Wednesday, 17 July 2013

Some Random Thoughts On The Spotify / Thom Yorke Debate

So Thom Yorke pulls some of his music off Spotify. The Weeknd sample Portishead’s Machine Gun even though Portishead refused consent. The whole ‘what is the value of music’ debate opens up again and quite a few musicians start moaning that it’s not fair that they are having to work for nothing / very little and that good old Thom is right and Spotify isn’t helping new music.

Now let's be clear here, we appreciate it's hard for the majority of artists – the internet has created an overcrowded market place. It’s the simple and basic fact why the vast majority of musicians will earn very little from their music. Anyone who thinks that every new band should be able to buy a new house and a Ferrari off the sale of just a few songs is living in cloud cuckoo land. 

Recording artists are competing in a very large race and there will be very few winners. And just like sport the chances are the winners will be those who work the hardest, have the most ability and by thinking outside of the box put themselves in a position to get those 'lucky' breaks.

Let's talk about this hard work - the work of creating music. It's a selfishly weird type of work, because generally it involves the artist (worker) setting their own agenda in terms of the work (what they create). It’s not the kind of job that the regular guy or girl in the street has where a price / salary are agreed for a defined type of work with a customer or employer before the job starts. The vast majority of independent pop / rock musicians aren’t commissioned to make their music (although the likes of Pledge Music and Kickstarter now enable that model to exist.) Musicians write record and then put it out to the open market.  As such music has no value, unless the open market decides it is worth something and consumers decide to purchase. Yes of course it costs money to record, promote and manufacture but this doesn’t automatically by rights add to the customer's perception of value.

Thom Yorke's decision to remove some of his work from Spotify is hardly a revelation. He's just decided that the rewards from streaming through Spotify aren't adequate against the values he perceives it has as its creator. Of course at the current time Spotify is a relatively small player, with the Guardian reporting that it is operational in 28 Countries with six million paying subscribers – a tiny amount compared with the likes of Amazon, iTunes and You Tube. However, if Spotify gets it right and develops as a business model it may be able to reward the artists it streams with increased income. Of course if artists decide that they are going to follow Yorke’s example, Spotify will quickly plunge to failure.

So back to Mr Yorke and his claims that Spotify isn’t helping new music. Come on Thom what do you really expect? There are thousands of new artists out there. The chances of them all getting millions or even thousands of plays on Spotify (or actual sales of MP3’s or physical format) are very low. This brings us to the key point. What is one play on Spotify actually worth?

Let’s compare. Take for example one play on national radio. One play on Spotify = 1 pair of ears. One play on national radio = maybe 2 million pairs of ears. So as one play on a national radio station such as Radio 2 gets around £60 from PRS payments that equates to approximately 0.00003 pence per listener.  Hardly huge value considering how many people listened to the song and contributed to payment through the licence fee. Yet we don’t see Thom asking for his records not to be played on national radio do we?

So what is the (monetary) value of music? Is Spotify paying too little? Are records and CD’s too expensive or too cheap? Or is the reality simply that there’s too much music out there and only a finite amount of resource for consumers to spend on it?

As we stated at the beginning of this post, it’s an overcrowded market place, the internet and technology enabling anyone to be a musician. Unless someone works out how to control those markets, it’s just going to get busier and busier and there will be less and less money for individual musicians to go round.


Tom said...

Interesting post. I've also compared what I make on Spotify to radio royalties on a per-listener basis, and come to the same conclusion.

To play devil's advocate for a minute, however, there is a crucial factor that makes radio plays much more appealing to artists than streams are: streams are ‘on demand’ – so can realistically replace actually having to own the music – whereas plays on the radio are (from a listener's perspective) pretty much random. A radio play can pique interest and raise awareness, but if the listener then falls in love with a particular song and absolutely has to hear it whenever they want then their only option is to buy it. Services like Spotify and YouTube effectively removes that need to buy a track.

Also, Spotify have been saying for years now that the royalty rate will increase, but while the amount of money they've paid out has gone up, the per-stream rate is still virtually the same (fluctuating between 0.04p and 0.5p in my case).

Breaking More Waves Blog said...

Yes these are good points. Radio does serve a different function in terms of raising awareness (of course some people might then just log on to Spotify and listen to the song again there rather than buy it.) There’s also a danger for artists that Spotify can act as a filter. For example, a listener hears a song on the radio, goes to Spotify to check out the album based on 1 song, decides the album isn’t very good and decides not to buy it – which is why it’s important than ever for new artists to produce really really great material to stand out.

Unfortunately technology makes it too eay to make average music these days.

Let's hope that Spotify do eventually increase their per-stream rate as they've promised. If they don't they might find more artists doing a Thom Yorke.

Anonymous said...

Here’s another comparison.

An artist records an album (10 songs) and sells on CD via a label.

Artist gets say 6% (realistic) of the sale. CD retails at (£8.99)

Consumer plays the CD 100 times in their life.

(£ 8.99x6%) / 10 songs / 100 plays = 0.00054 pence per play

Even if the album was only played 5 times it still only works out at 0.01 pence per play. At that rate Spotify actually looks to be paying pretty well per play.

Edward Perry said...

