Spotify worth £23bn - at the expense of musicians

[Bilbo]

If Spotify IS worth anything close to this figure, it really needs to be challenged on the royalties it gives artists. It borders on theft.

[mybass]

agreed!

[BigRedX]

43 minutes ago, Bilbo said:

If Spotify IS worth anything close to this figure, it really needs to be challenged on the royalties it gives artists. It borders on theft.

Do you have a source for that?

It is my understanding that Spotify has still to turn a profit and is only kept going by investment hoping that one day it might actually be worth something close to that figure.

Personally ATM I can't see how that is possible. The infrastructure and bandwidth costs alone to support Spotify's user base must be huge, and I suspect that the vast majority of them are using the free service. The ads on the free service are poorly targeted, most of the ones I get are from Spotify trying to persuade me to upgrade to their paid service and all of the others are for music I have absolutely no interest in; and since I'm mostly using Spotify's own genre playlists, you would think that ads for music would reflect the genre being streamed?

I see little point in paying for Spotify when their catalogue is so incomplete. Roughly one third of the tracks I have on CD or records are unavailable on Spotify and while I'm not exactly mainstream, my tastes aren't THAT obscure.

AFAIK none of the streaming services actually make any money. Soundcloud was just about viable until they were told that they would have to pay royalties to the owners of their content. Since then they've stubbled from one financial crisis to another.

Even YouTube only survives because it is being propped up by Google's more lucrative services.

No one but Spotify's management and their anxious investors can believe that Spotify is worth anything close to the figure being quoted. 

Maybe if someone actually works out how to make music streaming services turn a profit then perhaps one of them could be worth that much. But until then dream on.

Edited March 1, 2018 by BigRedX

[EssentialTension]

http://faroutmagazine.co.uk/spotify-valued-at-23-billion-goes-public/

 

... but I also read that they lost $1.5 billion last year.

[BigRedX]

6 minutes ago, EssentialTension said:

http://faroutmagazine.co.uk/spotify-valued-at-23-billion-goes-public/

 

... but I also read that they lost $1.5 billion last year.

Well the 1bn they might have raised from the shares might keep them going for the next year.

I think unless there is some breakthrough working out a way for streaming to be profitable without alienating their customers as well as their content providers, then a lot of people are going to lose their money.

[fretmeister]

Amazon didn't hit profit for about a decade.

 

But they have just about everything people need. And it was clearly something that could work given time to build the service.

I'll use the free spotify sometimes, but I'm not paying for such a limited service.

[Lw.]

It's not all Spotify's fault. 

They actually pay out more of their revenues to the content owners than most of the other streaming services, it's the labels that are holding back most of the cash - by the time it gets to the artists, several large chunks of the cash have already been cut out. 

And let's not forget that the labels force Spotify to give them part owner ship of the service too so they're giving away most of their revenue to the people that will claw back any profit they make anyway.

[Al Krow]

1 hour ago, Bilbo said:

If Spotify IS worth anything close to this figure, it really needs to be challenged on the royalties it gives artists. It borders on theft.

STRONGLY disagree! 

Spotify means that musicians are getting some royalties rather than getting NOTHING from folk file sharing on an industrial scale.

No one is forcing musicians to sign up to Spotify. If they can do better without, good luck to them.

[Painy]

I happily pay for their full service. I have a couple of hundred albums at least downloaded onto my phone that I can listen to whether I have an internet connection or not (I live out in the sticks so 'not' is the default setting unless I'm actually at home) and without adds. Any one of those albums might have cost me the monthly fee to buy on CD.

Plus if I pay then I can live in hope that at least there's a little more that could go to the artist (probably not the case I know but you gotta have hope).

As for limited selection the choice of music is infinitely more substantial than any high street store could have even dreamt of stocking back in the days of Our Price and Andy's Records.

It's all relative innit.

Edited March 1, 2018 by Painy

[pbasspecial]

Unfortunately the genie is out of the bottle when it comes to 'free music'.   The consumers expect to get music for nothing nowadays.  That is why the live sector is so expensive/profitable instead.  £20 tickets become £30 tickets, £40 becomes £50-60,  T shirts go from £15 to £20-25, etc.  

Record labels understandably now sign artists to 360 deals instead of straight record sales wanting a slice of every potential revenue stream.

New acts will struggle as the longer term investment/support needed to break a new band will not be there and it will be up to the band/management to build a reasonable audience first. They will probably have to set up/sign to small, independent labels.  Which ultimately may prove better for music in the long term. Or not.

[Bilbo]

As a Jazz fan and player who has absolutely no presence on the streaming world OR the world of hard copy (I am on two cds, both of which will sell dozens) so the argument is completely academic but I know from the conversations that I do have with artists suggest that the royalties paid by Spotify are negligible (literally pennies, if at all). The simple fact is that the production of non-mainstream music is becoming a cottage industry if even that. Meanwhile, people who have NO contribution to the actual production of musical content are making billions. It's ludicrous.  i

[Happy Jack]

That £23bn valuation makes me smile.

Am I really the only one who remembers the DotCom bubble bursting?

 

[dave_bass5]

1 hour ago, Al Krow said:

STRONGLY disagree! 

Spotify means that musicians are getting some royalties rather than getting NOTHING from folk file sharing on an industrial scale.

No one is forcing musicians to sign up to Spotify. If they can do better without, good luck to them.

