White Collar Criminals

DIGBY: “WE GET PAID BY SPOTIFY”

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Spotify

If Don Robertson, Brian Slagel, Jonas Nachsin etc wrote candid blogs about their label operations I’d probably pick apart their opinions too, but it just so happens Earache’s Digby Pearson is the only metal label head honcho to do so… so, here we go, once again.

The latest Ask Earache entry is the first time I can recall hearing the head of a metal record label publicly endorse Spotify, or any all-you-can-eat music streaming service. Spotify, for those unaware, is a highly successful streaming service currently available in Europe that’s been trying to break into the U.S. market for years; with licensing deals now in place with three of the four majors and a big integration with Facebook on the horizon, it looks like that may finally happen very soon. The basic service is available for free and is supported by ads, while those who pay $10/month have ads lifted (and I believe some extra premium features too). It works on your computer, your phone, streams from the cloud in high quality, etc etc.

Digby’s public stance is significant; while the world moves ahead towards digital consumption and the demand for all-you-can-eat music streaming services grows, metal labels remain doggedly stuck to the archaic CD. Even Ash Avildsen, whose Sumerian / Outerloop / Pantheon axis business model is very forward-thinking, is head-scratchingly an ardent supporter of CDs.

Before you lash out at me that metal labels supply physical product because metal fans demand it, consider this: metal fans — all music fans, really — buy what it is most readily available to them, and I can’t recall any instance of a metal label actively pushing a digital product. All those fancy pre-order packages? They always include CDs (or vinyl). Banner ads? Magazine ads? “Buy now” links on websites / MySpace / Facebook pages etc? The same. So what would happen if metal labels actively pushed a digital product? I’m 100% certain that sales of those products would increase. This is irrelevant in the grand scheme, of course, because eventually it’s going to happen on its own whether the labels dictate so or not.

Anyway, here’s Digby waxing ecstatic about Spotify:

Spotify is amazing and I use it myself on a daily basis, there’s nothing better than dragging/dropping a bunch of new albums to my phone which I can then take with me to listen to on the daily commute into work. Its all legal and costs the price of one CD a month, any fool can see it’s a bargain really. The key difference is that the songs remain in the cloud and are streamed to the device. Such cloud-based music services are the hottest new trend in tech, with Google and Amazon already launching cloud based music locker services, and Apple promising to launch a similar ‘iCloud’ with iPhone 5 in September.

And here’s Digby explaining how Earache makes money from Spotify:

As for how we get paid- Spotify logs every stream, which number many billions per month, from a European user base of around 10 Million, of which 1 million are premium subscribers and pay the monthly fee.

It reports and pays labels like Earache based on the exact proportion which our tracks take up compared to the overall number of tracks streamed. All the numbers are becoming eye-wateringly huge. Earache typically has over a million tracks streamed every month, and as Spotify increase their income from encouraging more sign ups to the paid-for service, our income increases too. Earache’s monthly income from Spotify has doubled in the last 12 months and is rapidly gaining on iTunes.

It’s reported that some Swedish major labels make more income from Spotify than iTunes now, which shows the power of the site in its home country. Luckily for Earache, we have quite a few important Swedish Metal acts in our back catalog, which serves to boost our income.

Those are big words. It’s also interesting to find out that Spotify pays on a pie-splitting model, similar to how ASCAP and BMI account to artists for radio royalties.

Every time I post about Spotify, MOG, or any of the “storage locker” cloud services that have recently been rolled out by Amazon, Google and Apple, commenters express their hesitance to move away from “owning” the music, even if it’s a digital file on a hard drive. To some degree I understand this. But it’s really one of those things you’ve got to try out for yourself to understand how great it is; once the U.S. gets ahold of Spotify it’s never going back. Kudos to our British brother Dig for being the first in the metal crowd.

-VN

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