Spotify – How do artists get paid?

I’ve already mentioned how Spotify makes money through their subscription tiers and respectively through advertisements for the free service. But how does that translate into payments for artists, recording labels and right holders?

According to their website, of the revenue collected from the over 6 million paying customers and the many companies who advertise through their platform, close to 70% goes to right holders: artists, labels, publishers and performing rights societies such as ASCAP and BMI. In the US, just thre years from launch, Spotify has paid out more than 500M USD in royalties and they are rapidly increasing along with the popularity of the service.

But how does this work exactly? Spotify has direct agreements with record labels, digital distributors, aggregators and publisher collecting societies to whom they regularly pay royalties. They then pay recording artists according to their respective contractual agreement. Generally speaking, Spotify pays according to the popularity of a specific song or artist. For example, if one artist’s music makes up for 2% of what users are streaming, then the artist will get almost 2% of Spotify’s gross royalties.

For artists, this means that if their music is popular, they have a much better chance of increasing their revenue through Spotify than they have by just selling them through usual distribution channels, be them physical or digital.

How do the economics of this model differ from those of the current single and album sales model? Spotify sells access to music instead of ownership of individual songs or albums. Royalties are generated every time a song or album is streamed (vs. the one time a song or album is purchased), and Spotify users spend twice the amount of money on music through subscription than the average downloader. The economics of streaming are very different than those of digital downloads. A proper comparison requires considering the long-term value of a consumer. In other words, the question they ask is: how much revenue does a streaming subscriber generate compared with a paying downloader.

Spotify Premium subscribers are higher value consumers than “downloaders” because they pay at least £120 annually, whereas average download purchasers spend under £60 / year on music. So for instance, if the 40M paying downloaders in the US became Spotify subscribers, artists would earn twice as much for their music than they currently do.

And this is not only good for already acknowledged artists and their music, but for independent and emerging artists as well. Spotify pays out royalties to emerging artists whenever fans enjoy their music. Here are some artists who agree:

We’ve been big fans of Spotify ever since we got our hands on an early beta version. Spotify was just everything we had ever wished for. Spotify’s got a tight focus and became the main platform for the release of our last studio album, Lorentz & Sakarias. Later on, approximately 90% of our revenue came from Spotify. Prior to Spotify, the music industry had invested in safe bets – popular music, and TV formats such as Idol, but as we, and others with us, reached success on Spotify – the major companies dared to invest in new, more independent-minded music that was aimed towards a younger audience.
– M.Sakarias, artist and producer from the band Lorentz & Sakarias

Independent artists can choose the distributor that best suits them to get their music on Spotify. As with the labels, these distributors govern the specifics of how and when royalties pass-through to artists. Each aggregator makes its own policies clear on its website.

So, whether you’re enjoying their free service or you’re paying one of the subscription fees, you can rest assured that your favourite artists are getting paid for their awesome music and will be rolling out new songs for you.

Until next time, I wish you a delicious day!

Love,
Maddie.

Source: Spotify

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Spotify in the news

Two recent developments have caught the eye of  journalists all over the world, and one other improvement to the Spotify mobile app has been announced on their Facebook app page.

The What’s new page has been refurbished and is now called “Discover”. Tina Hart from MusicWeek said:

“Discover personalises a Spotify user’s homepage according to their activity and makes it easier to find new music suited to their tastes, reports VentureBeat. Features of the page include daily personalised recommendations, new releases from ‘followed’ artists, music and playlists shared by followed friends and trendsetters, Songkick local gig alerts and instantly recommended related music when a song is played. The Discover page is currently available on Spotify’s web-based application and will be rolled out to desktop and mobile apps in due course. Spotify chief product officer Gustav Söderström said in a statement: “With the Discover page, we’re making good on our promise of helping you choose what to listen to when faced with millions of songs. We’ve made your listening experience more personal, more social, and more current.” “

discoverSince the article mentioned above was posted 2 days ago, Discover has been introduced to the desktop app users as well, and I must say it’s awesome. I found a few great songs based on the recommendations on the page.

The second interesting announcement that Spotify has released was the partnership with Ford. Chad Kirchner from Gotta be Mobile said:

“At [the] Mobile World Congress, Spotify and Ford announced that they would be partnering to bring a new Spotify app which would support AppLink. AppLink support will allow Ford drivers to access their playlists, move forward and back through songs, and everything else that they can do natively on the phone through the steering wheel or voice commands.

Available now (iTunes link) you can install the latest version of the app and integrate it into the vehicle. To make this connection, your phone must be connected to Ford Sync via Bluetooth and via a USB cable at the same time.

