You Can’t Just Switch Off Free

Ministry of Sound boss Lohan Presencer does the cry baby act in today’s Guardian, complaining that Spotify’s freemium model doesn’t allow him to bathe in a Scrooge McDuck style swimming pool of golden coins any more. The cat is out of the bag for streaming music now, and no matter how much music companies cry foul they can’t stop Spotify and their ilk, and there wouldn’t be pots of gold waiting for them even if they could.

Presencer goes on to say that he fears for artist development in this post-streaming world. Personally I think he’s more worried about whether he can sell any more shitty themed compilations that aren’t dance music but nonetheless trade on Ministry of Sound’s credentials. But let’s take him at face value and explore this point. Will allowing people to stream some of the music that they like for free affect artist development?

It Used to Be Called Radio

Well I grew up listening to the radio and I never paid a penny for it. Most stations, were - like Spotify is now - supported by advertising revenue, a proportion of which goes to the artists and the supporting industry of talentless leeches like Presencer. Apparently radio stations still exist and have existed throughout the history of recorded music, during which time the number of new artists and genres has increased over and over.

(Unfortunately most radio stations in the UK are now part of a soulless megacorp designed to do nothing but sell advertising. The group is called Global radio and I had a job interview with them last year. It was pretty close to my own personal hell - and the pay would have been shit too.)

Home Taping Didn’t Kill Music, and Neither Will Piracy or Streaming

Moreover, there have always been pirate stations broadcasting up and coming music from hidden transmitters for no reason other than enthusiasm for the music itself. Artists have never received royalties from these stations but the exposure has been priceless for countless artists.

Music piracy seems like a starker threat to business model of record companies and to the commercial prospects of artists. I am convinced piracy has hit artists hard, though many have thrived by adapting to rather than pouting against illegal downloads.

For an artist, piracy at least means there is someone out there listening to your music. If your music is good, an emotional connection can be forged with your listeners. They will seek you out and support you. Even if only a fraction do, it should be possible to convert that to sales of things that cannot be pirated: merchandise, live experiences, the chance of genuine connection.

Before the invention of the radio, an artist would only ever be heard by the people who he performed to. Throughout the twentieth century that artist to listener ratio grew up to the heights that created the music industry’s largesse and spectacle. Now with hundreds if not thousands of musical microniches and the old media companies breaking down, artists are seeing a regression to mean with regard to the number of people they can reach out to. There’s still way more of a market for musicians to work with than there was fifty or sixty years ago.

Work With Not Against

Spotify and their competitors have the potential to be a useful tool for record companies. Not only can Spotify provide exposure for bands, circumventing the expensive business of plugging records for radio, but they can also provide valuable data on who is streaming a band’s records. If Presencer is so worried about the free tier of Spotify, why doesn’t he work at comparing his sales data with the streaming data from Spotify? He could work out who he needs to convince to take up paid Spotify subscriptions or find out what the market for his records is. If you know who’s streaming them, you know who might be tempted to buy them.

And then of course there’s advertising. Perhaps Ministry of Sound could persuade Spotify and the like to tell them which adverts get clicked between their tracks so they know which companies to prostrate themselves in front of: please use our Eric Prydz tracks to help you sell more probiotic yoghurts!

There Is No Armour Plate

I think that the erosion of internet privacy by the likes of CIA and Facebook emboldens people like Presencer, whose traditional business models are threatened by the rise of streaming. They know that anonymity is being scratched off our internet connections faster than a flea from a fox’s ear flaps and that torrent sites are being slowed to a trickle by censorship. They think that piracy is gone, that people wouldn’t bother going back to it if they had to pay for everything. I think people are more resourceful than that, I don’t think they are indifferent to changing their habits and techniques if they have to.

Like everyone else, he knows that it’s easier to threaten the upstart than to change his own actions. But I think the message that will come back to him from music listeners and Spotify alike is that they will need to change or they will simply be swept away.

Back to Whether It Hurts Artists

I don’t think Spotify does hurt artists, and specifically I don’t think a free tier hurts artists. If Spotify were to replace its free tier with one costing £2.99 a month, how many people would actually convert to that knowing that they’d still have to sit through adverts etc? How much revenue could Spotify raise from advertisers if their user base were to shrink by 70%? How would that affect how much they could pay artists and record companies?

Meanwhile, Spotify’s payouts reflect the popularity of the music on the service. The good will out. There are no doubt big bucks payouts to people like Mark Ronson but also the long tail is longer and fatter than people might imagine. If record companies help Spotify to convert more users to subscribers without blackmail or coercion, there should be plenty of cash to go around.

Full Disclosure

I am a happy paying subscriber of Spotify. Their support account on twitter is friendly and helpful. I didn’t get the job at Global Radio so I’m probably just bitter - though I wouldn’t have taken it anyway because there’s no way you could work in London on the wage they were offering.

You May Also Enjoy

An Initial Comparison of Apple Music and Spotify
Jim's Conservatory
· Music, Ideas, Fifteen, Spotify, Economics

⇠ Album Digest, February 2015

Ned Beauman, Glow ⇢