand. The algorithm doesn't seem to give much weight to popularity and I love that. Popularity just isn't a strong indicator for quality music and people have been musing over that point for centuries. I think for many, music is just background noise or social fodder. Used solely for those ends then popularity matters. Otherwise, it's a useless metric and you are just as likely to find a genius with 200 followers as you are a vapid repeater box with 500,000. The hurdles serve as enough of a barrier for people posting just garbage to the platform, but they don't seem to hinder those who are creative but unpopular.
  - StellarTabi 9y ago
    I'm hoping they double down on non-mainstream music, because that's what I'm using it for.
  - eitland 9y ago
    > I think for many, music is just background noise... That's me 90% of the time. So names doesn't matter much AND I'd actually be happy if the artists got paid better, directly and without feeding the middle men in todays music industry.
dyeje 9y ago
As a someone who used to do music semi professionally, I'm intrigued by this statement. I've never considered signing directly to a distributor. The major problems I see are, no artist wants to be locked to one platform and all the artist management folks Spotify would need to hire.
- TekMol 9y ago
  Why would Spotify lock in the artist? It's enough for them to attain a license to play the songs. Why would that need management folks? Wouldn't a simple signup form be enough?
  - jakevn 9y ago
    Spotify wouldn't lock in the artist, but labels do. If the label demands full rights to a song/album, you would not be able to sign for the label since you've already granted rights to Spotify.
  - dyeje 9y ago
    To me, they were suggesting that Spotify could replace labels if they had 'enough users'. Currently, band to record label relationships are exclusive (i.e. I can't release an album with both Label X and Label Y). Also, labels do a lot more than just getting your music on platforms. If Spotify wanted to replace the label, they would need to provide those services instead.
    - TekMol 9y ago
      Which services do record labels provide?
      - dragonwriter 9y ago
        Financing, networking/matchmaking between different kinds of talent that go into making records, and promotion, just off the top of my head.
      - dyeje 9y ago
anentropic 9y ago
> neither has a sufficient user base to attract suppliers maybe it means 'exclusively'... i.e. it's not the absolute size of user base that matters but relative as long as there is no clear winner, artists would not want to sign up exclusively to one of the services
- anentropic 9y ago
  also, if the record labels are keeping royalty rates 'high' (most artists would say they are pitifully low...) and are therefore acting in this case, through their own self-interest, as collective bargaining agents for artists (or at least, rights-holders) then anything that gives Spotify more power and profitability is presumably even worse for artists
oflannabhra 9y ago
If Spotify were to pull a Netflix and begin signing artists, this would put it in conflict with its current supplier gateways, other labels. Unlike Netflix however, Spotify does not have enough of a market share to prevent the labels from pulling out.
- simias 9y ago
  On top of that I don't think streaming music and videos is completely the same thing. I think for video new content is vastly more valuable than the back catalog, keeping a steady stream of fresh exclusives might be enough to justify a Netflix subscription. Meanwhile I'd say that maybe 2/3rds of my playlists are tracks from the past decade or older. Having only access to a subset of the music being produced today is not really enough for me to justify paying 10 euros a month. When I hear some music that I like on the radio I fully expect to be able to find it on Spotify and most of the time I'm right. If suddenly I have to use 3 different streaming services to access all the music I like then it'll be back to pirating for me. How do you even compile a playlist in these conditions? I really don't think that "pulling a Netflix" would make any sense for Spotify at all, and it would be a terrible thing for the users.
- EADGBE 9y ago
  Also, royalties pay so little it's in the artists' best interest to put their music everywhere in hopes of a streaming revenue.
- fasteddie 9y ago
  On the contrary, a ton of licensors have pulled out of Netflix. Its just that their content is good and at a large enough scale that it doesnt matter. Netflix was lucky to build its in-house production muscle before a lot of the licensors wised up and started building their own platforms.
WisNorCan 9y ago