Just a few randoms thoughts myself:

Obviously I think we can both agree that at no point is anyone expecting that new bands can buy a sports car nor a house from their music earnings, especially during a dramatic worldwide recession, but his point about new bands definitely stands up. He is protesting against the percentage of revenue that goes to bands (new or otherwise) as opposed to that of labels and spotify itself. Nigel Godrich makes a good point in that labels who made deals with spotify made that with old catalogue and new catalogue in mind. Essentially old catalogue is free money so labels were happy to make any money at all, but that doesn't stand up to current bands who need to reinvest in the present.

As an entry level musician, I have my music on spotify for exposure purposes (to date I myself do have thousands of listens on spotify, so it does happen quite easily), knowing full well I don't have a chance of receiving any revenue in return, but it is a flawed system when a professional musician like Sam Duckworth recieves £19.22 ( for the streams of his last album, hardly an average and entry level musician. New artists are making truly amazing music and we're not talking about whether something is average or not, because that doesn't matter in this debate and you're getting at something else with that arguement.

I just personally think it's disappointing that something that gives all our lives so much joy and worth is deemed to be worthless by some in comparison to record labels and a business. Nobody is crying about not getting paid enough, just that it isn't fair in a comparison to the cut the bigger cats are taking.

I actually pay for the spotify service, believing that I have to invest in the new models for something to find its way of working, but spotify isn't working in the way they like to pretend it is. It's a business, not a music model and we have to accept that and create a new idea if it doesn't work for all parties.

Breaking More Waves Blog said...

Some great points here Edward - thanks.

Here's a perspective from another 'small' artist

There does seem to be a question over the perception of level of fairness and worth.

I think your last sentence says it all really. "It's a business, not a music model and we have to accept that and create a new idea if it doesn't work for all parties."

If it doesn't work for all parties then I guess over time Spotify will fail. Only time will tell if it works for everyone or not.

Scryst said...

Enjoying the debate.

My 2 pennyworth

Re Edwards comment that "New artists are making truly amazing music and we're not talking about whether something is average or not, because that doesn't matter in this debate and you're getting at something else with that arguement."

I'm inclined to agree with Breaking More Waves that this is relevant. The trouble with pay per play is that a well marketed campaign can get many more plays and therefore earn more money irrespective of quality. You only have to look at something like Ke$ha to realise this.

I also think this model just isn't working though but the question is what is there that will work? The music industry fucked up with screwing over Napster and Spotify as its attempt to stop illegal downloading (something that affected the majors far more than small indies).

A great solution would be for you to pay a flat rate individual subscription to any artist or label on Spotify. So for example if I wanted to hear all the shit Jessie J puts out I could pay say 50p a year to hear everything she does. Altrnatively if I wanted to hear everything by Arcade Fire I would pay another fee. The beauty of this would be that artists could set there own subscription rates with Spotify taking a %. So they could chooseto go cheap and potentially attract new listeners or go expensive and just attract a small dedictaed fanbase.

Tim said...

My issue with Spotify isn't low streaming rates per se, but that all streams are not created equal.

I don't see why a stream for an artist on a major label should be worth more than a stream on an indie or even a DIY musician.

Spotify says it has paid out $500 million so far, but they don't say how much of this is through direct royalties and how much is via share dividends to investor labels.

If Spotify want to say they are good for musicians, then they should be transparent and show how much they are paying per stream and make that equal.

Breaking More Waves Blog said...

Tim - thanks for the comment - yes this seems to be something that is coming out a lot in the debate about potify across the internet. It needs to be more transparent.

Hopefully all these debates that are happening on so many sites will help that cause and create a better situation for all - if they don't we may find many artists 'doing a Thom Yorke' and Spotify failing.

Scryst - Yes the flat rate subscription would be an interesting idea. I'd like to see that developed.

the Discovery Hour said...

I'm glad this debate continues across the spectrum of music lovers and the industry itself. This, I believe, was Yorke's ultimate goal moreso than taking a stand financially or creatively. Just like when In Rainbows was released for free and without a distribution model (at first), people love to use Radiohead or Yorke as the rule and not the exception. But this is backwards. Radiohead and Atoms for Peace are not the little guy here, they've earned a level of respect and fan appreciation which allows them to take divisive actions about where their music belongs and how it's enjoyed. I think for Yorke its more about the conversation than the actual payments

I think they are concerned that if the dialogue doesn't continue about Spotify and artists rights and streaming etc then the music industry is just going to monopolize it all over again. I think it's important to remember that Spotify only survives because the major labels ALLOW them to use their music, not the other way around. Which inevitably means that Spotify has many masters and they all want to maximize their own profits. I see Spotify as just a pawn in their game in this way, which I think is Yorke's concern. In this model the little guy will be run over 1 million times over, all so that the label execs can hold on to their series 8 BMW leases.

Also, as someone who makes a living writing and creating music as a composer, I think it's important to realize the artist side of the argument is NOT for ferraris and new houses. I understand the exaggeration to make the point but I think this is a common exaggeration that has become too familiar in these discussions. Of course their are artists that fit the example but anyone seeking this is doing it fro the wrong reasons. The artist side of this about what is the value of music, is about simply making a living doing it. Not living in mansions or flying to exotic places, its about paying for car insurance, health insurance, raising a family, doing all the other things that everyone else in the world needs money for. When artists have no hope of even achieving this level of comfort, well you can imagine how bleak it really is. And also how hard it makes it for them to want to "follow their dream" or "live for their art", the art that is often taken for granted in today's age in the post Napster void

Breaking More Waves Blog said...

Well made point The Discovery Hour