As mentioned elsewhere in this thread, I think spotify have positioned themselves exactly to be in this situation. If they earn more money, the music labels still have all the negotiating power and will just take it, and if they raise their prices, less subscribers.

At a guess, I think spotify are trying to squeeze themselves into a position where the labels need spotify because otherwise artists just will not have the same reach otherwise, I know I dont listen to a band until they put their stuff on spotify. I have seen labels + bands be more reactive to making sure their stuff hits spotify quickly which seems to show a shift in power, hopefully the trend continues.

The challenge then is to make money but appear to lose it, this appeases the music labels who think they are taking all the value off the table.

It seems we need a tech company that can do 'hollywood accounting' where they give the labels 40% of the 'net' and sadly there is no net.

From a musician's perspective the entire problem with Spotify is that its replacing sales and yet its paying broadcast performance royalties.

Broadcast has always been promotion for sales. That's how you sell recordings: you get it on radio. Spotify looks and acts like iTunes. Its replacing the user need for purchasing, its not replacing radio. And yet they want to pay like radio.

So they've disrupted digital sales and cannibalized an industry in doing so.

Oh I know .. we can always go sell t-shirts at our gigs. until the kids figure out how to 3d print those.

A lot of people seem to compare the earnings from one listening on spotify to the sale of a single...

Thing is, you have no idea how often that single is played. If the customer are crazy about it the musician would most likely earn more if he listened through spotify rather than buying it. If on the other hand the customer gets bored of it quickly the musician would barely get anything through spotify.

Also, one listening doesn't equal to a lost sale. Especially considering how easy (and wonderful) it is to just be able try new stuff out when there is no barrier or cost associated with it.

Musicians get waay more money from me thanks to spotify than they ever would get otherwise. And I bet there is a whole generation where this is/will be quite common.

There are winners and loser though, those artists that make songs that only last two weeks probably loose on spotify. I see that as a bonus.

And that's the problem: You, as a listener, think you're doing the noble thing by using spotify instead of pirating, but it really doesn't matter if those two are the only options you'd consider.

Of course you're on the legal site of music consumption now, but don't fool yourself into thinking that artists should be well off thanks to you.

Well known by now, but have a look at this infographic again: http://www.informationisbeautiful.net/2010/how-much-do-music...

I admit I'm a rdio subscriber and artist, but rdio, for me, just serves as a tastemaker, pre-listening source and mobile collection without limited space - everything I like, I buy elsewhere in lossless formats. Sadly, I guess that's a rather rare use of streaming services as people will often see them as a replacement to buying things they enjoy.

No, the problem is the record labels. They are the ones that hinder artist revenue from services such as spotify.

I don't consider pirating and yes, if spotify (and all similar services) were shut down and I were forced to buy albums on CDs the artists would get much less money from me.

Also remember that the day I end my spotify subscription I have nothing to show for it. I've spend many hundreds of dollars on spotify and the day I stop paying I will not have a single track to show for it.

How many people actually constantly buys music every month? A monthly spotify subscription isn't much per month but it adds up.

> If the customer are crazy about it the musician would most likely earn more if he listened through spotify rather than buying it.

Estimates vary, but $0.0033 is quoted as a possible pay per stream from Spotify. I had some plays on one invoice from a label but it was less than a penny. [for comparison: I've gotten $75 for a single play on BBC]

So for a 99 cent track you would get 300 plays for that price. That means 10 times a day for 30 days if you are really crazy about it (you are either a teenage girl or you are trying to piss off your neighbors). Or 3 times a day for 100 days. Or 10 times a year for 30 years (let's just guess that its highly unlikely that you are still on Spotify or that you are using the same mp3)

[edit: calculator fail]

For a 5 minute song that's 1500 minutes of stereophonic pleasure. 25 hours.

Let's assume you bought the entire album. 10 tracks. That's 250 hours total listening time.

This is what you'll have to do in order for the artist to earn the same amount as your $9.99 album purchase would have brought in.

> Musicians get waay more money from me thanks to spotify than they ever would get otherwise.

By which I'm guessing that you aren't a music collector and you didn't really buy music anyway.