People often use Netflix as a parallel to reason about Spotify and circumventing labels. But it is a bad comparison. Start with the consumer and work back. Consumers expect their music streaming service to have any song they are looking for. For video they don’t have the same expectation. Music has a greater element of “I want to listen to this particular song/album because it is my favorite”. Video is more about “I want to find something new to watch”. That fundamentally changes the value of having a complete catalog in music and puts Spotify in a weaker spot relative to Netflix.
- nerdponx 9y ago
  For video they don’t have the same expectation. I think this has more to do with the economics of pirating movies versus music. When Netflix started, people were not used to torrenting (or Napster-ing, or Kazaa-ing, etc) movies. They were already at the mercy of Blockbuster, so being at the mercy of Netflix instead wasn't that big a deal. Pirating movies is more popular today, but people are still generally OK with having a limited movie selection. Whereas by the time iTunes Music rolled around, people were already comfortable with having the whole world of music at their fingertips. You can't undo something like that easily. So the only way forward has been to try to have everything. Perhaps the most interesting part about all this is that there was never (to my knowledge) such a thing as a store where you could rent records, tapes, or CDs -- Blockbuster for music.
  - csytan 9y ago
    Music also has much more replay-ability than movies.
  - kakarot 9y ago
    > When Netflix started, people were not used to torrenting (or Napster-ing, or Kazaa-ing, etc) movies Can you provide a source for this that adjusts for the increase in worldwide internet use as well as bandwidth? When Netflix started, it was an overnight DVD delivery company, not directly competing with online movie piracy. Pirating movies in 1997 meant making large sacrifices over quality and convenience, not because people "weren't used to it". By the time Netflix entered the online movie streaming market to compete with piracy, the DMCA had been in effect for years. The world was very used to filesharing before the DMCA went into effect. And Blockbuster was already suffering poorly not just because of Netflix but because of a general shift in how people consume their movies. > Whereas by the time iTunes Music rolled around, people were already comfortable with having the whole world of music at their fingertips Through YouTube? Because otherwise I don't know of a truly comprehensive legal streaming service. Unless you're referring to filesharing? > Perhaps the most interesting part about all this is that there was never (to my knowledge) such a thing as a store where you could rent records, tapes, or CDs -- Blockbuster for music. Music-ripping tools were ubiquitous at the time (everyone had a CD drive), movie ripping tools were not nearly as popular. It didn't economically make sense.
theptip 9y ago
There's possibly a bit of assumed knowledge in Ben Thompson's posts; he analyzes web companies through the lens of his Aggregation Theory. If you're not familiar with that, then it's possible that some of his arguments seem unfounded. [1] It perhaps sounds borderline tautological, but I think the reasoning under Aggregation theory is simply: if they could attract suppliers directly, they would have, and therefore because they haven't, they can't. I think this is reasonable where Aggregation theory holds, since being an Aggregator is an incredibly strong position in the market. To make a reductio ad absurdum example, as a musician, I believe you could currently just upload your recordings to Spotify, and skip the record label, in the same way that Youtube video producers upload their content directly. (Youtube is an example of a true Aggregator in Thompson's terminology.) However it seems quite clear that the Spotify-only approach wouldn't be sensible, because Spotify doesn't get you onto radio, tv commercials, and all the other channels that a record label has available. And Spotify revenue alone is less than Spotify-plus-record label. (e.g. see Taylor Swift, who gets (by a very swift Google search) $160m in revenue [2], vs. $2m paid by Spotify [3] (and split between her and her record label). Obviously some of that revenue comes from non-music revenue, but the album sales numbers suggest that she's netting at least tens of millions per year. [1]: https://stratechery.com/2015/aggregation-theory/ https://stratechery.com/2015/aggregation-theory/ [2]: https://www.forbes.com/sites/zackomalleygreenburg/2016/07/11/taylor-swift-is-the-worlds-top-earning-celebrity-with-170-million-in-2016/#455ff4f0747a https://www.forbes.com/sites/zackomalleygreenburg/2016/07/11... [3]: http://www.businessinsider.com/how-much-taylor-swift-earned-from-spotify-2014-11 http://www.businessinsider.com/how-much-taylor-swift-earned-...

