6 ms·

Spotify is second largest source of revenue in Europe for labels

124 points by vilpponen 16y ago

kennywinker 16y ago
http://torrentfreak.com/spotify-income-is-microscopic-laughable-pathetic-110205/ http://torrentfreak.com/spotify-income-is-microscopic-laugha... Good for labels, not so good for artists
- tintin 16y ago
  Maybe that's what your read, but you could also read that Lady Gaga has more income from iTunes just because more copies were sold there. And ofcourse this has nothing to do with Spotify. They just have a contract with the labels. How labels distribute income is up to the labels.
- yesbabyyes 16y ago
  Here's the thing with Spotify: The major four all own a share of the company (around 4-6%, if I'm not mistaken). For them to be willing to license their music, they negotiated a sweet deal: They get a lot more per play than indie artists (or artists on labels not on the major four). So, if you're a Spotify customer, paying 100 SEK ($15)/month and listening exclusively to, say, Santigold, most of the loot will still end up in the big four's pockets.
- JonnieCache 16y ago
  Spotify cannot be compared to iTunes and amazon, or traditional CD sales. It is more equivalent to royalties from FM radio play. Lots of people don't seem to get this. The smart musicians realise they can do things like put their album on there for the month before the release, leave it on there for the month after its release, then yank it away and watch the MP3 sales climb. I see this quite a lot. Planet Mu records in particular seem to have a subset of their extensive back catalogue on there that is constantly in rotation. This practice has basically forced me to buy music from them on more than one occasion. It's like the mythical practice of drug dealers giving kids free samples to get them hooked :)
  - adsr 16y ago
    Of course it can! The fact that it is on-demand practically negates the need to buy the music else where. On radio you have to sit around waiting for your song to come on. I've seen royalty reports from Spotify's largest artists, and it was indeed microscopically small.
  - unicornporn 16y ago
    > Spotify cannot be compared to iTunes and amazon, or traditional CD sales. It is more equivalent to royalties from FM radio play. Well, that sounds like a strange simile to me. When listening to FM radio you do not chose what tracks you listen to. Spotify isn't Pandora. With Spotify, you can chose whatever track you like (as long they have it and there's no commercial queued). Lady Gaga got $167 for 1 million plays. Imagine what the small artists receives. Spotify is controlled by the four major record companies: Universal, EMI, Sony and Warner. Even if they just own 18% of the shares, Spotify's entire existence rests on the trust that these record companies continue to license "their" music. The four record companies are using the power of Spotify to further strengthen its domination over other record companies and penalize artists outside their own team. To me, listening to Spotify and actually believing you are doing something better for the artist than those who pirate is no less than delusion.
    - mzl 16y ago
      The Lady Gaga figure is not relevant. It was for the first months of public Spotify, before they had any real revenue. Since the payout is revenue based and not fixed (at least as far as I've heard), the level of revenue impacts the payouts a lot. Also, AFAIK, no official figures are released for how much any artist gets from Spotify currently.
    - StrawberryFrog 16y ago
      listening to Spotify and actually believing you are doing something better for the artist than those who pirate is no less than delusion. That’s sad to hear, and I hope it gets fixed, but But I didn't sign up for Spotify in order to "do something for teh starving artists" I, and the people I know who signed up for it, did so because 1) it's legal 2) it's cheap 3) It gives instant access to a wealth of music beyond what I could ever listen to in my whole life. It’s not every song ever (for instance there’s no Frank Zappa, no Coil, and the cusswords in Cake’s songs are blipped out) but it's close. The artists were starving when the major labels were ripping them off, the artists are starving now their songs get copied and torented. It’s sad that Spotify doesn’t solve that problem, and that it doesn’t cure cancer either, but hey, at least Spotify didn’t make things worse. Spotify’s competition is yes, illegal downloads. Illegal downloads have the advantage in price - they’re free, but they lose out to Spotify in not being legal and being less searchable. The "instant music" really is a distinguishing feature. e.g. Gary Moore dies -> Play some of his music on Spotify. Friend says he’s been digging a band called "Aesthetic perfection" -> Listen to them all afternoon on Spotify. As ever, casual listening, if the artist gets paid or not is a gateway to finding new music that you really like, leading to being a fan and buying CDs/MP3s, gig tickets and merchandise.
- agaton 16y ago
  I think illegal piracy downloading is the real competitor to Spotify, not CD:s or iTunes. This is the problem they're trying to solve http://www.avc.com/a_vc/2011/02/anatomy-of-a-pirate.html http://www.avc.com/a_vc/2011/02/anatomy-of-a-pirate.html As you might now The Pirate Bay and piracy have been huge in Sweden. Spotify have changed that when it comes to music. By making it _easier_ to listen to music via their application than via bittorrent/kazaa/napster/dc++ downloading, they're now the most used music player in Sweden. Just a few years ago the Pirate Bay top 100 list was full of music. Now there's two (2!) music albums on it, the rest is tv-series and movies. If you look at it that way, that piracy is the competitor not cd sales, the music industry has a great opportunity in Spotify in the long run.
