"Really? Cool! I wonder how much money the band gets from that?", I reply, hastily logging into Garage Hymnal's Internet Distribution site to track the royalties.
When our Internet Distributor told us that Spotify was starting up (and unless we opted out, which would be mad because it is the next big thing, they would be taking our music) we had no idea how much money it would bring us - all we were told is that it would be a percentage of advertising revenue.
Turns out that for every person who listens to our music on Spotify we get $0.007. That's not a typo - that's point seven of one cent (on a good day - it can vary).
Given that figure, we worked out how long it would take us to pay back the money on the last album we made: roughly seven million people would have to listen to our song before we could afford to go back into the studio. That's not paying us anything for our time (we work for free) or even contributing to the cost of maintaining our instruments (our day jobs pay for that). That's just the actual outgoings on getting an album recorded and ready to upload.
Needless to say, if this is the model of content delivery the music industry is moving towards, then something has to give. Why have record companies agreed to this underpricing of content? Basically they have no choice. People like you and me expect to get things for free online. And if they're not free (paid for by advertisers hoping we'll spend our money on their site) then we will download them illegally anyway. A seventh of one cent is better than zero cents, and might keep the industry afloat for another month.
But if you'd like for bands to keep recording albums then we need to do something different. Something as simple as buying mp3s directly from our website. Here's a comparison table of how that decision helps us:
- Downloading a full album from our website costs you $16.90 and we get $16.19 of that (after credit card processing), which means if about 3,000 people buy our album we can pay back the cost of the latest album.
- Buying an album from our website or in a retail shop like Koorong or Word costs you $24.95 and we get roughly $7 of that (after retail margin, packing, pressing, and distribution), which means about 7,000 people need to buy our CD to pay back the last one.
- Downloading an individual album from our website costs you $1.69 per track and we get $1.35 of that (after credit card processing), which means if approx 37,000 people buy our music we can pay back the cost of the latest album.
- Downloading a track from iTunes costs you $1.69 but we get $0.99 of that (after Apple gets their cut), which means about 50,000 people need to buy our music before we can make a new album.
- Listening to our track on Spotify costs you nothing and we get $0.007 from advertising, which means 7,142,857 people would have to listen to our music before we could pay back the recording costs.
You could use spotify to gain publicity? Why is money the only reason to be on spotify?
ReplyDeleteGood question Anonymous - of course we are happy to give many things away for free (which we do with youtube, sheet music, facebook giveaways, our blog etc).
ReplyDeleteBut at what point does someone actually start paying for the content? With the spotify model we could have the entire population of Sydney groovin to our music, and still go bankrupt!
Anonymous, in defence of Hymnal, there is no real evidence that Spotify is the low threshold to purchasing. If people can listen there, why wouldnt they just keep listening there? Publicity has no value if it doesn't convert into transactions.
ReplyDeleteI contemplated this. Spotify is not free for the consumer but it is cheap, it has not reduced the amount of record sales but created another revenue stream. I believe it has targeted at the illegal downloaders or try before you buy consumers. In my opinion its just enhanced the music industry, but if the industry does go this way, you can only expect to get paid more per listen. I mean think also how much music is on sites like soundcloud, YouTube etc. Basically spotify plus the other hand full of similar services have given the bands a way to get paid for this kind of consumer. I dunno it worked well for the artists i have worked with, considering everyone someone listens it counted as a download and therefore a payment. Plus consider the amount you would get from APRA. Radio had similar reactions from artists too but radio didnt pay as much.
ReplyDeletePeople need to realise that content isn't free. Do I occasionally download shows illegally? Yes. But only when it's the best way to access content. I rented Batman Begins on Saturday night, it was scratched and kept stopping. Everyone was upset, so I downloaded the movie online in 15-20min. Boom, we watched it and were happy. How do I listen to my music? I put (purchased) mp3s/CDs onto my phone and use it in the car and at the gym. I'll spend more time listening to fewer songs, but at least I'll appreciate the songs more. Spotify, I'm afraid, is a great way to make people act cheaper than they already are, and have less appreciation for a great number of songs... oh and it's great for sending even more hard working musicians packing up shop.