Once linked, pressing the Sync voice command button and saying “Spotify” should be all that is necessary to access all of your Spotify content. Once Spotify is connected and active, the phone will also become unusable; only displaying the Spotify and Ford logo.”

But as most cars now have the native use of the phone integrated in their functions, that shouldn’t be a problem – you’re driving anyway, so you shouldn’t be using your phone, should you?

The third, and most important to me, was the announcement that Spotify has released an updated version of their mobile/tablet app which allows users to “turn sideways” – it has the landscape mode! One of their Facebook fans responded to this post saying “Thankyou SO MUCH for this!!!! As an Android Tablet user I found that turning my head 90 degrees to listen to music was an awful pain in the neck (see what I did there!!!) THANKYOU!!!!! ” and boy his words are true. It appears as the users have been requesting this upgrade for a long time now and many of them are really pleased that their voice has been heard.

How many times has your voice been heard as a customer?

Until next time, have a delicious evening!

Love,

Maddie.

 

Spotify – Tips and Tricks

After learning how Spotify operates and how it makes money, I think it’s time to go back to the user perspective.

The lovely guys from Mashable have compiled a great list of tips and tricks that are designed to make your life as a Spotify user easier. And to make your life as an internet user easier, I will quickly tell you what they were saying :).

1. Discover new music

Try their various discovery apps, such as We Are Hunted, Pitchfork, Hype Machine and Blue Note. When you like particular bands, check out “Related Artists” on their artist pages, and check out Spotify’s “What’s New” tab for new music every Tuesday.

You should also use the Radio function for stations, based on a song, artist, album or even a playlist, and tailor your preferences with likes and dislikes. Also note that once you hit like on a song it will also be added to a playlist called “Liked from Radio” which makes it really easy for you to find it again.

2. Collaborate on playlists

Switch your playlists to a “Collaborative”, share them with your friends and let the music flow in! You’ll be amazed at the songs your friends add. And if you’re not, I think you should get new ones 🙂

3. Listen to music online with the premium subscription

I’ve already mentioned a couple of times that you can save money on internet usage by synchronising your playlists for offline listening. And why wouldn’t you when a good internet connection is not always available?

4. Check Play History and Top Lists

You can check your play history by selecting “Play Queue” in the left-hand toolbar, then toggling to “History” at the top. You can add tracks to your queue by right-clicking and selecting “Add to queue”. You can also select “Top Lists” under Apps, and see what you listen to most by choosing “for me.”

5. Use advanced search modifiers

Similar to Google, you can use certain search modifiers and operators to make your search more advanced. For example, by typing “year:2000-2005,” you can find all kinds of songs between those years, and even make it more specific (e.g., “genre:electronic”).

6. Organise Playlists in folders

Do you know how I mentioned the Playlists that you can use to organise your music? Well, if you find that you have dozens of playlists and your toolbar is starting to get a little convoluted, you can organise them by sorting them into folders. Simply click File > New Playlist Folder, and rename, drag and drop as needed.

7. Import mp3s From Your Computer

Spotify has a pretty expansive music database, but you might not find everything you’re looking for. Import your iTunes library to have all of your tunes in one place. To do this, go to File > Import Playlists, and follow the directions. Depending on how many songs you want to import, this could take a little while.

8. Embed songs online

It’s really simple to share the songs you like on your blog or website. All you need to do is right-click on the song you’re interested in and copy the embed code.

9. Link to a specific part of a song

If you’d like to share a specific point of a song with someone (one minute in, for example), right-click on the song, click “Copy HTTP link” and affix to the URL the time at which you’d like the song to start. See the screenshot for the example “#0:32.”

10. Change Privacy Settings Permanently

Since your Facebook and Spotify accounts are most likely linked, you might run into some trouble: for example, you listen to a ton of One Direction and your Facebook friends publicly mock you – and to be honest I can totally see why. Therefore, instead of entering a private session every time you use Spotify, go to Preferences, then go under “Activity Settings” and uncheck both share settings listed below “Privacy.

11. Find Song Lyrics

If you’re like me and love to sing along with your favourite songs, you’ll love the lyrics apps that come with Spotify. From my knowledge, you have two options: TuneWiki and musiXmatch. My personal preference is musiXmatch because they seem to have the lyrics to most of my favourite songs, as opposed to TuneWiki. With the former, you can create those inspirational pictures with lyrics from songs which is cool, but aren’t enough of those already?

