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YMI Consulting

You don't like Spotify? Well, get over it.

Spotify1

Indie musicians: you will not make bank through music streaming platforms. Get over it

Ibelieve in up and coming musicians. They need to earn an income to fund their passions, and as I’ve said before, it’s up to indie music fans to aid artists. We live in a world where it is possible to make a living, or more, with your passion. But let’s lay off of Spotify –they were only trying to help.

Spotify’s model was designed around the user, not the musician

The idea of streaming music services is to allow users to access a vast catalog of music on any device, for free with ads, or for a small monthly fee without ads. In other words, a massive library of music, easily accessible, inexpensive, and cross-platform. Also, music streaming services are social, and interactive. This is great for major music labels that have a substantial amount of music to offer. The majors continue to collect on artists that have had their time in the spotlight, as well as today’s heavy-hitters. Streaming services have proven that people will still pay for music, even though it’s a lot less, and they’ve created a solution that benefits the labels and the listeners.

You, the indie musician, are stuck with your hand out.

Sorry, but Spotify can’t pay you more

In 2011, Spotify confirmed that they had a net loss of nearly $60 million, even with $244.5 million in revenue. I doubt that they’ve made a profit since then. That loss was a 60% increase from the prior year. When you look at the numbers, the model simply doesn’t work. Oh, and Spotify only makes 15% of it’s revenue through advertising.

PrivCo’s founder, Sam Hamadeh, told Inc. that Spotify pays 98 cents in royalties for every dollar they make. That’s a 2% gross profit left to pay for everything else in order to operate. Every single time a user streams a song, that’s an added cost to Spotify, and the user never pays more than $10 a month. Spotify could either pay musicians and labels less, or raise the price to use their service. But that won’t work. Indie musicians are already complaining about the petty amount they receive in royalties. Users will ditch the platform if Spotify raises the price on their unlimited jukebox. If the users leave, Spotify will have no value to musicians and the labels.

It’s a vicious cycle

Music streaming services are valuable to musicians for their reach. They are valuable to users for the catalog of music. One cannot exist without the other.

Although I think local musicians should continue to distribute their music through all channels available for maximum exposure, if you are upset that Spotify pays a fraction of a cent per play, then don’t place your music in their catalog. Will you hurt Spotify? Probably not. If you become the next Macklemore, and you’re not on Spotify, they’ll feel it. But will it matter then?

If Spotify continues their losing streak, they’re doomed, but that doesn’t save the indie musician. There’s still MOG, Google Play, and Rdio.

Sell direct

It’s pretty simple. You’ll make more profit selling directly to your fans, since there is no one taking a cut in the middle, even if your direct price is less.

Indie musicians will make the majority of their money playing shows, selling albums, and selling merchandise. But you may not exist to everyone you’re trying to reach if you’re not making it easy for the masses to get to you.

I want to know your thoughts

Is Spotify doomed? How do you make money with your band? Fans, are you willing to pay for an album at a show? I’m on Twitter – @yuriym. Need more than 140 characters? Email me at yuriy@pdxpick.com.

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I Get Things Done. Let's grow your business together!