Spotify Scares The Hell Out Of Me And My Income

I make 90% of my living through iTunes sales. If iTunes were gone tomorrow, I’d be OK because then I’d direct traffic to Bandcamp, or my Paypal account. This works because $1 may not be a lot for a sale, but it certainty adds up.

But this Spotify deal is the same thing that I’ve been unsure about for the same reason that Steve Jobs warns the music labels that free streaming services will destroy their income. If things can be free, then what’s the market for paid product?

Pandora hasn’t been a threat to my income, because it’s a music discovery service, not an on-demand streaming service like Spotify. Pandora is more like an online radio station catered to your interested genres and artists that creates many affiliated income streams and new audiences for your music, whereas Spotify is like the $5 bucket bin at Bockbuster. Except the product isn’t $5, it’s free, and it includes every title you could ever think of, on demand, anywhere you go.

But I’m intrigued about Spotify and have seen some new fans find out about my work and come in from Europe. So that’s great, but if the amount of new fans streaming my music severely dwindles my iTunes and Bandcamp income, then I’m out of a job. And fast. Unless it leads to other avenues and opportunities, which is far from guaranteed.

Spotify reportedly paid Lady Gaga $168 after 1 million plays. So what’s this mean for other musicians? What’s it mean for people who aren’t superstars? Today’s music is about the long tail – gone are the days of 20 million CD’s sold, rather it’s now about a rise to the middle class and having a small, tight, and supportive community. So depending on Spotify as an income stream isn’t realistic, unlike Pandora which has good affiliate click-through sales.

So is it just free publicity, like a radio station circa 1995? Should musicians use it for promotion and in turn make up their revenue on merchandise, touring, and more? Maybe, but what if you’re like me and can’t tour? I can’t get an orchestra to follow me around or perform at different orchestra halls. Heck, touring is the least of my issues because the whole reason why I started ‘For Orchestra’ in the first place is because orchestras don’t play new music and would rather play music by the same 4 dead composers.

I met Spotify founder Daniel Elk at SXSW 2009 – good guy, definitely knows the game, and I’m absolutely interested to see what he does with this. But the one thing I remain skeptical about it that Spotify isn’t really a company that licenses their technology with major labels’ catalogues, it’s actually partly owned by the major labels themselves like “Sony BMG Music, Universal Music, Warner Music, EMI Merlin, and others”.

So is music just a loss leader now? Should it be free? Seems to have worked for DJ Earworm, Girl Talk, and many many others.

One thing I always go back to on this blog, though, is the idea of how the freeloaders will continue to get things for free, and the paid people will continue to support. So some part of me says “Spotify won’t hurt my income, because the people who don’t buy my music weren’t going to buy it in the first place.” While that may be true, it doesn’t make them any less of a fan, because streaming simply might just be where the industry is headed. Torrents on the other hand, are different, and certainly state the case of fan vs. freeloader. But to ignore trends due to fear will only make the situation worse, sort of like thinking “if I close my eyes then no one will see me”.

Yes, I’m excited for Spotify and the new trends of the music industry because I’m all about innovation. Yes, I will give it a shot, and see if I can use it just like I use Pandora (both as a consumer and merchant). The truth is that things will always change and companies will always have to continue to adapt, myself including. I’m just not sure what’s around the corner, and if I’ll be able to maintain my dream job and create new music on a weekly basis for everyone – and that’s a scary thought – for me, for my community, and the entire art world at large.

The reason why iTunes, blogging, the App Store, and even Youtube’s Partner Program work so well is because the creators are making a living from their work, which allows them to create more of it – rinse, repeat. If you take that away, then you take away the idea of art being a hobby and not a career, which I feel is the ultimate fear. It diminishes the appreciation of the work, the quality of the work, and the quantity of the work.

So, yes, Spotify scares the hell out of me. And I know I’m not alone.