So there you have the most useful tips and tricks you can found in regards to Spotify. Aren’t you impressed yet? If you aren’t then you should read some more…I’ll find a way to impress you!

But until then, have a delicious day.

Love,

Maddie.

Spotify – the Hack Week

Just like many other software companies before them, Spotify has implemented a so-called “free time” in which their employees can work on a project of their choosing, on which they would otherwise have no time to spend developing.

At Spotify, this free time used to be called “hack days” and most employees used to have a day and a half to work on their specific project to improve the company in anyway ( from improvements to the building, to the operations, new product add-ons, etc. ) at the beginning of their “three week sprints”. But this used to happen at a time when the company was still pretty small and with rather few employees. As the company got bigger, they noticed that it became harder and harder for employees to find the time to take the hack days. The employees were still the ones to find a solution: the started saving their hack days and organised a hack week together with other teams. Since the results were pretty amazing, it did not take long for someone to pitch the idea to the CTO and CPO and they were immediately on board.

As Joakim Sundén put it, “[a] work group with people who wanted to help was formed and we ended up with a good mix of people from engineering, product, design and other departments, with experience from running big hack day events at places like Netflix and Yahoo. We read up on how others have organized events like this, for example Atlassian’s ShipIt Days and Jurgen Appelo’s Exploration Days, shared our experiences and our ideas in a workshop and communicated the event in an e-mail to the rest of the company:

So what is hack week about? Well, hack week is a chance for you to explore new ideas and collaborate on things you feel passionate about. Remember all those great ideas you’ve had that you never have time for because you’re too busy with your normal work? Those are exactly the kinds of ideas that Hack Week is made for! It could be a new tool you want to explore, an awesome product feature, a process improvement, an ambitious marketing campaign, or anything else that will help improve Spotify. Think of an idea and seek out others who can help you with it, or join up with someone else’s project. Here are some possible project ideas…”

A lot of ideas have been brought up in this one week event. Some of them will be implemented, some won’t. But this Hack Week idea clearly shows why Spotify gets better and better all the time.

And to leave you with some insight from the event, here is the promotional clip that they have shown:

 

Until next time, I wish you a delicious day!

Love,

Maddie.

Source: Spotify Labs

Spotify – A Business Perspective

A few days ago I told you what Spotify is, and I also told you the reasons I like it so much. I can bet that I am not the only one who likes it, and even though many people will probably just use their free service, there must be a reason they are still in business. The Copyright infringement issues are very openly addressed in Spotify’s commercials. They clearly state that the artists and copyright holders are paid in order for us to have the privilege to listen to their music, as “without them there would be no music to enjoy” (or something like that).

music moneySo, where do they get the money to pay the bills? The site, developed in Sweden by Daniel Ek and Martin Lorentzon in 2006 and launched in the UK in October 2008, is financed by audio commercials followed by call to action links included in their software. Spotify users can avoid the commercials by paying for either an “Unlimited” subscription or a “Premium” one. The “Unlimited” membership gives users the possibility of listening to unlimited, uninterrupted music on their personal computer for just £4.99 per month. The “Premium” subscription, however, seems like a more interesting option and, to me, to offer more value for money. For £9.99 per month you get unlimited access to music on all your favourite devices and the possibility to download all your favourite songs “for when you don’t have a connection”.

Lets crunch some number, shall we? According to a market research conducted by KeyNote back in 2010 the number of downloads in the recording market has been increasing continuously since 2005, with a whooping 557.9% raise until 2010. KeyNote estimated that the downloading market will increase from 14.1% of the total sales in 2008 to over 65% in 2012 and 87% by 2014, while the physical market will only be worth £350m in 2014. I don’t know about you, but it seems like a pretty profitable business to me that still has room to grow.

rdio vs spotifyBut lets see exactly if value is offered for the money where their music catalogue is concerned. The Bulletin mentioned back in 2011 that the Spotify music catalogue is formed by over 15 million songs and it has probably accumulated more songs between then and now. Andy Baio has complied a comparison for Wired based on the 5700 songs that have been in the Billboard Top 100 between 1955 and 2011. He found that out of the 5,700 songs in the top 100, 5,026 (88 percent) were available on both Spotify and Rdio. An additional 81 (1.4 percent) were only on Spotify, and 100 (1.7 percent) only available on Rdio. If we limit it to only the 570 top-10 singles, 518 songs (over 90 percent) were available on both Spotify and Rdio. Both services stream virtually every song every to appear on the Billboard charts, but they don’t overlap perfectly. Each has secured different licenses with record labels, giving each exclusive access to some songs and artists.