ReplyDeleteI think you've contrasted CD sales with Spotify streams unfairly here. You say that 7,142,857 people would need to listen to your music but that makes it sounds as if you'd need 7,142,857 album streams compared to the 3,000 sales from your website. That's assuming every individual person only listens to one song and only once. Even if each person listens to the album once your numbers are reduced to 595,238. And again, that's assuming only one play through per listener which is unlikely if your music is of any quality. If your music is good then let's conservatively argue that you'll get five listen-throughs per person who finds you and now you're down to 119047. Sure, it's not as good as the 3,000 record sales to make your overhead back but it's not the seven million you make it sound like.
ReplyDeleteI also agree with anonymous above in that paid streaming services are designed to take from illegal streaming rather than cannibalise other revenue streams. And agreed again that radio pays less still. Consumers will still buy your music if they like it enough. I use both spotify and buy albums and overseas stats have shown that I'm not alone in this.
And finally, in the end, the more people that hear about Jesus the better right?
When I refer to anonymous above, I don't mean anonymous immediately above, I mean the one above that.
ReplyDeleteHey anonymous, I'm not sure if a scratched rental dvd is a good enough argument to presumably, illegally download the Batman movie - even if "everyone was upset".
ReplyDeletewhy do people write anonymously? Who does that? I am hoping there is a good reason.
ReplyDeleteAndrew - thanks for the info ... i had no idea (my middle name) the difference where we put what made. Like fruit - the guy who takes all the risks and does all the real production gets a few cents per apple and the middle "thieves", esp C and W get so much more.
While I can understand your concerns are valid, I don't know if removing your material off spotify would achieve much. I know that I sometimes use those sort of services to listen to a CD I already own but have just left at home etc. If there are many users like me, then you might expose yourself to the risk of losing money!
ReplyDeleteWhat tommy has said as well about Jesus is a very good point. As an evangelical Christian band, I would think that this would be a big priority.
It is a shame that there are two competing business models-one which is free to the consumer but returns comparatively very little to the musician, and one that is very expensive (in comparison) the consumer to the extent that consumers find it unsustainable, but that pays the musician (sometimes). It is a shame we can't find an 'in between'.
Also I write anonymously because I don't want to be judged for my name, age, race, gender, etc. And because I can. Seeing as I am not being inflammatory, nor is anyone else here, I don't see why it is a problem =)
I think the real problems with Spotify and other similar services will come in a few years, when streaming remote media on mobile devices will be more realistic/affordable. Right now Spotify is great if I'm sitting at my desk and I want some background music that I haven't heard before, so I'll give a random album a spin to see if I like it and then may want to purchase later. If I tried that on my mobile phone on the train I'd go through my download quota in a heartbeat. In five years that might not be such an unrealistic scenario and there will be no barrier to people getting music wherever they want for free - home, car, train, you name it! That said, free (legal) content on the internet has turned me onto some great artists in the past, so I would be sad to see a good resource disappear completely.
ReplyDeleteQuestion for Andy - if Spotify became a paid subscription service and the price of a song stream was increased to say $0.10, would you be willing to submit your music under those conditions? Why or why not?
I find it odd that Artists are so horrified with the royalty rate offered by RDIO and Spotify, when a rate that is less than 30% of this is what has been offered to artists (per capita) for radio play for decades and has always been okay with everyone.
ReplyDeleteIf the (dramatically improved) royalty rate of Spotify, is not good enough for an artist, then by the same position, surely they should be withdrawing their music from all radio play.
Clinging to an old model will only benefit artists in the short term. Within 5 years the notion of owning an mp3 file will be archaic and inconvenient (why would i use up my hard drive space when i can access it anywhere and everywhere). Music purchase for ownership will be based around collecting, and people will instead look for ways to access music (i.e. the 'music like water' paradigm).
Those artists who begin to limit where they can be discovered, begin to limit the potential for their own growth.
Sustainable careers are built across a number of income streams (specifically, Endorsement, Publishing, Recordings, Merch and Live). The recording industry is reprogramming and rearranging itself towards a royalty-based system. This brings many changes to the cashflow of artists, but also presents other valuable opportunities.
R
Thanks Rowan - if anyone can work out a new business model for Aussie artists it's you.
Delete(That said, one who puts on his armour for battle should not speak like one who takes it off (to quote Solomon).)
Tech startup bloggers have argued [*] that recorded music will become little more than marketing collateral because the marginal cost is essentially zero.
ReplyDeletePerson-to-person file sharing will be encouraged and streaming services like Spotify /paid/ by record labels - because touring is where the real money is made.