  - furyg3 16y ago
    100% correct, at least as it pertains to me. The concept of "owning" music has been dead to my generation since Napster. I'm not even sure what that concept means, nowadays. Music is like water, you can get it from a million sources, paid or not. Getting it isn't the problem. My real problem is finding what I want to listen to at this very moment, and managing it. I don't want to spend forever finding my music, downloading it, arranging payment, organizing it, backing it up, copying it to my iPod or other computer, etc. Spotify gets this: search -> listen -> add to playlists. At work, home, wherever... just login. Girlfriend's music? Switch user. Throw away my iPod, it was just a shipping container, anyway.
    - seabee 16y ago
      And the nice thing is it picks up your local files (and even syncs them to your mobile just like the other songs!) It solves the organisation problem very neatly. Piracy will find it hard to compete.
    - agaton 16y ago
      Actually, you don't even need to switch users to listen to your girlfriends music. The social layer they've integrated via Facebook makes it possible for you to listen to her playlists as well, from your account ;) #win
- jrmg 16y ago
  I'd be more interested to see how much an album will make in an artist's lifetime. Traditionally, you buy the album once. With Spotify, money changes hands whenever a track is played, on an ongoing basis.
- bartl 16y ago
  Uh, that complaint was a quote from a music label executive. "Good for labels"?
2arrs2ells 16y ago
Spotify background (in case others were ignorant like me): * 10 million free users can stream any song in the 10 million song catalog to their desktop (Pandora-style ads) * 750,000 paid users - no ads, support for streaming to mobile (Android, iPhone, etc), better quality stream * Paid 45 million Euro to labels in 2010
- frou_dh 16y ago
  You can also pay half and forgo the mobile streaming.
  - pdaddyo 16y ago
    Just to clarify it's not just mobile streaming, but offline mobile support. I carry around 1500 tracks on my Android using Spotify Premium for £10 / month. The transparent wifi syncing and social aspects of the service (collaborative playlists, music inbox etc) are awesome too. If it's available in your country, I urge you to try it.
- unicornporn 16y ago
  * Partially owned by the big four (18%), who got their shares for basically nothing. * So far, they're losing more money each year. http://eu.techcrunch.com/2010/11/22/spotify-had-a-16-66m-loss-in-2009-a-rumoured-us-launch-is-now-imperative/ http://eu.techcrunch.com/2010/11/22/spotify-had-a-16-66m-los...
- burke 16y ago
  There is a North American equivalent: http://rdio.com http://rdio.com
  - Tomek_ 16y ago
    But it has an interface that no one undestands
    - kingkilr 16y ago
kleiba 16y ago
Spotify is not available in Germany. Neither is Pandora.
- to 16y ago
  nor is netflix, gamefly, grooveshark (or is it by now?) and uncensored video games. i think a service like netflix is about time to hit europe and esp. germany with all the traffic you want on 50mbit lines in every house and over 85% online connectivity over all 10-18 year olds. anyway. im not sure if that article isnt just made up by someone to support spotify. people here in america dont even know what grooveshark, last.fm or pandora is but people know about spotify in the countries where its available to an extend that its the second largest source of income of _european_ labels. most big labels are US anyway... either they are US or they have their HQ in the states. besides the fact that 2.2 million euro in income is pretty much nothing. at the end with sweden and finland combined we're talking about around 15m people - you just cant move much with it. i call BS on that one and vote for an edit of the title to: "Spotify Could Be Second Largest Source Of Revenue For Labels In Europe"
- mzl 16y ago
  That is most likely due to GEMA (the german collection agency) having very high fees for internet streaming. Same problem in Denmark with their collection agency.
  - DrJokepu 16y ago
    Exactly. GEMA charges a minimum of €0.1916 ($0.2626) for each streaming of a song up to five minutes. Compare that to the £0.0022 ($0.0035) charged by PRS for Music, the equivalent performing rights collection society in the United Kingdom.
dragonintime 16y ago
Sorry, but this is inaccurate. The IFPI report says Spotify is the second largest source of DIGITAL revenue. (Itunes is number 1.) Big difference. Digital revenue is about 20% of total revenue for European labels.
- kragen 16y ago
  Are Compact Disc Digital Audio sales being counted as non-digital?
  - bartl 16y ago
    I think so. "Digital music sales" generally means the sale of music files, while CDs are counted as physical objects, not files.
    - kragen 16y ago
      That is mindblowingly stupid. (I know it's not your fault.)
- vilpponen 16y ago
  As the writer of the article, I want to apologise for that inaccuracy. I have added this clarification to the article itself and mentioned of this in the end. The mistake was completely unintentional. However, it would be interesting to research if there are single entities larger than iTunes or Spotify selling "analogue" music on a European level - which could hold the initial statement true.