I don’t know about you, but I’m very satisfied with their licensed music collection, but you can always add your local files and have your most beloved music a click away.

Thank you for tuning in again. Until next time, have a delicious day!

Love,

Maddie.

What is Spotify?

SpotifyTo start this topic on a rather euphemistic note, Spotify was regarded by John Dvorak from PC Magazine as “The online streaming service [that] seems to have solved the music industry’s problems” and “the culmination of 15 to 20 years of user experimentation”.

But what is Spotify? According to Anne Shelley, “Spotify is an audio player with an experience more like iTunes than its streaming music peers.” It uses a downloadable platform for both Windows OS and iOS with which you can search for artists, songs, albums, etc. and create playlists to share with your friends over Twitter or Facebook. If you hear a song or album you like, you also have the option to purchase it from one of Spotify’s online music store partners.

spotibook-560x373However, before you can do all that, you’ll need to create an account. You can either use your Facebook account for the ease of connection between the two accounts, or simply create an account with Spotify and then connect it to your Facebook account, provided of course that you have one. Some time ago you would only be able to create an account if you already had a Facebook account, but this has changed to please even the less social people who like music.

You have many features available with the Spotify client. You have the music catalogue, the radio, a player for unlicensed music from your computer, the ability to sort your music into playlists, sharing your playlists and songs you are listening to with your friends, finding new music with the help of your friends, or through the news feed on the home page, and many, many apps designed to make your life easier.

One other feature that “Premium” users will find very useful is the offline listening that allows you to synchronise your playlists and then not use a byte of your internet connection for 30 days. The reason behind the fact that you need to go online at least once every thirty days, as Spotify puts it is “just to make sure that your subscription is still active and so … [they] can keep track of how many times the tracks have been played.”

What is your favourite feature?

Have a delicious day,

Maddie.

Sources:  Business insider , Spotify

Spotify – A User Perspective

lovemusicI must say that I am the one in that one in five statistic I was mentioning yesterday, and I do consider music as being one of my main hobbies. I may not be as informed as other “ones”, but I hardly pass a day without listening to music. I remember that from my first allowance I bought two albums. I was 12, and I really liked All Saints, reason for which I really wanted their album. Unfortunately for me I was 12 and stubborn, and I was determined to do this all by myself. Needless to say that my stubbornness bought me an ATC album (well it wasn’t even an album, it was an LP with 13 remixes of the same song) and Vonda Sheppard’s album, which my brother already had. I therefore decided that I would rely on my brother’s collection until I got old enough to know what I’m doing.

Soon after, I started to borrow CDs my brother didn’t have from friends and classmates, and I would ask my brother to make copies if them. I didn’t realise at that time that I was infringing copyright or anything. All I knew was that I really wanted to listen to music and that I really loved my brother’s “Mix CDs”.

rightoneIn high-school I started using YouTube to watch videos but it was really annoying for me to not have a playlist that would run uninterrupted, which is why I turned to LastFM. The problem was that the subscription fee was rather high for my student budget, and I gave this streamer up really soon. The next thing I tried was 8Tracks, which I still use from time to time. But my favourite discovery was definitely Spotify.

What do I like so much about Spotify you might ask. Well, first and foremost, I love the integration between a desktop music player and an online streamer, as well as the extension to all my other devices (smartphone and tablet). I love the fact that I can create multiple playlists to help me organise my (well, their) music according to my mood, that I can upload music that they may spotibook-560x373not have straight from my computer, I like thier radio very much (you can start the radio with a song you love and it will suggest songs that are similar and the best thing is that you can save the songs you like in a separate playlist) and I love the “sing along” app. And of course it has a social feature that simply cannot be overlooked. You can share what you’re listening to, listen to what your friends are listning to and check out other users’ playlists.

There are three different pricetags attached to these services: the basic listening to music or radio on your desktop (or laptop) is free, but is interrupted by ads. The unlimited and uninterrupted version is £4.99, while the subscription which allows you to listen to your favourite music on any device (and download the songs as well!) in £9.99. Maybe I’m biased, but I feel that it gives a lot more value for money that iTunes does.

There you have the personal perspective on Spotify. But what is the business perspective? You’re going to have to tune in again for that :).

Until then, have a delicious day!

Love,

Maddie.

Recording industry

Buying vs. DownloadingFor nearly 10 years, the recording industry has been plagued by uncertainty over how to adapt to new technologies which have dramatically changed the traditional methods of selling recorded music — in a nutshell, the transition from ‘physical’ products such as vinyl records or CDs, sold to the consumer as singles or albums, to the downloading of random tracks to home computers or mobile phones, often for no payment.

