Spotify is second largest source of revenue in Europe for labels

http://www.arcticstartup.com/2011/02/09/spotify-second-largest-source-of-revenue-in-europe-for-labels/

by vilpponen • 15 years ago

124 42 15 years ago

arcticstartup.com

kennywinker2• 15 years ago

http://torrentfreak.com/spotify-income-is-microscopic-laugha...

Good for labels, not so good for artists

tintin• 15 years 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.

yesbabyyes2• 15 years 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.

JonnieCache2• 15 years 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 :)

unicornporn3• 15 years 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.

dlib• 15 years ago

I've seen this happen on occasion and it's the one thing that really pisses me off about Spotify. I expect music that's in my playlists to actually be there when I want to play it. I pay for it, it's legal and it earns the labels more than the thousands of people who use Pirate Bay. When they yank the music I listen to, away from Spotify it makes me want to fire up my BitTorrent-client again.

seabee2• 15 years ago

So THAT's why they have 'Buy' buttons on the songs.

adsr• 15 years 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.

kennywinker2• 15 years ago

You can do that with your website. Who needs spotify for that?

agaton2• 15 years 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

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.

furyg32• 15 years 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.

vilpponen2• 15 years ago

I heard a talk by Andreas Ehn (Spotify's former CTO) last year and he actually mentioned in his talk that piracy was the benchmark they were trying to compete with Spotify.

Piracy still is the market leader in catalogue size and ease of use for consumers at large (just see the AVC post in another comment). This is actually a fantastic way to look at it - Spotify didn't set out to beat iTunes or any existing market player with a business model, they wanted to beat piracy.

Now that's an ambitious goal, even though many other services aim at doing the same indirectly (by beating existing market players).

genieyclo• 15 years ago

The main reason music is gone from TBP is because everyone knows RIAA is watching the peers on public trackers like mofos.

Serious pirates are all on small, private trackers with exclusivity, speed, and quality as the main guidelines. You can't just join them either, most require relatively decent speeds tests, high ratios for seeding/sharing and have closed registrations, only invitations. Seedboxes are all the rage, and the hardcore pirates are probably using Usenet quite a bit now as well.

jrmg• 15 years 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.

bartl2• 15 years ago

Uh, that complaint was a quote from a music label executive. "Good for labels"?

2arrs2ells• 15 years 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• 15 years ago

You can also pay half and forgo the mobile streaming.

pdaddyo• 15 years 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.

unicornporn3• 15 years 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-los...

burke• 15 years ago

There is a North American equivalent: http://rdio.com

Tomek_• 15 years ago

But it has an interface that no one undestands

yesbabyyes2• 15 years ago

It too, as Spotify, has a Swedish connection: it was founded by Niclas Zennström (Skype founder).

trustfundbaby2• 15 years ago

I would really love to hear more about the kind of technology infrastructure they have that supports that kind of usage.

martinkallstrom• 15 years ago

p2p

mzl3• 15 years ago

Here is a nice article: http://www.csc.kth.se/~gkreitz/spotify-p2p10/

kleiba• 15 years ago

Spotify is not available in Germany. Neither is Pandora.

mzl3• 15 years 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• 15 years 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• 15 years 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.

kragen2• 15 years ago

Are Compact Disc Digital Audio sales being counted as non-digital?

bartl2• 15 years ago

I think so. "Digital music sales" generally means the sale of music files, while CDs are counted as physical objects, not files.

vilpponen2• 15 years 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.

Spotify is second largest source of revenue in Europe for labels

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