124 points by vilpponen 16y ago

http://torrentfreak.com/spotify-income-is-microscopic-laughable-pathetic-110205/ http://torrentfreak.com/spotify-income-is-microscopic-laugha... Good for labels, not so good for artists

tintin 16y ago
Maybe that's what your read, but you could also read that Lady Gaga has more income from iTunes just because more copies were sold there. And ofcourse this has nothing to do with Spotify. They just have a contract with the labels. How labels distribute income is up to the labels.
yesbabyyes 16y ago
Here's the thing with Spotify: The major four all own a share of the company (around 4-6%, if I'm not mistaken). For them to be willing to license their music, they negotiated a sweet deal: They get a lot more per play than indie artists (or artists on labels not on the major four). So, if you're a Spotify customer, paying 100 SEK ($15)/month and listening exclusively to, say, Santigold, most of the loot will still end up in the big four's pockets.
JonnieCache 16y ago
Spotify cannot be compared to iTunes and amazon, or traditional CD sales. It is more equivalent to royalties from FM radio play. Lots of people don't seem to get this. The smart musicians realise they can do things like put their album on there for the month before the release, leave it on there for the month after its release, then yank it away and watch the MP3 sales climb. I see this quite a lot. Planet Mu records in particular seem to have a subset of their extensive back catalogue on there that is constantly in rotation. This practice has basically forced me to buy music from them on more than one occasion. It's like the mythical practice of drug dealers giving kids free samples to get them hooked :)
- adsr 16y ago
  Of course it can! The fact that it is on-demand practically negates the need to buy the music else where. On radio you have to sit around waiting for your song to come on. I've seen royalty reports from Spotify's largest artists, and it was indeed microscopically small.
- unicornporn 16y ago
  > Spotify cannot be compared to iTunes and amazon, or traditional CD sales. It is more equivalent to royalties from FM radio play. Well, that sounds like a strange simile to me. When listening to FM radio you do not chose what tracks you listen to. Spotify isn't Pandora. With Spotify, you can chose whatever track you like (as long they have it and there's no commercial queued). Lady Gaga got $167 for 1 million plays. Imagine what the small artists receives. Spotify is controlled by the four major record companies: Universal, EMI, Sony and Warner. Even if they just own 18% of the shares, Spotify's entire existence rests on the trust that these record companies continue to license "their" music. The four record companies are using the power of Spotify to further strengthen its domination over other record companies and penalize artists outside their own team. To me, listening to Spotify and actually believing you are doing something better for the artist than those who pirate is no less than delusion.
  - mzl 16y ago
    The Lady Gaga figure is not relevant. It was for the first months of public Spotify, before they had any real revenue. Since the payout is revenue based and not fixed (at least as far as I've heard), the level of revenue impacts the payouts a lot. Also, AFAIK, no official figures are released for how much any artist gets from Spotify currently.
  - StrawberryFrog 16y ago