by TekMol 9y ago

Cenk 9y ago

What about back catalogs, though? Only the labels can provide those. Edit: Just remembered that Spotify may already be doing something like this[0] for certain areas where name recognition and back catalog don’t matter. A very clever approach, if they commissioned more tracks like these and filled their playlists with them, and concentrated on growing the areas of their user base that listen to those kinds of playlists, they could decrease their dependence on the record labels. [0]: https://www.theverge.com/2017/7/12/15961416/spotify-fake-artist-controversy-mystery-tracks https://www.theverge.com/2017/7/12/15961416/spotify-fake-art...

ehnto 9y ago
My understanding was the vast majority of listens come from popular artists, and those listening to niche artists (of which there are tens of thousands) are the minority (~10%). But on researching this comment it would seem I may be way off base https://insights.spotify.com/no/2017/11/02/listening-diversity-spotify/ https://insights.spotify.com/no/2017/11/02/listening-diversi.... I really hope that is the case. I have more than a hundred artists in my saved list and a huge spread of genres and styles. I enjoy Spotify constantly for giving me some of these insights. I am just as likely to get a suggestion for an artist with 1000 followers versus someone with 500,000 thousand. The algorithm doesn't seem to give much weight to popularity and I love that. Popularity just isn't a strong indicator for quality music and people have been musing over that point for centuries. I think for many, music is just background noise or social fodder. Used solely for those ends then popularity matters. Otherwise, it's a useless metric and you are just as likely to find a genius with 200 followers as you are a vapid repeater box with 500,000. The hurdles serve as enough of a barrier for people posting just garbage to the platform, but they don't seem to hinder those who are creative but unpopular.
- StellarTabi 9y ago
  I'm hoping they double down on non-mainstream music, because that's what I'm using it for.
- eitland 9y ago
  > I think for many, music is just background noise... That's me 90% of the time. So names doesn't matter much AND I'd actually be happy if the artists got paid better, directly and without feeding the middle men in todays music industry.

dyeje 9y ago

As a someone who used to do music semi professionally, I'm intrigued by this statement. I've never considered signing directly to a distributor. The major problems I see are, no artist wants to be locked to one platform and all the artist management folks Spotify would need to hire.

TekMol 9y ago
Why would Spotify lock in the artist? It's enough for them to attain a license to play the songs. Why would that need management folks? Wouldn't a simple signup form be enough?
- jakevn 9y ago
  Spotify wouldn't lock in the artist, but labels do. If the label demands full rights to a song/album, you would not be able to sign for the label since you've already granted rights to Spotify.
- dyeje 9y ago
  To me, they were suggesting that Spotify could replace labels if they had 'enough users'. Currently, band to record label relationships are exclusive (i.e. I can't release an album with both Label X and Label Y). Also, labels do a lot more than just getting your music on platforms. If Spotify wanted to replace the label, they would need to provide those services instead.
  - TekMol 9y ago
    Which services do record labels provide?
    - dragonwriter 9y ago
      Financing, networking/matchmaking between different kinds of talent that go into making records, and promotion, just off the top of my head.
    - dyeje 9y ago

anentropic 9y ago

> neither has a sufficient user base to attract suppliers maybe it means 'exclusively'... i.e. it's not the absolute size of user base that matters but relative as long as there is no clear winner, artists would not want to sign up exclusively to one of the services

anentropic 9y ago
also, if the record labels are keeping royalty rates 'high' (most artists would say they are pitifully low...) and are therefore acting in this case, through their own self-interest, as collective bargaining agents for artists (or at least, rights-holders) then anything that gives Spotify more power and profitability is presumably even worse for artists

oflannabhra 9y ago

If Spotify were to pull a Netflix and begin signing artists, this would put it in conflict with its current supplier gateways, other labels. Unlike Netflix however, Spotify does not have enough of a market share to prevent the labels from pulling out.

simias 9y ago
On top of that I don't think streaming music and videos is completely the same thing. I think for video new content is vastly more valuable than the back catalog, keeping a steady stream of fresh exclusives might be enough to justify a Netflix subscription. Meanwhile I'd say that maybe 2/3rds of my playlists are tracks from the past decade or older. Having only access to a subset of the music being produced today is not really enough for me to justify paying 10 euros a month. When I hear some music that I like on the radio I fully expect to be able to find it on Spotify and most of the time I'm right. If suddenly I have to use 3 different streaming services to access all the music I like then it'll be back to pirating for me. How do you even compile a playlist in these conditions? I really don't think that "pulling a Netflix" would make any sense for Spotify at all, and it would be a terrible thing for the users.
EADGBE 9y ago
Also, royalties pay so little it's in the artists' best interest to put their music everywhere in hopes of a streaming revenue.
fasteddie 9y ago
On the contrary, a ton of licensors have pulled out of Netflix. Its just that their content is good and at a large enough scale that it doesnt matter. Netflix was lucky to build its in-house production muscle before a lot of the licensors wised up and started building their own platforms.

