Getting people to pay again to listen to works they’d already bought. However, the simple fact remained that the purpose of Spotify, economically speaking, was built around the re-leveraging of IP/value in existing catalogue. There were many stories of artists leveraging Spotify to build audiences, and for those who owned their entire catalogue and publishing, the economics were in some cases quite reasonable. That aspect of fan/audience/community building has always remained well out of reach of the platform itself.
Following a campaign by, amongst others, Cellist Zoë Keating, they eventually made some available, but it still wasn’t all that easy to access depending on which aggregator you used to get your music on the platform, and there was still no way to converse with your audience. Which brings us to the problem of communication – Spotify for a long time gave no analytic detail to artists. Spotify itself didn’t really engender that kind of audience building. What was also apparent, perhaps like radio in this respect, was that there was minimal lateral movement from playlists to wider awareness of the artist. However, there were winners – it became a new form of ‘viral’ success to have a playlist hit, one track that landed on a massively subscribed playlist and made good money for the artist. News emerged of bands and territories and labels negotiating different deals, of Spotify lobbying to reduce statutory royalty payments for streams, and despite having been to at least three talks where it was explained in depth, I still couldn’t tell you in any great detail how Spotify calculates who gets what.
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(it’s worth noting that Spotify weren’t the first to try the same thing – an almost identical app called Datz was built, and had a press launch but it turned out their attempts to get the majors on side involved a whole lot of lying to each of their negotiators who rather awkwardly actually talked to each other ahead of the launch, and the whole thing collapsed spectacularly).Īs Spotify evolved into some kind of ‘total music solution’, removing the sales platform not long after the deal with 7 Digital ran out, and adding a mobile app and offline storage as soon as they could, their economic model (which made sense in relation to radio, but was problematic in terms of cannibalising sales revenue) didn’t evolve. Which is not to say that there aren’t millions of Spotify users who use it like radio, just that the number of prior experiences and economic transactions that it has subsumed is way, way more complex than it was in Year 1. At that point, the ‘ Spotify is more like radio’ argument was a whole lot more compelling that it is now. So the idea that Spotify pointed you to a sales opportunity and had no mobile app made it a very different proposition with a very different set of affordances.
The catalogue they kickstarted by doing equity deals with the Major labels and the platform they got (I can’t find the reference for how this worked, but I definitely remember it being talked about at the time!) by – I think – doing a deal with 7 Digital who built the first version of Spotify in exchange for the being the exclusive ‘shop’ within Spotify – yup, when Spotify first started, you could buy most of the music that they played inside the browser window. So, Spotify’s problems, summarised – Spotify began by realising that they needed two things to get an edge over everyone else in the race to be the first ‘all you can eat’ streaming service – a catalogue and a platform. And therefor why I hope that any collapse in Spotify’s position in the market (it’s WAY too early to make that call, but we can hope, right?) would possibly offer us a chance to rethink the economics of streaming. So I’m going to try and summarise that here, and then offer some thoughts on streaming and why the argument against Spotify is not an argument against streaming. Something on which I’ve been pretty vocal over time. With the recent increased scrutiny placed on Spotify thanks to their tendency to give millions of dollars to berks who give a platform to conspiracy theorists and transphobes, it has also amongst my musician friends reignited the discussion about Spotify’s economics.
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