Our iTunes Page Songs We’ve Arranged
Buy Me A Pizza Become A Fan

Related Posts:
By WaltRibeiro on Jul - 13 - 2011 -- Categories: Blog     7 COMMENTS
  • http://twitter.com/Collin1000 Collin1000

    Is Spotify not just the same thing as something like Rhapsody, which I use?

    • http://www.fororchestra.com WaltRibeiro

      Hey Collin! You bring up a good point, because Rhapsody is the same idea. I guess what’s the issue is that Spotify seems like a bigger threat than Rhapsody because of its userbase and backing from the labels. But in reality they both may not be threats at all. I remember when major labels were against iTunes, now they realize how great it is and use it exclusively sometimes for their music launches.

      Only time will tell. And just curious, did you find out about my work through Rhapsody?

  • http://www.globalgeeknews.com pcnerd37

    After reading your thoughts, a couple of things crossed my mind.  First, although I think services like Spotify might push things forward, I think streaming is still pretty niche.  I think most people would still prefer to own the music they listen to so that they can put it on their offline devices such as their ipod so that they can still listen to the music that they love when they are in places where you aren’t typically connected like the subway or the gym.  I’m one of those people.  Whether they buy that music or decide to play freeloader isn’t something that is really changing as far as that goes.  I do think that services like this are going to become more mainstream in the next couple of years but that is plenty of time to set yourself up to compete with it.  I figure once it launches in the US, it will probably take about 2 years for it to become really popular and attempt to rival existing music services like iTunes.  In that time, I think you should focus on doing everything you can to make a premium product that will make people want to come to you rather than settle for something less with Spotify.  There are a lot of premium things you can offer like higher quality audio or whatever but you should do whatever you can to set yourself up so that people will realize that they should be buying straight from you (or wherever you want people to buy from) rather than just streaming your songs.  I’d say take a page out of Gary Vaynerchuks book and focus as much on interacting with your community and your fans as humanly possible so that they are more likely to listen to you when you ask them to buy something rather than stream it.  I’d also say take every opportunity you can to tell people why streaming is not only bad for you but bad for them too.  Point out the fact that they are using up bandwidth and have nothing to show for it.  This will resonate with people worried about bandwidth caps.  Explain to people that if the service is down or they are somewhere that they can’t connect to the service like the places I mentioned above, then they are screwed if they want to listen to your music unless they actually go and buy it for those offline scenarios.  Bottom line, develop relationships and then use whatever reason you have to in order to point out to them that they can have a better experience if they follow what you want them to do rather than what some other service is letting them do.

  • http://www.facebook.com/profile.php?id=1160010211 Abby Fisher

    I used Spotify while I lived in the UK and am glad to finally have it stateside.  I’m not sure about the paid Spotify accounts, but at this point the free US account only allows 10 hours of listening time per month and only allows for a song to be played 5 times within a month.  In that respect it doesn’t make much more content available than YouTube.  I will most likely use up all of my monthly Spotify time within the next few days.  I like to use it as a try it before you buy it service.  After listening to Beyonce’s new album on Spotify I have decided to purchase the entire album instead of just the singles.  I also believe that Spotify’s arrival might be the reason iTunes has extended the length of their samples.      

    • http://www.fororchestra.com WaltRibeiro

      yea it’s funny because I’ve made a few sales this week from people who told me they found me from Spotify. Should be interesting if Spotify works for me though, because I have no way of knowing if the groups of people who are discovering me through Spotify are at a greater size than the one’s who are no longer purchasing my music on iTunes, etc. I’ll know in a few months tho. But I think Spotify is great technology, no doubt. I hope they get affiliate links and a better search algorithm. Looks promising, and definitely interesting. Only time will tell!

  • Anonymous

    Now that the service has been around for a while in the US, do you have any updates? Are you getting any direct revenue from the Spotify?

    • http://www.fororchestra.com WaltRibeiro

      if I am I haven’t seen anything