Purchasing music, especially vinyl or nicely crafted packaged CDs is about building a collection that expresses who you are. People come over and you get out the records. They look through your CD or record shelf while they are at your place. This ritual is how people connect, find out about the other person and it opens up conversations. That era is gone.

Digital weakened that and selling digital is just a fake simulation of the era of buying physical recordings. We know its dead, it was transitory and the era of replication is over. Its not just the economics, its abundance.

Still, buying music (even if its a dead art form) is not to obtain a utility value. Its purchasing a signifier of self identity.

I've had Spotify beta since 2008 and I've loved going through the massive back catalogs and listening to stuff. It was insane how much music they loaded into the system back then. Once they opened it up to the public they had to axe most of it when they couldn't get deals with the labels.

You (and thirdsum), as well as most others, make the other big mistake and looks at what the artist makes. Which is kind of irrelevant. Look at what the record label is making from spotify streaming.

Also I don't get your BBC-comparison, did BBC broadcast it to one person?

Spotify can hardly be blamed for the artist having a crappy deal with his/her record label.

And the reason for why it is sooo bad is of course because it hasn't matured yet. But the only problem in the equation is the record labels.

The reason for why I didn't buy albums was because I didn't enjoy listening to albums. I enjoy listening to tracks and I don't feel like buying twenty when I only like two of them.

It doesn't help that buying an album and having it in my shelf "says something about who I am" when I really didn't want the album to begin with.

Not to mention how inconvenient a pressed CD is for someone like me.

> the other big mistake and looks at what the artist makes.

Actually I'm calculating only what the rights holder gets and doing the comparison between sales and streaming income.

Its completely irrelevant to the discussion what the artist/label deal is, only what the spotify|iTunes/payee deal is.

> Spotify can hardly be blamed for the artist having a crappy deal with his/her record label.

No, the stated payout rates are what the rights holder receives. That is the publishing company or sound recording copyright holder which is usually but not always the label. In many cases indie labels are owned by the artists. I get 100%

I'm not fond of this demonization of the labels as though they were the whole problem. The music industry has gone through dramatic changes and its not really useful to try to identify a bad guy. The musicians certainly are getting fucked though, that's always how it goes.

> Also I don't get your BBC-comparison, did BBC broadcast it to one person?

But that's the thing: a Spotify streaming play requires a large number of people to actively select to listen to your track. Radio plays to a huge number of people who are mostly passive (after they've selected to listen to the radio or not). Its vastly more difficult to achieve that kind of focused high traffic streaming income in the super fragmented world of streaming.

So comparing the payout rate to broadcast royalty rates IS completely irrelevant, yet that is what everybody is doing and that's basically how the payouts are being calculated.

And yet its sales that they are replacing. For the user its play on demand. It looks like iTunes. I pulled up tracks the other night on Spotify while making dinner for my girlfriend. Its just like owning the tracks.

So for the rights holder its an awful disruption.

> And the reason for why it is sooo bad is of course because it hasn't matured yet. But the only problem in the equation is the record labels.

Because Spotify was designed as an alternative to P2P/piracy. So the price point is in comparison to that, not in competition with sales. Its accidental that its cannibalizing sales, and in fact Spotify would love to be resulting in large amounts of sales (with their buy buttons). The problem is that the music is available on demand, so the incentive to buy is very low.

> The reason for why I didn't buy albums was because I didn't enjoy listening to albums. I enjoy listening to tracks and I don't feel like buying twenty when I only like two of them.

iTunes disrupted that back in 2001, so I would say that's pretty irrelevant to the Spotify vs. digital sales discussion.

Numbers for an iTunes single: Best case is generally an indie artist who has a 50/50 split with their label. So for an iTunes single, the label gets at most $0.70 (and if they use an aggregator then say $0.63). Divide by two and you are at $0.32-0.35/track. So basically you need to divide all of your equivalence numbers by 3. Instead of 300 plays, it's one hundred plays. 3 times a day for ~30 days or once a day for one hundred days.

statements like this are exactly the reason why people have zero sympathy for the music (and movie) industries. In the real world, products are worth as much as people are willing to pay for them, not whatever the hell you want to charge. Spotify isn't cheating you out of anything. You are getting paid what the market has deemed your content is worth. If you don't like it, take your songs off spotify.