WisNorCan 9y ago

People often use Netflix as a parallel to reason about Spotify and circumventing labels. But it is a bad comparison. Start with the consumer and work back. Consumers expect their music streaming service to have any song they are looking for. For video they don’t have the same expectation. Music has a greater element of “I want to listen to this particular song/album because it is my favorite”. Video is more about “I want to find something new to watch”. That fundamentally changes the value of having a complete catalog in music and puts Spotify in a weaker spot relative to Netflix.

nerdponx 9y ago
For video they don’t have the same expectation. I think this has more to do with the economics of pirating movies versus music. When Netflix started, people were not used to torrenting (or Napster-ing, or Kazaa-ing, etc) movies. They were already at the mercy of Blockbuster, so being at the mercy of Netflix instead wasn't that big a deal. Pirating movies is more popular today, but people are still generally OK with having a limited movie selection. Whereas by the time iTunes Music rolled around, people were already comfortable with having the whole world of music at their fingertips. You can't undo something like that easily. So the only way forward has been to try to have everything. Perhaps the most interesting part about all this is that there was never (to my knowledge) such a thing as a store where you could rent records, tapes, or CDs -- Blockbuster for music.
- csytan 9y ago
  Music also has much more replay-ability than movies.
- kakarot 9y ago
  > When Netflix started, people were not used to torrenting (or Napster-ing, or Kazaa-ing, etc) movies Can you provide a source for this that adjusts for the increase in worldwide internet use as well as bandwidth? When Netflix started, it was an overnight DVD delivery company, not directly competing with online movie piracy. Pirating movies in 1997 meant making large sacrifices over quality and convenience, not because people "weren't used to it". By the time Netflix entered the online movie streaming market to compete with piracy, the DMCA had been in effect for years. The world was very used to filesharing before the DMCA went into effect. And Blockbuster was already suffering poorly not just because of Netflix but because of a general shift in how people consume their movies. > Whereas by the time iTunes Music rolled around, people were already comfortable with having the whole world of music at their fingertips Through YouTube? Because otherwise I don't know of a truly comprehensive legal streaming service. Unless you're referring to filesharing? > Perhaps the most interesting part about all this is that there was never (to my knowledge) such a thing as a store where you could rent records, tapes, or CDs -- Blockbuster for music. Music-ripping tools were ubiquitous at the time (everyone had a CD drive), movie ripping tools were not nearly as popular. It didn't economically make sense.

theptip 9y ago

There's possibly a bit of assumed knowledge in Ben Thompson's posts; he analyzes web companies through the lens of his Aggregation Theory. If you're not familiar with that, then it's possible that some of his arguments seem unfounded. [1] It perhaps sounds borderline tautological, but I think the reasoning under Aggregation theory is simply: if they could attract suppliers directly, they would have, and therefore because they haven't, they can't. I think this is reasonable where Aggregation theory holds, since being an Aggregator is an incredibly strong position in the market. To make a reductio ad absurdum example, as a musician, I believe you could currently just upload your recordings to Spotify, and skip the record label, in the same way that Youtube video producers upload their content directly. (Youtube is an example of a true Aggregator in Thompson's terminology.) However it seems quite clear that the Spotify-only approach wouldn't be sensible, because Spotify doesn't get you onto radio, tv commercials, and all the other channels that a record label has available. And Spotify revenue alone is less than Spotify-plus-record label. (e.g. see Taylor Swift, who gets (by a very swift Google search) $160m in revenue [2], vs. $2m paid by Spotify [3] (and split between her and her record label). Obviously some of that revenue comes from non-music revenue, but the album sales numbers suggest that she's netting at least tens of millions per year. [1]: https://stratechery.com/2015/aggregation-theory/ https://stratechery.com/2015/aggregation-theory/ [2]: https://www.forbes.com/sites/zackomalleygreenburg/2016/07/11/taylor-swift-is-the-worlds-top-earning-celebrity-with-170-million-in-2016/#455ff4f0747a https://www.forbes.com/sites/zackomalleygreenburg/2016/07/11... [3]: http://www.businessinsider.com/how-much-taylor-swift-earned-from-spotify-2014-11 http://www.businessinsider.com/how-much-taylor-swift-earned-...