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The confusing, contrary arguments over music streaming

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The arguments over the value of music streaming to artists roll on, but one thing’s for certain: something definitely hit the fan for Spotify, Rdio and the rest this week, as an independent record distributor in Britain — representing more than 200 small records labels — quit a range of streaming services in a protest over “negligible” royalty payments.

U.K-based STHoldings was adamant that Spotify and the rest were stripping away value, referring to reports of a study commissioned by the National Association of Recording Merchandisers. “Despite these services offering promotion to many millions of music listeners, we have concerns that these services cannibalise the revenues of more traditional digital services,” said the company.

That stoked a fire… but it wasn’t the whole story.

First, NARM clarified the study and backpedalled a little. Then Stuart Dredge at MusicAlly pointed out some strange goings on. Was the story planted to boost iTunes?

Then the complaints went viral with a blunt tweet from Jon Hopkins, a musician and collaborator with Coldplay, Brian Eno and respected Scottish indie performer King Creosote. His message was simple: he was angry because he only earned £8 — that’s $12.50 — for getting 90,000 plays on Spotify.

All in all, it was a mess.

The thing is, it doesn’t look like it’s getting any better.

Right now, there’s a host of reports and statements is flooding in, from people whose figures back up Hopkins and STH — and from those who contradict it. Take this from Danny Ryan at Kudos, another British distributor which classifies itself as a competitor to STH. He describes essentially the opposite experience:

Our current Spotify quarterly turnover is, BY A VERY LARGE FACTOR more than the £2,500 quoted as ST’s quarterly Spotify revenue  in the linked Digital Music News article.  Now, I am pretty sure that our overall company turnover is no greater than ST’s, so why this enormous disparity? […] Currently, Spotify is our number two digital account in most of the territories where it exists in terms of actual turnover. In Scandinavian countries it is our number one source of income (physical or digital).

Danny says he thinks distributors like him aren’t getting a raw deal from streaming services, and that in some cases the problem is between artists and their labels, not producers and platforms. Working out who’s right and who’s wrong is tough.

Here’s the thing, though: perhaps neither of them are.

Everyone has different experiences because, it seems, everyone’s deal is different. Each part of the relationship — artist to label, label to distributor, distributor to platform — allows for some variance. How long you’ve been on a service can make a difference; how well you operate inside the service; how much work you have online; how easily surfaced it is; and, of course, the quality and desirability of your work… these things all count.

Labels and distributors have different negotiations with streaming services, and operate under different rights regimes in different countries. And all the while, big labels are shareholders in Spotify and presumably hope to recoup some of their money in the future (rather than today).

I think one of the problems of streaming music is essentially the same one that sees many of the world’s banks struggling right now: they are simple products built around incredibly difficult, increasingly complex business models. No service is going to succeed in the long term without coming up with answers for these issues — and yet in the short term they burn some bridges by trying to work out the answer.

Perhaps these arguments will only fade once things are standardized and straightforward. But until then, the fight is based on wildly varying data and vastly different experiences. And that means more trouble is going to be coming, whether musicians, labels and platforms like it or not.

6 Responses to “The confusing, contrary arguments over music streaming”

  1. I can understand how the low royalty payments are frustrating, but there’s a different angle: how many of those streams are from people who already own the music and can’t be bothered to rip it or put it on the device they were listening on? And how many of those people would never pay for individual songs or albums in the first place?

    I buy around ten albums a month on CD/vinyl/MP3, have a subscription, subscribe to eMusic, and have a Spotify subscription. I am a very rare case, but I know I use Spotify to find new music that I then buy, and listen to stuff that isn’t on my mobile phone. That’s about to change now iTunes Match is here, but still.

    • Same here, I use Spotify to try before I buy. I still love having physical CDs on a shelf at home, so use Spotify to check out friends’ recommendations and new releases that the music mags are talking about. I have probably bought more new CDs since Spotify came along as it gives me the confidence to buy albums, knowing I’m going to like what I get. I also use Spotify to create playlists and share with friends to share new discoveries.

  2. melodyhill

    I am a songwriter who is fortunate enough to have songs that are streamed in many countries around the world and I have received royalties from streaming services in those territories. Significant streaming creates almost no income for those who create the music. It is abysmal. That has also been the experience of every single performer and songwriter I have discussed this with, some of whom are household names around the world.