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Spotify economics
Today's Guardian business pages have an interesting but limited piece on Spotify this morning; one which contains two statistics which are supposed to be impressive but, erm, actually aren't.
Number one:
But last week the blogosphere was alight with speculation about Spotify's model, fuelled by reports in its home market that it paid Lady Gaga – through the Swedish performing rights society STIM – a mere 1,150 kronor (£100) for a million streams of her song 'Poker Face'. Spotify stresses that payments to STIM only represent a fraction of the money received by rights holders and the figure is only for one country. But those reports have raised questions about how much money the music labels are making from Spotify and whether they have an ulterior motive for supporting the firm.
A million people listen to Lady GaGa, she makes a hundred pounds, and this is supposed to be a small amount?
As I've pointed out before, the last published figures showed that Radio One pays £18 a minute for music it plays - so, a three-minute Lady GaGa song on Chris Moyles show garners £54 for the equivalent of seven and a half million streams. Looks like Spotify is overpaying, doesn't it?
Number two:
There is embryonic evidence in Sweden that the rise of legal, free music services are helping switch people away from pirate sites. According to industry body IFPI Sweden, music sales are up 18% in the first nine months of this year.
Except the levels of file-sharing traffic in Sweden have returned to where they were over the course of the months since the Pirate Bay trial, so it seems unlikely that this boost has anything to do with people 'switching' from "pirate sites". Oh, and music sales are growing all over the place - British single sales are now over double where they were in 2002, for example, which is more down to the spread of usable digital services and the existence of singles people want to buy rather than any expensive file-sharing battles.
3 comments:
Surely £100 is better than the nothing she would get if services like Spotify didn't exist. I mean their point here all comes back to the silly "one download equals one lost sale" argument again. If Spotify didn't exist that doesn't necessarily mean that the same people would be paying for it elsewhere. I.e. there's no loss here, there's just £100 more in the bank.
You are comparing apples (radio) with oranges (spotify, music-on-demand).
"Taking a stake is a commercial decision, (...) which also ensures labels can benefit from any potential sale or flotation, and is not a return for taking a smaller cut in revenues."
Investing in spotify or similar services might be a good a idea for (major) labels. But how much money will the artists see, when or if Spotify will be sold?
@anonymous 2
Not really - I'm comparing the royalties for a million people listening to your song with the royalties for seven and a half million people listening to your song. I think that's comparing apple slices to apples.
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