And thus the artists get screwed.
Let's face it, the real reason Spotify is popular is because folks see music as a commodity and fairly compensating artists as unaffordable.
And so Spotify lives on despite its many many flaws.
Spotify is going down the same path as the ride sharing companies: burning private and public monies to subsidize consumer habits, then jacking prices up to maintain cashflow. I fully expect Spotify pricing to increase fairly regularly at this point forward, especially if they continue to grow their subscriber base despite higher prices.
The problem is, the hole is so deep your non-major label artist won't be in a good position to negotiate a better deal - the lion's share will go to major labels licensing their massive catalogue to Spotify.
Now there is no doubt Spotify gets a paying user a lot more music than they would get by buying albums.
But there just isn't that much entertainment money out there either. Most people have what they have and they spend it each month. It takes something unusual to get people to spend more and when they do it comes from savings, or they don't do some other activity involving a financial transaction.
This idea of a fan buying all the albums if it were not for Spotify does not pan out. The money just is not there.
We learned all this during the piracy wars, and as iTunes settled on a buck a track.
The other thing we learned is artists can get known when people have access to a lot of music. Before the Internet, radio was about the only way and the broadcast people were the gatekeepers.
When people could share music directly, a lot changed! Artists could get known by working social media, and by selling directly to fans, etc...
Spotify is popular because it does compensate artists (and those artists deserve more of what Spotify collects), and it adds real value to listeners able to share play lists, seek any music they want and to do so without having to worry about infringement and other painful possibilities associated with tormenting and piracy in general.
Folks do see music as a commodity as they should. Music production has been made easy. Tons of music is produced each day.
That doesn't mean it is good music. And there is real value right there. Just finding good music is hard without Spotify and friends.
The idea of there being billions more dollars for movies and music is not reality.
It is all about people hearing a lot less music, seeing fewer movies.
Say we have a perfect pay for play system. When new artists want to get into the scene, what will they do?
Damn near give the tunes away!
And that little detail is why a buck a track made sense when it happened.
Well, I easily found $2.7 billion, and I'm sure there's a lot more if you look harder:
https://www.forbes.com/profile/daniel-ek/?sh=5f021fbf46ab
Now, you can argue that he's doing some esoteric thing that's valuable to society, and I disagree, but let's not circle that drain. What you can't argue is that most of that $2.7 billion came from people willing to pay for music, and if we were more efficiently giving musicians money for their music, that $2.7 billion could have gone to musicians.
So I don't buy this idea that there isn't more money. There is, we're just giving it to people like Daniel Ek instead of musicians.
I was there, have lived both times.
Spotify scooped up all those ad-hoc buys and got people a lot more music for the money.
Take a larger view, and a big gain on one form, takes from another. Gaming takes a small hit when a ton of great movies hit the theaters, for example.
And it flexes a little. I am not saying it is a hard wall.
But I am saying for most people, suddenly doubling their entertainment spends is not an option. They just don't have it.
The money for the artist is in touring and licensing in media / commercials / movies. Album sales are for enriching record labels.
My impression is that modern record labels are only relevant because they control payola for radio, and handshake relations with aging executives in other media companies, and probably have lots of inertia from rights and exploitative contracts.
But I've been waiting for the label implosion for the last two decades.
The price increase is unwelcome, but when you get interested in a musician who made many albums, it’s a lot cheaper than buying them all.