No, its not a price point that the market resolved.

Its not like a moving company that has a businesses with costs and then they compete with other identical businesses and test the customers and have a price discovery phase and then arrive at a price.

Spotify is a solution to the environment of widespread P2P/piracy.

The people were offered a price: $0 on Napster/Limewire/Oink. They accepted the offer. Great, the market has spoken; that's what the content is deemed to be worth. Its worthless. Its worthless because it is possible to obtain it without paying for it.

In any industry whatsoever if you offer a price of $0 then people will take it. Try offering beer for $0 — maybe you can support it with advertising ;)

The price point that Spotify is offering is in competion with piracy. That's why it is so low.

> If you don't like it, take your songs off spotify.

Why would I do that ? I love Spotify. There is no income in it for me as a rights holder, but there's no benefit for me to remove it. [I am far more likely to remove my music from iTunes actually. its just not a good look, there are better digital stores]

I think they have great intentions and want desperately to make this new economy work. They cannot just raise the price (they would love to) because they could kill the whole thing and sales would drop off. They are losing money in order to keep this thing going.

What I said was that its use for the user is to replace sales; but the payment and pricing (in and out) are like that of broadcast.

Its a very unfortunate disruption.

> Spotify isn't cheating you out of anything.

sigh. people are so binary when discussing this stuff. Its more complicated. It would be nice if people weren't so hostile and always trying to identify a bad guy to blame everything on.

^This a million times. I'm so sick of all the irrelevant arguments made by ALL the parties involved. There is only ONE product type that can hold an artificially high value for any extended period of time; a status symbol. By definition status symbols are impossible on any digital medium. THEREFORE, stay off the internet or follow economics. I will respect either choice. I will laugh at anyone that expects to get the benefit of both without the cost of the either.

I know the part about t-shirts is a joke, but you can print your own with stuff bought at Home Depot and in a DIY setup the cost is roughly 3$, being the most expensive stuff the t-shirt and the paint.

Conversely, I hardly listen to music and bought maybe 10 CDs in my entire life. Spotify changed my behavior dramatically. I consume a lot more music now, that I wouldn't have otherwise. Spotify has got more money out of me than the sum of all my other music related spending. It's very possible I am an outlier though.

I disagree on it being priced too low. I realize that in some sense, they have to play to cards they are dealt by the labels - but 10 bucks a month is far too much for streaming music. If Netflix can stream unlimited HD video for 8 bucks a month, there's no (technical) reason audio should be more expensive than that. The only thing holding them back is the politics of the music industry. IMO, a fair price point for streaming audio has to be < 5 bucks a month at the high end. The marginal cost of a song being streamed is basically zero at technical level.

I knew someone would mention Netflix for comparison -- the problem is that I think they're too inexpensive as well :)

Mind you, as a consumer I'm not complaining about low prices. It's awesome. But I'm also mindful of the economics --

I pay $50+ / month for my cable TV subscription. I don't like it. I'm not "happy" about it. But you know what -- I haven't cancelled it yet either, so something's keeping me there -likely the 'flip channels' factor, which is nice and brainless, and the availability of live news - MSNBC, CNN, local news, etc. Sometimes you just want to sit down and turn the TV on, and I'm willing to pay for that.

But the point remains that there's a big gap between $9.99 Spotify / $8 Netflix and $50-$100 cable, both of which many people are willing to pay for.

You're confusing cost with value.

I'm aware of the distinction - but in this case - to me at least - the cost and the value are the same. The value of streaming songs is exceptionally minimal when they are easily acquired for free via other means. The only value add in my mind is the convenience of not having to download albums in the first place. The value of that convenience is tied very closely to the cost of providing it as I could set up my own streaming service for personal use "at cost" so to speak with a cheap vps and a collection of downloaded music - or use something like iTunes match which costs ~$2.00 a month, if I'm willing to put forth the effort to acquire the music initially.

If Netflix had almost every new movie release and a larger catalog maybe it would be an apples to apples comparison.

Spotify has to pay royalties on every song play, which adds up extremely quickly considering you can just leave it running all day without even listening to it (like I do accidentally almost every day). There's not particularly an easy way to just "leave Netflix on".

