When Spotify was launched in the US in July 2011, after nearly 2 years of negotiations with the record industries, it probably made a lot of the music industry’s high rollers scratch their heads. Should they embrace the new platform with open arms or try to fight it by all means neccesary? Why had the record companies agreed to this? Will we ever make any money again? What about the small artists that never earns anything giving concerts? Surely, music consumption as they knew it had come to an end. Today, two years later, we know that the issue is still at hand, and the final verdict is yet to be announced.
One of the players included in this game of tones is ASCAP (The American Society of Composers, Authors and Publishers). This society is one of the bigger ones of its kind(US), collecting royalties for the artist signed with them. They welcomed the release and gave it their blessing. But the artists soon started to realize that money profits were small (US$0.00029 per stream) and of course, got pissed of. A few of them jumped ship, but almost all the major labels and artists stayed. Why you might ask?
The answer is quite simple: Spotify is not a place for artists to make big bucks. Spotify should more be looked at as a place to distribute and market songs and bands. Like an on-demand radio station. The record companies also knows this. The bigger the artist, the better the use of Spotify. Keeping the audiences up-to-date with the record labels latest music, allows direct feedback about whats hot and whats not. It also allows for better monitoring of the market, so that they know what artist to send on a 2 month-tour in their home state, and what artist to send on a 3-year arena journey around the globe. And by using this tool for observing your product on the market, you decrease the unpredictability of profits. It could easily be compared with the film industry and their blockbuster-movies, that keep their pockets filled while they test their wings on new ground. But the music industry differs in that it has two seperate parts of distribution: broadcasting of recorded material and performance of live material. One is cheap, on-demand anywhere and never owned by you, the other is expensive, scarce and the expercience is definitely owned by you. CISAC, one of the major international royalty collectors, representing 3 million artists worldwide, reported that they collected and distributed 7.545 billion Euros (eqv. to US$9.758 billion). Have in mind that this is live profits excluded.
But what about the small, independent artists? Well, I would argue that it is better to have access to that platform of distribution, than to not have it, when you are without a manager. Putting your music out there is a way of making it easy for the audience to get to know you. You will still have to go around and put up your own posters for your show at the local pub, but that is truly the way of living like an artist. Nobody said it was easy.
Live music will always be worth something more than an mp3 played in my livingroom. Appreciated music will always have an audience if there is some way for them to discover it. If there is an audience, there will always be live performances. This is the reason there will always be big money in the music industry.