I have to agree. I used to download all my music for about 10 years, but these days im all above board and pay for Spotify.

You cant go basing the current trend on what was the norm decades ago. times change. Back then musicians were paid a fortune, now they aren't. Thats just the way things are.

 

[Al Krow]

11 minutes ago, Happy Jack said:

That £23bn valuation makes me smile.

Am I really the only one who remembers the DotCom bubble bursting?

Check Google's MONTHLY revenues. It will make your eyes water! For sure, there are some dogs out there (SNAP anyone?) but when you get the likes of Google and fBook raking in £BILLIONS each month...

If you want to avoid the next DotCom bubble, may I humbly suggest steering clear of 'Ponzi' schemes like Bitcoin (which don't actually do anything 'real' other than avoid the prying eyes of law enforcement?)

I personally really do wish Spotify well. It's great to see an European player holding its own against the US tech titans.

And, besides, it's been the launchpad for some major UK talent: http://www.bbc.co.uk/news/entertainment-arts-30436855

[Burns-bass]

The problem all of these streaming services (and online subscription-based platforms) is that there's little cost to leave them and sign up to a competitor. The simplest parallel here is Netflix. Neither Spotify nor Netfilx own the majority of their content, they license it. At the moment the big push is to gain market share and crowd out competitors, then increase the price to a point where they at least make a profit (instead of losing billions).

It's not revenue that matters to a business in the long-term, but profit. At some point there will be a dramatic shift in the business model (see Uber already attempting to increase costs for example). At this point we will see how consumers react.

Take a look at how eBay cast Paypal aside when the law finally caught up with Paypal and demanded it began operating within the law and dispensing their responsibilities as a processor of financial transactions. As soon as consumers are asked to pay the full cost for the service, we balk at it. It will be the same with Spotify, but another provider willing to lose billions to achieve a monopoly position will be propped up by venture capital and early-investors.

Edited March 1, 2018 by Burns-bass

[Skol303]

4 hours ago, Happy Jack said:

That £23bn valuation makes me smile.

Am I really the only one who remembers the DotCom bubble bursting?

 

Haha, indeed I do. I was involved in an online start-up business looking for several £million investment at the time... not-so-happy days!

I hear from a lot of quarters that Spotify gets rich on the back of musicians; and I know of musicians who organise activities whereby a particular artist will receive many thousands of crowd-source plays in order to boost their Spotify income. So it seems there are ways to 'game the system' if you have the social network to do so, but it still adds up to little more than chump change.

It's a difficult conundrum. And I agree with the comment above that Spotify at least pays some royalties and that people are welcome to try blazing their own trail without it however they wish.

Regardless, if the future of mass music distribution isn't Spotify then it's going to be something along such lines. It's still very early days for all of these business models, so much room for improvement of course...

Edited March 1, 2018 by Skol303

[stingrayPete1977]

I didn't realise anything I've been involved with was on there until looking due to this thread! 

I need a better agent, lol.

[TomRandles97]

I’m actually doing an essay on this at the moment. You could consider it theft but the record labels normally keep about 80% of the revenue received from Spotify before the musicians get a whiff of it. Also, spotify was launched in 2008, the same year that the ‘vinyl resurgence’ is considered to have began. In the following 7 years, global profit made from vinyl alone has quadrupled. While there are many factors that contribute towards this, it’s worth considering that while streaming services have monopolised music consumption, there seems to be a demand for something tangible for the consumers money. And of course, this means more money for artists. I think that Spotify should pay artists more, though if you try and see Spotify as not being a direct income source, it has some real benefits for artists, though not intentionally.

I’m sure I read somewhere that the guys behind daft punk would only have earned $13000 each from ‘get lucky’ from streams alone, despite being one of the most listened to tracks of that year. This doesn’t seem so bad but consider the amount of money that would have gone into producing that record. 

The fact is that most mass media is now consumed through subscription based platforms, Netflix and Spotify being the first to come to mind. It’s certainly a trend that works great for consumers and the platforms themselves, but it’s the artists that seem to suffer. 

[Lw.]

What % of the 9.99 subscription fee do people think would be fair for Spotify (et al) to pay out to the content owners? Note I'm not saying artists here as the digital services don't wouldn't be involved in that relationship, just how much of their revenues do you think is a fair amount to pay out.

 

The comparison between Netflix & Spotify is a funny one in terms of who the services are good for - I think it's fair to say musicians aren't getting a whole lot of money from streaming (without going down the arguments of recorded music just being promo material for tours) so it's maybe not a great deal for them. But Netflix's investment in TV is absolutely huge & has easy taken over the amount of revenue TV producers get from traditional TV sales - there are millions more pounds being plowed into creating content and so being paid to the actors/writers than there was a few years ago & they pay huge license fees to buy up other content - so really TV is getting a huge benefit from streaming, it's almost a bad deal for the consumer as they're having to pay multiple subscriptions to get the best shows from the different services which ignoring most of the other content. 

[Chris2112]

I use the paid Spotify service and I think it's great, but my tastes are directed very much towards fusion and a lot of the records listed on there in the fusion section are either out of print or hard to get hold of. I like being able to stream high quality music easily through my phone when I'm surfing the net. That said, I know musicians are getting next to nothing back from it and that irks me but there is little I can do. If I pay £30 for an out of print CD from an Amazon marketplace seller, the artist won't see that cash either.