I've experienced the service differently. I'm more old school. Spotify does not give me the feeling to be the master of my library and that this music belongs to me.

I'm more happy with buying albums I love and archiving them. So, I'm looking forward to the new iTunes, I hope it combines the old way with the new way in new ways.

But Spotify has to work more on discoverability of new artists and music. I'm not convinced by there app.

It doesn't have to be mutually exclusive... I collect records and digital files, but when I'm away from my collection - whether it be at work, on the go, in the car - I've been making use of Spotify.

The library is really good, and the app itself is quite nice. It has this amazing thing called QUEUING (iTunes - I'm looking at you) and the social aspect of it is actually pretty useful. You can search playlists for anything from "Jazz for dummies" to "Breaking Bad soundtrack" and sure enough, somebody will have gone through the trouble of assembling a really high quality mix from the Spotify library.

So no, Spotify obviously isn't going to give you the same feeling as physically collecting music releases. It doesn't try to.

I will add that I do have a few negatives surrounding Spotify. I think it is a pretty poor music discoverability tool (outside of searching for social playlists to subscribe to). The radio is very poor, and some of the tagging/cataloguing of their vast collection leaves a bit to be desired.

Spotify helps you be 'master of your library' by putting a file icon next to songs you have locally. It's pretty much telling you exactly what you need to download for 'backup.'

Maybe for you. So maybe they should come up with an additional tier to grab some of your consumer surplus.

But for me? I compare it to the $30/year I pay Pandora. I have a Pandora app in my car, on my TV, on every phone and computer, etc. It's ubiquitous and the fact that I can't pick a specific song is meaningless to me. In fact, I like it much better. I can work and live my life and not have to spend a single second worrying about playlists and song selection.

Lately I've really liked the rebooted Songza.com -- it's curated playlists vs Pandora's algorithm-driven model. The playlists are great and the activity-centric UI is pretty awesome too.

If you like Songza check out http://8tracks.com too.

Disagree that the price is too low. I think its sitting right at the top of what most are willing to pay.

I think of it like this: for 10 bucks a month, every month I have Spotify, I could have owned an album on one of my playlists. After 2-3 years, I basically own nothing, when I could have owned most of the music I listen to. Most of the people I've introduced Spotify to are on a similar wavelength.

On top of that, the idea that Spotify may not be around in a year or two add's even more hesitance on my part to keep the $10 subscription.

I really hope it all works out for them (and us).

Interesting usecase. I probably like listening to about 10-20% music a day that I have never heard before. Every 2-3 years, I am basically still only listening to 5% of the music I did like in that time period. So the musical "churn" for me is high where ownership is essentially meaningless. But I can see how someone with a different set discovery needs/wants would have a very different sense for the product.

That's exactly how I listen to music too. I've got a very small selection of albums I've listened to throughout my life and other than them my music churn has always been as high as possible, though typically a great album lasts a month or 2.

Do you really want to own all your music?

Rhetorically, it sounds like an obvious "yes", but if I personally think back to all the stuff I got as a teenager and hardly ever listen to anymore, not owning it might be entirely fine.

Ownership is less of a burden when there's no physical media, of course, and there's still some old music everyone keeps coming back to. But a lot of music is ephemeral, and only having access to it when it's current might not be so bad.

"I could have owned most of the music I listen to"

If you're only listening to 24-36 albums in 2-3 years than yeah you could have and maybe you should have. If you listen to that much in a month or sometimes a week than Spotify is by far the best thing ever.

Spotify isn't just competing with iTunes, they're competing with piracy. And while $10 a month is nothing compared to maintaining a comprable iTunes collection, it's a lot compared to free.

I think $10 is the sweet spot. I used to be a fairly big music pirate (what.cd elite, if that means anything to anybody), and RDIO at $10/month has completely replaced my whole illegal music collection. If it were more than that, i'd probably start thinking about whether it was worth the money or not, but at $10/mo i don't even think about it.

I do not consider the hidden tax of forcing me to use my facebook account worth it. That's not cheap; it's merely a different kind of currency.

Edit: I am mistaken; they allow users wihtout facebook accounts to sign up now (see elsewhere in the thread)