Spotify Hits 15m Subscribers

music, music business, music industry

spotify-logo-primary-vertical-light-background-rgbThere will be a long, probably too long, post about music streaming and its impact on the music industry coming at some point but we just had to stop and talk about the Spotify announcement from yesterday that they’ve hit 15m paid subscribers.

A lot has been spoken about Spotify and its supposed negative effect on the music business recently thanks to Taylor Swift taking her music off of it completely a few months ago.  We fall on the other side of that argument and see streaming as the future of the industry. We’ll try and keep our reasons brief here so as not to spoil the big post that will be coming soon (we know you can’t wait..)

Yesterday’s announcement is big because 15m people are paying $10 a month to stream music on Spotify, that’s $150m monthly revenue and $1.8bn annually. Take into account that in the United States alone there are over 320m people and globally the population sits just shy of 7.3bn, 15m really isn’t that much. Yet those 15m subscribers generate more than 10% of the total global recorded music revenues from 2013 ($15bn). Just imagine if there were ten times the amount of paid subscribers, and judging by the amount of YouTube views major label artists get, there are more than that listening to music for free online. From Spotify alone there would be more money coming in to music than there is now, and Spotify doesn’t have to be the only player!!

Artists that are disgruntled because they claim to be losing out on money from lower sales need to sign better contracts. Spotify pays out 70% of its revenues to right-holders, just as much as Apple and other online retailers, where are the complaints from those that dismiss streaming? Artists have always lost out in shitty deals, check out 30 Second To Mars’ brilliant documentary Artifact for some insight into that. On the flip side, more needs to be done for songwriters and publishers as they do lose out from streaming- although they made pittance on the sales anyway, roughly 9 cents per song total (split between all parties). Hopefully laws will be put into place to change this as unlike the artists, writers and producers can’t sign endorsement deals or tour off of the back of the songs they write and should be compensated fairly. The money generated per stream is a mute point. The more money in the pot, the more there is to distribute. Right now there isn’t as much in the Spotify pot as there are only 15m subscribers. You can’t compare that to a fixed amount for a sale. As the amount of money coming into Spotify grows, so will the per stream revenue.

Before this post turns in to a long rant, we’ll end by congratulating Spotify and hope they continue to grow and break into new markets. Considering only 3% of all commercially released music sells more than 1000 units, streaming services are giving the other 97% a platform to reach new fans and build a base that they can make money from with a low barrier of entry and zero commitment for the consumer to check out their music.

We’ll elaborate further on all the points raised but hope we’ve given you something to think about, whichever side of the argument you sit.



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