Tuesday, November 11, 2014

Spotify is a Terrific Fraud

The reason why Spotify is mad at Taylor Swift is not because they are white knights who have paid struggling artists $2 billion dollars. They're mad because the business model that supports Spotify is a fraud.  Spotify wants to use an artist like Swift to bring in listeners. When they branch out and listen to other artists, Spotify can pay those "small time" artists a meager royalty and make money.

Their own numbers simply don't lie:

Spotify may have 50 million subscribers, and yes, it may pay 70% royalties out to artists, but when you calculate the money that goes into albums per user, the numbers are tiny and embarrassing.

When people ‘used’ to buy albums they would retail around $10 or more. An album would typically contain 10 or more songs with some bonuses, and a cover with added info about the music.

Fast-forward to reality: Each artist on Spotify will receive approximately$0.006 to $0.008 per stream, so for 10 songs or 1 album an artist will get $0.08 in total instead of $10. Now of course, tracks will get repeated plays, but in order for a music artist to get $10, their songs will have to be listened to 1250 times, or each album will have to play 125 times to get the same amount of money.

We can argue that people spend more money on music when they sign up to a Spotify account on a yearly basis, but in actual fact Spotify is providing users with unlimited access to millions of songs for pennies, and artists are not making money. In fact, only the major superstars are really getting any traction out of it (albeit with a huge paycut) while indie artists are being financially ruined. The reason for this is that Spotify has downgraded the cost of individual tracks and people now expect to pay virtually nothing for access to everything. Spotify wins. The consumer wins. The artist dies.

In other words, Spotify makes money because of the diversity of the audience. They are taking advantage of the market, like any good capitalist. However, the only individual who is supposed to be a socialist and give everything away is, of course, the artist. No one is giving away bandwidth. No one is giving away computers. And now Neil Young is selling a FLAC music player (selling, not giving away, of course, because the only entity that gives things away is supposed to be the music artist, otherwise everything collapses).

With that many people listening to such a disparate number of artists and genres, they can give away everything, pay a pittance, and make money on the margins.

Again, it all turns to shit of the musician expects to get paid. The money is made providing access to content and the content itself has to be paid next to nothing otherwise the model falls to pieces.

I've said it before--movies and video games are not given away for free, so why do we tolerate free music? It has meant the death of artists, near and far.

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