    listening to Spotify and actually believing you are doing something better for the artist than those who pirate is no less than delusion. That’s sad to hear, and I hope it gets fixed, but But I didn't sign up for Spotify in order to "do something for teh starving artists" I, and the people I know who signed up for it, did so because 1) it's legal 2) it's cheap 3) It gives instant access to a wealth of music beyond what I could ever listen to in my whole life. It’s not every song ever (for instance there’s no Frank Zappa, no Coil, and the cusswords in Cake’s songs are blipped out) but it's close. The artists were starving when the major labels were ripping them off, the artists are starving now their songs get copied and torented. It’s sad that Spotify doesn’t solve that problem, and that it doesn’t cure cancer either, but hey, at least Spotify didn’t make things worse. Spotify’s competition is yes, illegal downloads. Illegal downloads have the advantage in price - they’re free, but they lose out to Spotify in not being legal and being less searchable. The "instant music" really is a distinguishing feature. e.g. Gary Moore dies -> Play some of his music on Spotify. Friend says he’s been digging a band called "Aesthetic perfection" -> Listen to them all afternoon on Spotify. As ever, casual listening, if the artist gets paid or not is a gateway to finding new music that you really like, leading to being a fan and buying CDs/MP3s, gig tickets and merchandise.
agaton 16y ago
I think illegal piracy downloading is the real competitor to Spotify, not CD:s or iTunes. This is the problem they're trying to solve http://www.avc.com/a_vc/2011/02/anatomy-of-a-pirate.html http://www.avc.com/a_vc/2011/02/anatomy-of-a-pirate.html As you might now The Pirate Bay and piracy have been huge in Sweden. Spotify have changed that when it comes to music. By making it _easier_ to listen to music via their application than via bittorrent/kazaa/napster/dc++ downloading, they're now the most used music player in Sweden. Just a few years ago the Pirate Bay top 100 list was full of music. Now there's two (2!) music albums on it, the rest is tv-series and movies. If you look at it that way, that piracy is the competitor not cd sales, the music industry has a great opportunity in Spotify in the long run.
- furyg3 16y ago
  100% correct, at least as it pertains to me. The concept of "owning" music has been dead to my generation since Napster. I'm not even sure what that concept means, nowadays. Music is like water, you can get it from a million sources, paid or not. Getting it isn't the problem. My real problem is finding what I want to listen to at this very moment, and managing it. I don't want to spend forever finding my music, downloading it, arranging payment, organizing it, backing it up, copying it to my iPod or other computer, etc. Spotify gets this: search -> listen -> add to playlists. At work, home, wherever... just login. Girlfriend's music? Switch user. Throw away my iPod, it was just a shipping container, anyway.
  - seabee 16y ago
    And the nice thing is it picks up your local files (and even syncs them to your mobile just like the other songs!) It solves the organisation problem very neatly. Piracy will find it hard to compete.
  - agaton 16y ago
    Actually, you don't even need to switch users to listen to your girlfriends music. The social layer they've integrated via Facebook makes it possible for you to listen to her playlists as well, from your account ;) #win
jrmg 16y ago
I'd be more interested to see how much an album will make in an artist's lifetime. Traditionally, you buy the album once. With Spotify, money changes hands whenever a track is played, on an ongoing basis.
bartl 16y ago
Uh, that complaint was a quote from a music label executive. "Good for labels"?

