Piracy, Spotify, And Independents: A Lowly Metalhead’s Take

Many of you may have heard about the recent leak of an independent report to explaining, in short, that independent record labels have seen a major boost in revenue through Spotify in the first quarter of 2012.  The report was scripted by Merlin, a company that represents independent labels and fights for equal treatment between independent and major labels.

You may have also heard about a handful of big players in the independent metal scene pulling their artists out of the unlimited streaming service due to “unfair payouts and poor treatment”, namely Century MediaProstheticMetal Blade and Sumerian records.

Given the apprehension and subtle controversy surrounding Spotify since its American launch last July, this seems to be the first smattering of good news surrounding the situation since the handful of beloved minors pulled out shortly thereafter.  While no reports containing actual per-stream revenue amounts/percentages have made it into the public view as of yet, it’s been fairly obvious that most independents believed they were getting the short end of the stick as compared to the majors, who (wouldn’t you know it) have a financial stake in the service.

This new report doesn’t extrapolate as to whether or not the revenue amounts per stream have increased, or that it’s purely the result of the growing numbers of users and subscribers,  but one thing is for certain; regardless of where the actual payouts are coming from, artists are beginning to once again see and experience the growing trend of consumers paying for music as opposed to downloading it for free.  Yes, the profits are much smaller—as Spotify users don’t pay for each song/album download, or even each listen, but a monthly fee that is dependent on how versatile and mobile users want their experience to be—but they are profits nonetheless.  Spotify does offer a free service as well, though as far as I can tell the artists and labels still get pay outs from the listens accrued by those members.

At the center of all of this controversy is simply this:  Most record labels, independent or otherwise, are still operating under the hope and belief that physical album sales will one day make their comeback and overtake the massive amounts of illegal downloads and file sharing, arguing that although Spotify does pay the artists and labels for the music that is listened to, it’s not a “fair amount” compared to what they believe they are owed.  This is where I call bullshit.  And in fact, Spotify founder Daniel Ek believes so, too:

Spotify users are the exact same people [who] used to listen to music every day on YouTube, whose entire music collection was pulled off BitTorrent sites. By offering them a compelling music service that allows them to discover hundreds of new artists, not just their favorites pulled from YouTube or [pirated], we’re seeing millions move back to listening to music legally after years of being left out in the cold.

They’re helping pay a ton of money back to the industry. You’re talking 10 million active users, 2.5 million subscribers — most of them paying $120 a year, which is double the amount of your average iTunes user.

Do you really want to hold back your album from people who are finally paying for music again? If you think that by doing so you’re getting them to buy your album on a CD, or as an album download, again, there’s absolutely no evidence to back that theory up. Your album’s getting shared en masse over BitTorrent, over YouTube. It’s there, right now — but you decide that it’s the paying, loyal music fans that should lose out. It makes no sense.

Truer words have seldom been spoken on the topic.  Speaking from the point of view of a fan, and one of those people who has downloaded my fair share of music, I find it selfish and downright foolish that record labels continue to withhold their artists from such exposure and possible revenue.  And it’s not just the artists who are getting the short end of the stick, but the fans as well.  In a day and age such as this, limiting a band’s output and availability is almost career suicide.  Fans are going to get their hands on the product one way or another, that much has been proven, and no matter how you spin it, these labels are forcing their artists, whom they are supposed to be looking out for, into an even more fleeting uphill battle.  They are in essence forcing people to pirate their product.

Now I am aware that all of these labels have their music available in physical formats as well as legal paid downloads, but let’s be real.  A product’s value is only as high as the consumer is willing to pay for it.  Whether or not you agree with or partake in illegal downloading, it’s very real and very alive, and this mentality has essentially taken a once valuable commodity and deemed it nearly worthless.  To a certain degree.  Again, and Merlin’s report only further solidifies this, it’s not that all consumers are heartless criminals, looking to strip every last ounce of money and dignity from the artists they so adore, but simply don’t believe an album is worth $10, or a song is worth $1, and prefer the instant gratification of a download, legal or otherwise.  I absolutely do believe in supporting the artists you truly love in any way you can, but if we’re being honest, the bulk of the money an independent band makes lies in touring and merchandise sales.  Hell, a lot of bands are beginning to produce and distribute their own merch in order to receive the bulk of the revenue it accrues, and some labels are even starting to hop onto this trend, which is a definite step in the right direction.

I’ve been a Spotify user since it first launched and I’ll tell you right now, I haven’t downloaded a single album from an artist whose music is streaming on the service.  There’s simply no reason to.  But as long as certain labels refuse to fall in line with services like Spotify, fans will still find the music, one way or another, and the next most viable option continues to be BitTorrent and file sharing sites.

