Spotify – Right Or Wrong?

SSpotify is the latest music platform that delivers a multitude of various genres of music, and does so at a considerably low rate. In fact for the first six months of usage, your Spotify account can be used for free. While this doesn’t get you everything that a premium service has you can build playlists, and listen to as much music as you want at the click of a button. The two premium services that are offered at $4.99 and $9.99 respectively give you a little more, including no advertisements, and the ability to be able to have your music offline via your computer or mobile device. It seems as though they are charging next to nothing per play. in reality that is true, for instance recent reports have suggested that Lady Gaga received a laughable $167 dollars for one million plays. This leaves a big question in the air whether or not Spotify has the right business model.

A common thought on the view of Spotify is that is it great for the consumer, and bad for the artist. Valid point. Considering that record labels are getting about a third of a penny per play, leaving artists with even less. So for instance, every 15 tracks you play, which is an average track number for CD’s, is going to cost you around 5 cents. Well, when it is put like that it certainly seems like stealing. Great for the consumer, considering that an average CD usually runs about $12.99. So how can this not be labelled stealing from the artists.

Spotify iPhone app's Playlists screen

To take a deeper look into the music industry, you should start by looking at the numbers. Since the late 1990’s the music industry has fallen from a 45 billion dollar industry to a 12 billion dollar industry. This is largely due to the increase in piracy, and internet distribution of media – in this case, music. Therefore artists simply are not making as much money as they did. People don’t buy CD’s because distribution of music has been made so convenient. Even things like Pandora radio station give us another alternative to buying CD’s. Spotify is the latest alternative to buying music. And just like Pandora, you do not physically own the track with Spotify.

This brings the question of how much is each track play worth to an artist. Are artist entitled to make large sums of money because of their work? I think not. As a technicality an artist is only an employee of a Record Label. Very few artists make it big without being signed to a record company. If any artist choses to go independent, more than likely they will see less success then they ever would as a signed artist. Record companies are striking up deals with Spotify obviously because there are some profits to be made. The profits may be less than they like, but without Spotify or any other music service, songs will just be pirated. Piracy is wrong, and it is unfortunate that it exists, but the problem doesn’t necessarily have to do with piracy as much as it has to do with distribution.

Just because at one point in time the only way you could buy CD’s was to go to the local store and buy one, doesn’t mean that model will always be sustainable. The music industry was making record profits during this time. Music was harder to produce, and there was only a select few who had the opportunity. Now, during our internet age, music can be delivered to your computer over the span of just a few minutes, and there are many more opportunities for artists to be successful. You can buy professional recording equipment for under $500 dollars with Pro Tools. You can broadcast yourself on YouTube. You can distribute your music on Myspace. There are endless ways to get seen these days, and the costs to produce music have gone down considerably. Artists, more than anyone else are ignoring this. Just like any other business, you are not guaranteed to make “x” amount of dollars because you or someone else has in the past.

The record companies do understand this. That is why they are making deals to be a part of it. It may not be the most beneficial to the artists, but as an artist, you cannot expect to make a large sum of money off of a market that doesn’t exist. A CD that sold for 16 dollars at one point after creation, production, packaging, shipping, and finally retail markup does not equate in today’s standards. You want to send the CD directly to someones PC in minutes, with decreased production costs and charge the same $16? Um, I don’t think so.

The music industry should look at Spotify as essentially free advertisement, that you can actually make a little bit of money from. This is especially true for artists who are under the radar, and need exposure that can be done through direct pays or from word of mouth through Spotify’s social aspect. Artists need to think about the live performance at its rawest as their main income. There is no market to sell $16 CD’s anymore, so don’t expect to make hand over fist with each CD you release.

Spotify

With all of that being said, Spotify does have one downfall. For popular artists who are dominating the number of plays, they should receive a little bit more of the profits since it is because of them that Spotify is able to have a successful business. There is no reason that a band who has just gotten off the ground should be paid the same percentage, when comparing to artists like Lady Gaga who attract millions of plays. Without the big names, many people would not be signing up to listen. For the smaller bands, it is better to look at this as an opportunity to be seen.

Spotify has definitely been generating some controversy over the inexpensive, seemingly all inclusive service of music. It is ultimately better for the consumer, than it is for the artist – but a better alternative than piracy. The music industry isn’t what it once was. Consumers can now have music faster, cheaper, and in large quantities. This isn’t exactly what musicians want to hear, but that is the reality. The internet has made things easier, and more affordable. Music is not independent from this, and therefore Spotify has made attempt to fix the problem of distribution and theft. Some people may think this is stealing, but the Record companies are making deals with Spotify. The artists are employees of the Record companies. Right now Spotify has the best business model. Our technology driven business era may change that fast, but everyone needs to understand that the same technology driven era has created Spotify out of necessity.

This article was written by Thomas Randall. Thomas likes to blog on the internet about music, web design, and other various internet related topics. He knows what it takes to get some buzz on the internet and helps to provide the best white hat SEO services.