The downloading statistics, attendance at live concerts, the success of musical talent shows on television and of musical video games are all reminders of how important music is to society, irrespective of the technology involved or the channels of delivery to the consumer.

One in five UK adults describe music as a “main hobby” (either playing, watching live or building a collection), but a much higher proportions of the population say that they listen to music every day, listen to it on the radio regularly or enjoy browsing in music shops, and 45.6% of homes contain a musical instrument (with just over a quarter of adults able to play one).

HMV

But how do people listen to music today? The recent disruption in the high street market distribution has been obvious with many stores such as HMV closing down. This is a clear indication that people have switched from buying CDs & DVDs to buying singular tracks or albums in a digital format. I am one of those people who stopped buying CDs a long time ago, when I realised how frustrated I was by having to buy an entire album for just one or two songs I liked.

itunesThe pioneer in the field of legally downloading individual songs was iTunes. It has revolutionised the market and has addressed the piracy problem that came with the development of the internet in a very smart way. People were now able to buy just one song and listen to it on their favourite device. Well, that is of course if their favourite device was an “iProduct”. However, considering that only 39% of all smartphone users rely on their Apple device it was clear that there was room for some other big players in this market. The first one to dig into the big pie of MP3 revenue was Napster 2.0, a re-furbished version of the previously popular illegal downloading programe, Napster.

streaming-logoStreaming websites have also made themselves available for a share of the big pie. Of the most popular ones I would mention LastFM, 8Tracks, We7. They act as a sort of online radio station, with the difference that you can choose what type of music to listen to, skip to a different song, and in exchange for a small monthly fee you can get the music without any annoying ads or interruptions. My favourite one, however is Spotify. I like many things about it and the following post will be dedicated to it.

Have a delicious day!

Love,

Maddie.

Music – The Beginning

Music has been a part of our lives since the beginning of our existence. Even in the simplest of forms, we have been drawn to beautiful sounds and have tried to mimic them.

Just like everything else, music has evolved over time, but its main purpose remains the same: to create and project emotions across countries, civilisations and time. Perhaps one of the reasons that music has evolved differently around the world was the difficulty of transmitting the information.

One of the earliest known device for recording sound was the phonautograph, invented in 1857 by Édouard-Léon Scott de Martinville. It’s only use at the time was to study acoustics and only in mid 1877 Charles Cros realised that the recordings could be converted back into sound. However, Thomas Edison’s invention, the phonograph was the first one to actually be able to reproduce the recorded sound. Alexander Graham Bell has also made some improvements to the device, but only at the turn of the 20th century, Emile Berliner initiated the transition from phonograph cylinders to gramophone records: flat, double-sided discs with a spiral groove running from the periphery to near the center. This has been one of the dominant audio recording formats throughout much of the 20th century.

Engineers at AEG, working with the chemical giant IG Farben, created the world’s first practical magnetic tape recorder, the ‘K1’, which was first demonstrated in 1935. American audio engineer John T. Mullin and entertainer Bing Crosby were key players in the commercial development of magnetic tape.

Mullin’s tape recorder came along at precisely the right moment. Crosby realised that the new technology would enable him to pre-record his radio show with a sound quality that equaled live broadcasts, and that these tapes could be replayed many times with no appreciable loss of quality. Mullin was asked to tape one show as a test and was immediately hired as Crosby’s chief engineer to pre-record the rest of the series. Crosby became the first major American music star to use tape to pre-record radio broadcasts, and the first to master commercial recordings on tape.

The next major development in magnetic tape was multitrack recording, in which the tape is divided into multiple tracks parallel with each other. The first development in multitracking was stereo sound, which quickly became the norm for commercial classical recordings and radio broadcasts, although many pop music and jazz recordings continued to be issued in monophonic sound until the mid-1960s.

The first digital audio recorders were reel-to-reel decks introduced by companies such as Denon (1972), Soundstream (1979) and Mitsubishi. They used a digital technology known as PCM recording. In the consumer market, however, tapes and gramophones were largely displaced by the compact disc (CD) and a lesser extent the minidisc. These recording media are fully digital and require complex electronics to play back. Digital sound files can be stored on any computer storage medium. The development of the MP3 audio file format, and legal issues involved in copying such files, has driven most of the innovation in music distribution since their introduction in the late 1990s.

So, where is music going? What further developments have arisen and who has benefitted from them? These are all topics that we will discuss in our next encounter.

Have a delicious day!

Love,

Maddie.