Which is true if you're Lady Gaga or U2. Not so much for indie artists. Certainly not for Garage Hymnal.
[commence rant]
Record labels have never really been in the music business. They're venture capital funds owned by shareholders that expect a return on their investment. Fair enough. But it's also why One Direction exists.
[end rant]
In a Spotify world, the last GH album would not have been made without those 7,142,857 individual streams and a whole bunch of people giving up their time. I don't know what the music industry will look like in 10 years time, but I'm confident that enough people will still enjoy listening to good music for artists to still carry on making it.
[*] http://techcrunch.com/2009/03/31/stealing-music-is-it-wrong-or-isnt-it/
Great thoughts everybody - thanks. No doubt some helpful perspectives here.
ReplyDeleteThe one final thing I will add though on the radio play analogy - we love having our songs played by 103.2 and other Christian stations (even though they are community, non-reporting stations and so we get ZERO royalties) because they send people to our gigs and websites and if people like what they hear they buy our music or come to shows.
The spotify streaming model seems to miss out that last bit. It I like what I hear and I want to hear it again, well, I can stream it straight into my car, living room or phone without actually contributing anything to the cost of making it.
No doubt new business models will have to be found. But don't think it won't have an impact on the music being made - as we all compete harder for a smaller revenue pool. (Our sync deal people tell us that our songs could go well with car ads, if only we had less 'Jesus' lines in them... and so it begins)
Over and out.
Perhaps the only slight edit worth making on the spotify maths is in the likely case that someone listens to a song more than once there will be multiple royalty payments per person. But regardless of that, it is still a very low rate.
ReplyDeleteAs someone who really likes Spotify, I'm not sure how this should change my listening. Buy music from indie artists and just use spotify for big label stuff? Only use spotify for previewing CDs I'm thinking of buying rather than for regular listening? Keep using it as is?
One thing I have noticed some other indie artists do in regards to spotify is put just a few songs up so people can still discover their music using the service but have to buy the music to hear the full album
My experience:
ReplyDeleteChristian blog posts about Josh Garrels; "He's got great music and his latest album is free!" - me; "Oh cool, I'll go have a listen. Wow I love this music! It's my new obsession!" and I buy every one of his albums.
I can't find any similar music. I still love his music but want more!
Spotify comes out - after assuming it's illegal, I discover all the labels have signed up to it.
After discovering that the artists need over 4 million plays to make minimum wage in America, I decide to not engage with it.
The thought occurs to me that I could attempt to use it to find music similar to Josh Garrels - and then buy their music. I try and to my delight it works a treat.
I attempt to buy their music.
I order and pay for Sara Groves' complete collection off her website. I still haven't heard back from them. Rather disappointed and slightly annoyed. Not so much about the money, more that I want to support a model where they get more money than Spotify and it seems to be failing miserably.
I attempt to purchase JJ Heller's music from her website and discover that my credit card is rejected because I'm in Australia. Contacted them, haven't heard back.
Well this sucks. Glad I still have Spotify. Glad they are at least getting *some* money from me for music I really love, rather than the usual model of illegally downloading it.
Yes, I pay for a premium account (I always listen to the music on my phone).
Yes, I'm an unusual case who actually follows up on the 'promise' of buying music after I listen to and enjoy it.
Yes, I'm quite upset that I'm being prevented from directly supporting the music that I appreciate so very much.
Maybe I should also be upset that there isn't a standard method for indie artists to sell their music.
Not sure why people aren't using "bandcamp"...
Oh, and yes - I'm *very* excited at the prospect of a certain someone (possibly) joining a certain church's staffing team. :)
Hmm... Interesting thoughts.
ReplyDeleteI think it's a great idea to keep the music on Spotify for the sake of spreading the gospel. And I think the members of Garage Hymnal would agree to that. People need to hear about Jesus, right?
But I think that everyone who suggests this, or agrees to it, should contribute financially to make that possible, rather than expecting our musicians to bear the costs on their own. Unless we are willing to significantly financially support garage hymnal's ministry, I think it's a little rich to expect them to work for free (or pay to work!). If we tell others to make a sacrifice for the gospel, we should be willing to make the same sacrifice with them. Let's all get behind spreading the gospel together, helping each other financially to make these things possible.
I hope that taking your music off Spotify really helps in getting the money back for your album, because we want to keeping seeing God work through your music (whether on Spotify or not!)