2arrs2ells 16y ago

Spotify background (in case others were ignorant like me): * 10 million free users can stream any song in the 10 million song catalog to their desktop (Pandora-style ads) * 750,000 paid users - no ads, support for streaming to mobile (Android, iPhone, etc), better quality stream * Paid 45 million Euro to labels in 2010

frou_dh 16y ago
You can also pay half and forgo the mobile streaming.
- pdaddyo 16y ago
  Just to clarify it's not just mobile streaming, but offline mobile support. I carry around 1500 tracks on my Android using Spotify Premium for £10 / month. The transparent wifi syncing and social aspects of the service (collaborative playlists, music inbox etc) are awesome too. If it's available in your country, I urge you to try it.
unicornporn 16y ago
* Partially owned by the big four (18%), who got their shares for basically nothing. * So far, they're losing more money each year. http://eu.techcrunch.com/2010/11/22/spotify-had-a-16-66m-loss-in-2009-a-rumoured-us-launch-is-now-imperative/ http://eu.techcrunch.com/2010/11/22/spotify-had-a-16-66m-los...
burke 16y ago
There is a North American equivalent: http://rdio.com http://rdio.com
- Tomek_ 16y ago
  But it has an interface that no one undestands
  - kingkilr 16y ago

kleiba 16y ago

Spotify is not available in Germany. Neither is Pandora.

to 16y ago
nor is netflix, gamefly, grooveshark (or is it by now?) and uncensored video games. i think a service like netflix is about time to hit europe and esp. germany with all the traffic you want on 50mbit lines in every house and over 85% online connectivity over all 10-18 year olds. anyway. im not sure if that article isnt just made up by someone to support spotify. people here in america dont even know what grooveshark, last.fm or pandora is but people know about spotify in the countries where its available to an extend that its the second largest source of income of _european_ labels. most big labels are US anyway... either they are US or they have their HQ in the states. besides the fact that 2.2 million euro in income is pretty much nothing. at the end with sweden and finland combined we're talking about around 15m people - you just cant move much with it. i call BS on that one and vote for an edit of the title to: "Spotify Could Be Second Largest Source Of Revenue For Labels In Europe"
mzl 16y ago
That is most likely due to GEMA (the german collection agency) having very high fees for internet streaming. Same problem in Denmark with their collection agency.
- DrJokepu 16y ago
  Exactly. GEMA charges a minimum of €0.1916 ($0.2626) for each streaming of a song up to five minutes. Compare that to the £0.0022 ($0.0035) charged by PRS for Music, the equivalent performing rights collection society in the United Kingdom.

dragonintime 16y ago

Sorry, but this is inaccurate. The IFPI report says Spotify is the second largest source of DIGITAL revenue. (Itunes is number 1.) Big difference. Digital revenue is about 20% of total revenue for European labels.

kragen 16y ago
Are Compact Disc Digital Audio sales being counted as non-digital?
- bartl 16y ago
  I think so. "Digital music sales" generally means the sale of music files, while CDs are counted as physical objects, not files.
  - kragen 16y ago
    That is mindblowingly stupid. (I know it's not your fault.)
vilpponen 16y ago
As the writer of the article, I want to apologise for that inaccuracy. I have added this clarification to the article itself and mentioned of this in the end. The mistake was completely unintentional. However, it would be interesting to research if there are single entities larger than iTunes or Spotify selling "analogue" music on a European level - which could hold the initial statement true.