Spotify: Where Will It End?


Videos by American Songwriter

Where’s it all going to end? Is Spotify going to cut a swath through the furniture industry, as CD towers no longer line the walls of homes throughout the land? Will a nation of printers stop having arguments with graphic designers about image resolution settings, as album artwork ceases to exist? And what of the ubiquitous Billboard charts? Will Spotify and even YouTube streams be the future of statistics? If so, beware that Tay Zonday’s ‘Chocolate Rain’ had 42 million hits. To quote Sam Cooke: “A change is going to come.”

It’s only been a few short years since the idea of leaving your house, getting in your car and driving to a store to buy a CD single, became as antiquated a notion as rolling off the sofa to change TV channels. The public’s appetite for downloading caught the music industry largely off guard, and it’s been a missed step by the majors that they’ve been struggling to make up ever since. The next generation is already upon us however in the guise of Spotify. Allowing that it actually launches in the US, Spotify and its peer-2-peer streaming has a potential audience of some 200 million listeners and for many of the 6 million users in Europe, Spotify has replaced a need for iTunes.

Per Sundin, head of Universal in Sweden, told The Swedish Wire: “In five months from the launch Spotify became our largest digital source of income and so passed by iTunes.”

It may not resonate as earth-shattering news, given that the Swedish download industry is worth just $10.8m, according to the International Federation of the Phonographic Industry (IFPI) but a recent report by the IFPI into the activities of the spiritual home of illegal downloading, reveals a sharp decline in illegal file sharing:

“Six out of 10 (users of file sharing sites) have stopped completely, or at least significantly lowered their use of illegal file sharing after the new legislation,” Ludvig Werner, chairman of IFPI Sweden, told AFP.

If we use Sweden as the benchmark for listening habits on a more global scale, the signs for musicians and songwriters struggling to find their place in an ever-developing industry seem positive. Legal downloads means greater revenues for the industry and with 10m streams a day Spotify may be paying out £100,000 (UK) a day in royalties. Break this down individually however and it becomes evident that emerging artists won’t be making fast cash. The standard on-demand streaming payments add up to just under 1 penny in the UK: with 0.8p going to the label and the remainder going to PRS (Performing Rights Society).

Pulled Apart By Horses is a hard rock band hailing from Leeds, England, who give blood, sweat and tears on stage, and work just as hard off it. In barely 18 months they’ve become favorites of British music bible NME, played some of the biggest festivals in Europe, supported Dinosaur Jr, and are currently wiping the stains of their skinny jeans in preparation for a European tour support slot with Biffy Clyro. And all this has been possible while still remaining unsigned. James Brown – no, not that one – is the guitar player, occasional vocalist, and Internet innovator with the Horses.

How important has the online presence of Pulled Apart By Horses been to the band’s success?

Brown: I would say pretty important. In this day and age you can communicate with fans and also get them to interact with the band. We steadily built up an online presence by letting people talk to us on MSN and then we started doing webcasts of rehearsals and recording sessions, competitions, videos, Q&A’s and stuff. I think it’s helped as people see you as giving a shit and that it’s not just about us writing and gigging. It’s about the people who continue to listen to you and buy tickets to see you play.

So is Spotify a good thing for music or will it ultimately lead to artists getting paid even less than they already are for their work?

I see Spotify as a fantastic resource. It’s just like going to a library really. You browse through a few books then pick one and take it home with you. If people like what they hear they can just download it and whack it on their ipod. I’m sure people just use Spotify now as a main media player, but it does have its drawbacks as you can’t import the music onto an mp3 player (without purchasing it first) plus those adverts make me wanna puke up binary. The rate artists receive per play is basically nothing but as the site gains more users and grows then I assume they will receive more advertising revenues. I guess at that point it could be questioned why they can gain so much capital from the pure fact that it’s the music that brings in the bucks.

Do you think legal streaming sites will stop piracy of music?

No, they wont. People have and always will pirate films, music, video games, etc. It’s something that’s been happening for years before the Internet, so why would people stop now? It will certainly help but if you can get something for cheap, or even better for free, then most people will. I think the future of the music industry is in danger of an un-natural disaster, but music will still obviously continue, money or no-money.

Could Spotify and similar ventures actually lead to more creative control for artists, as there’s the possibility to earn money from your work without the need for a record company?

Essentially resources like Spotify could lead to a new future for artists. Right now its very difficult to see any kind of new hope for artists but I’m sure the big heads at the majors and the web based boffins will either join forces or we’ll see independence for all artists big or small via the Internet. So much will be developed musically via the internet and I think we’ll see various new ways the web can make artists actually be able to live and pay the bills of their own accord without the need of a record label.

That sustainable reality may seem a distant mirage – like The Pyramid Stage at a muddy Glastonbury after one too many ciders – but with the right strategy, bands can potentially make good money from streaming. Without the support of a record however it’s no longer just about the music, as bands while be responsible for every aspect of their existence, like running a small business. The possibility for expansion always exists, but there’s always the sobering reality of foreclosure.

Should the unthinkable happen, and Spotify fail to launch in the US, the story of music streaming would by no means end. last week announced that communication giants Skype and Kazaa – the digital-file-sharing service that had such a lasting impact on the industry – have joined forces to create Rdio: a subscription based streaming service due to go live next year. Bloomberg reports that Rdio, based in San Francisco, is being developed by serial entrepreneurs Janus Friis and Niklas Zennstrom and is backed by their venture- capital firm, Atomico Ventures.

“We have watched many ad-supported music businesses come and go,” Friis said yesterday in an e-mailed statement. “We felt the time was right to revisit this space, this time with a compelling offering and a sustainable subscription model.”

“The service is still being tested and pricing hasn’t been determined yet,” CEO Drew Larner said yesterday in an interview with Bloomberg, before going on to confirm that the company plans to strike licensing deals with all four major music distributors.

“The idea is to create a subscription streaming service that’s between desktop and mobile,” Larner said. “For someone who’s interested on a subscription basis, the notion of ownership becomes less important than the idea of streaming on- demand.”

The big guns have their weapons at the ready and the future of music looks certain to change. From Thomas Edison’s invention of the phonogram in 1887, to compact discs in the early 1980s, the Apple ipod of the new millennium and now streaming, music has always been affected innovation. The future remains unwritten, and success for Spotify and its kind is far from assured but one thing is certain: in five years time something new will come along, and whatever it may be, the actual music will continue to transcend all available formats.

Now, anyone in the mood for a game of ‘Beatles: Rock Band’? I’ll be Ringo…

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