We’ve seen it recently, as one of the leading file sharing services in the world, MegaUpload, was indicted for copyright infringement and racketeering this past January, causing an uproar in the digital world.  I’m not against the shut down, per say, as it was made pretty clear that the site’s owners and operators were making a substantial chunk of money off of their illegally hosted files, but the idea in concept irks me.  And it was pretty clear what little impact such a devastating accusal had on the file sharing world; within hours more sites were popping up, and the ones who were already there began bogarting the traffic and downloads that once belonged to MegaUpload, further proving the point that no matter what, there is absolutely no stopping piracy short of enacting egregious bills such as SOPA and PIPA.

In short, I’m optimistic about what these new developments regarding independent labels and Spotify will bring in the future of streaming music and the fans’ listening experience.  The fact alone that Spotify has succeeded to the levels it has so far gives me great hope for the future of the music industry.  It will never be the glorious and lavish lifestyle that it once was, but that by no means signifies its bitter end.  Fans and record labels alike just need to take the leap and be willing to take the next logical step in the evolution of this variable industry.  Then and only then will everyone involved benefit from what the digital world has to offer.



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  • Brad

    What has always surprised me is this notion that more regulation will equal more profits and the elimination of the goods from the internet. It doesn’t matter. MegaUpload wasn’t a victory in the grand scheme of file sharing, because I can name at least 20 sites off the top of my head that offer the exact same content mirrored on their sites.

    It’s also well known that bands get the majority of their funds from touring and merch, as you stated. Most bands want to sell records so they can continue their stint with the current label and keep making music. However, I think there’s been a dramatic shift in recent years toward independent production without record companies. You no longer need these huge business conglomerates to promote your record. The internet is free and simple for any band to get popular and start making a living wage. Unless you count greedy assholes like Metallica, the majority of bands don’t seem to have much of an issue with it as long as people keep coming to shows.

    For those that aren’t musicians, think of a record deal as a loan with a horrible interest rate. You are the sole provider of the goods, but don’t even own your masters, and you’re always the last to get paid. Everyone else gets their cut first: the label, the manager, the lawyer, the accountant, and of course the IRS. Artists make about 96 cents per CD sold on majors. You can buy a song on iTunes now that you shop independent for $1 a pop.

    The difference is you own everything, you get all the money, and no one can tell you what you can and can’t do with your music.

    This is the same deal with the MPAA, because it isn’t the “artists” who are suffering, but the wealthy business magnates who are no longer getting their ridiculously unfair cut of the profits. I love those “would you steal a car?” ads. If it was that easy, yeah, I might.

    With that said, I’ve never used Spotify. Is it anything like Pandora Radio?

    Good article dude.

    • Sean Canfield

      Spotify is like Pandora, but you can search individual songs and there are even less commercials.

      It’s a great idea and it’s where people are going, that’s proven. Get out of the way of the bus and you might get a ride, stand in the way, you’re getting run down as it passes by.

    • David Sherbrook

      Good points for sure. Record labels are becoming more and more obsolete this day and age, especially with (as you mentioned) the much more affordable and accessible softwares and distribution models available through the internet so any band can essentially write, record, produce, and release their album by themselves and get it heard by thousands, if not millions of people instantly.

      I actually wrote an article dealing with some of that a while ago.

      The worst trend nowadays is the newfangled “360 deal” where a label essentially has its hands up the skirt of every facet of a band’s activities including merchandise sales, endorsements, concert revenue, etc. rather than just earning a percentage of the record sales. In return, the label acts more as a manager and looks out for the interests of the band and actively seeks out new ways to promote them and make them money. Sounds great, right? Well consider that most labels do this as a last ditch effort to try and stay afloat, effectively bogarting every last venture the band has to make at least SOME money while on the road. When done with good intentions it can be a great thing for a struggling band, but most labels most certainly don’t operate like that.

      The reality is that 90% of actively touring bands don’t make all of their income through their band alone. Almost all work day jobs when they’re not on tour, and are lucky if they can make enough to survive while they’re on the road. It’s an endless cycle of bullshit that had until more recently, gone relatively unnoticed to the casual observer.

      And yes, I would steal a fucking car in a heartbeat if all I had to do was click a link.

      I would say Spotify is like a cross between iTunes and Pandora. On one hand you have the radio feature, much like Pandora but more customizable. On the other, you can store all the music on your HD in Spotify and search individual songs or albums and listen to whatever you want, however many times you want. I highly recommend it for someone who’s as into crazy, obscure, and weird shit as I am.

  • Jeremy Lebens

    Very well-written article here. I can’t really chime in here, because I rarely listen to music and when I do I actually go out and get the CD. My big thing is musical scores for movies, in which case I buy the single tracks off of Amazon MP3.

    I did get a Spotify beta code when it came to the US, so I can still listen for free on my PC, just not on my phone or tablet, unless I pay.

  • Wilson Reinke

    To break down the distribution of revenue for you, here is an infograph I found for my music business project. Notice how much the artist makes when it gets to streaming services. Fractions of a penny