White Collar Criminals

SUMERIAN RECORDS IS OFF SPOTIFY NOW, TOO

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Spotify

Read this quote from Stu Pflaum, co-founder (with famous rapper Talib Kweli) of independent hip-hop label Element 9 [via the 10/25 Lefsetz Letter]:

Since [Talib Kweli’s] release went live on Spotify we’ve streamed the album over 70K times. I know what skeptics will say; our revenue from those streams is about $7. Who cares? Our web traffic has more than tripled in terms of site visitors & discussion… we’re getting real-time feedback from listeners on which tracks they favor and are able to adjust our marketing accordingly with most of our budget still intact. The group & the album have a legitimate buzz now.

Totally nails it. It’s not about the dollars and cents, but everything else that comes along with Spotify that makes it such a great tool for artists, and for their labels too. This benefit is hard to measure in dollars, but as it turns out is the case with the Spotify/Facebook integration the value can now be approximated — and it’s staggering! So what’s behind Sumerian’s decision to leave?

With so many metal labels pulling out of Spotify I’ve been seriously questioning why they can’t see the value that extends beyond the dollars and cents. Surely they see there’s SOME value there — while it’s frustrating not to be able to measure it, they must see it — so there’s got to be something else that overshadows that value. Part of it undoubtedly has to do with the fact that most metal labels are independent, and indies have a raw deal when it comes to Spotify; the per-stream payouts are the same, but the four major labels (soon to be three with the sale of EMI) all own stakes in Spotify U.S., meaning they get cash on the back-end from Spotify’s profit in addition to the large sums they got up-front when the service launched. With MOG and Rdio, the #2 and #3 streaming services — where Century, Metal Blade, Prosthetic and Sumerian artists are all available, as far as I know — at least all artists and labels are on the same playing field… and yeah, those services pay out much more money per stream, too.

I’ve said this before but I think it bears repeating, because people tend to latch onto the pro-Spotify stuff I’ve been saying while ignoring any criticisms I’ve leveled: Spotify needs to offer completely transparent accounting of their company. Then, and only then, can we judge whether Spotify’s payouts are fair or not. I’m talking operating cost, licensing costs, server costs, and all money that goes out the door to artists and labels vs. whatever they have coming in from premium subscriptions and advertisements — we need to see it all in simple terms. It is my personal belief that because of their business model, Spotify doesn’t have much money coming in — most people use the free version, and most of the ads right now are promo spots for the service itself — and therefore in that context the low payout rates are justified. This theory remains to be proven. If Spotify continues to keep this information under wraps, well then, I guess we’ll have to assume they ARE cheating artists and labels with their stupidly low payout rates and keeping all that extra cash for themselves.

Still, it’s hard to ignore that Spotify is by far the #1 streaming service, and it’s hard to ignore the promotional value it therefore offers in lieu of money. Chances are that if a Spotify user can’t find a particular Sumerian band on that service they won’t turn to MOG, Rdio or even iTunes… they’ll just go to rapidshare, megaupload, etc and pirate it. I understand the reasons behind certain labels pulling out of Spotify, but I do not agree with them. I think MOG and Rdio are great too and I’d like to explore them further in future articles, but Spotify’s got the public eye right now and it’s at the top of the heap for a reason.

This is starting to feel like Napster all over again when labels just pretended the world hadn’t undergone a massive sea change instead of attempting to play ball. Adapt or die. Or, let’s all just continue to bury our head in the sand and hope CDs make a miraculous comeback.

-VN

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