
Spotify Examined: What Their Report Really Says - oo7jeep
http://ayesimo.com/spotify/
======
wil421
>A Spotify Premium user isn't the average music fan.

Disagree I consider myself the average music fan and the reason I like this
service is that I have all my music with me where ever I go, even if its not
my device. Other people I know who use Spotify are mostly average the other
half isnt.

Spotify has converted me from a pirate in my younger days to a paid music
subscriber.

~~~
girvo
Your use case is why I have iTunes Match. It's finally not buggy, I love it so
much it's the reason I got an iPad mini yesterday instead of a nexus 7, and
that was a hard decision.

~~~
wil421
I am all about cross platform these days. S4 GE phone, iPad, MBP laptop, and a
windows desktop powerhouse. iTunes Match sucked when I used it last but its
been a while.

~~~
girvo
I've had it since launch, and it's always been pretty buggy. But for the last
12 months all issues I had (libraries getting weird on one device, streaming
choking a bit sometimes) have all been fixed, so I'd gladly recommend it now.
18 months ago? God no ;)

------
Flimm
> They don't pay per play, so most of your money goes to popular artists no
> matter how indie your listening habits are.

That's a misleading sentence, it implies that your listening choices do not
affect how much money goes to indie artists, which is not true. The proportion
that each artist gets depends on how many plays they have relative to the
plays of all artists in total in a particular time period, which is a
proportion you do influence by what you choose to play.

If you want to be misleading in the other direction, you could just as easily
say:

"They don't pay per play, so some of your money goes to Satanist artists no
matter how mainstream your listening habits are."

~~~
aston
I may be appealing to emotion there, but it's certainly not misleading (nor is
your claim about Satanists, though I think the proportion going to them is
very very small). It's true!

Do you disagree that it would be better for the $10/mo a subscriber pays to go
only to the artists they listen to?

~~~
qq66
"Your" $10 _does_ only go to the artists you listen to. If you shift your
listening entirely from one artist to another, the artist you left will see
their revenue drop by $7 and the artist you adopt will see their revenue
increase by $7.

------
oo7jeep
1\. "iTunes is also the preferred tool for listening to pirated music, which
generates nothing for artists."

Spotify has paid out $1B in 9 years. iTunes is paying out over $1B PER
QUARTER. [1]

2\. Spotify also has an ARPU cap ($120/yr) - Not only do none of their
competitors have this, but it is likely others will find ways to increase APRU
(better video CPMs or iTunes exclusives are just a few options). This will
likely make Spotify a less appealing distribution option going forward.

3\. It seems implausible Spotify is the cause for reduced piracy - YouTube has
10x the content, $0 cost, no need to download an application or creating an
account and has 50x the user base.

[1] - Don't worry, I'm not including app sales in this figure.

~~~
aston
Beyonce's latest release on iTunes sold over 1 million copies in less than a
week at a very premium $15.99 a pop [1]. And there's no need to pirate it, as
videos of her best songs are already heading to VEVO/YouTube now [2]. It's a
win-win, and Spotify's not a huge part of that story.

[1] [http://www.cnbc.com/id/101283857](http://www.cnbc.com/id/101283857)

[2] [http://www.vevo.com/watch/beyonce/drunk-in-love-
explicit/USS...](http://www.vevo.com/watch/beyonce/drunk-in-love-
explicit/USSM21302428)

------
tedpower
One thing that has always surprised me is just how small the entire music
industry is.

The entire recorded music industry was $16.5 billion in 2012 (According to the
IFPI). To put that in perspective... \- $364b: The TV industry (2009) \-
$557b: Our spending on the war in Afghanistan \- $523b: The amount the world
spends on beer each year (excluding other types of booze)

The point here is that the cultural value of recorded music is (I believe) not
reflected in it's market footprint. For better or for worse (mostly for better
I think) music is cheap.

~~~
tedpower
also, for comparison:
[http://www.informationisbeautiful.net/visualizations/billion...](http://www.informationisbeautiful.net/visualizations/billion-
dollar-o-gram-2013/)

------
jere
>We're set to soon see growth of physical sales eclipse the contraction of
physical sales completely. Which means the graph, if expanded a bit, might
look like this: It goes up a little bit!

I don't understand. To me, the change in physical sales appears to be
asymptotically approaching 0. Why assume it suddenly goes positive and then
use that guess to make Spotify look deceptive?

>Spotify is playing a little fast and loose here, though. A Spotify Premium
user isn't the average music fan. Only 25% of Spotify's active user base pays
for the Premium service. .. A fairer comparison might have been the average
U.S. citizen against the average Spotify user, since both include people not
really paying for music.

No, they're not. They're comparing _paying Spotify customers_ to _US paying
listeners_. If you think comparing nonpaying to nonpaying is reasonable,
paying to paying should be reasonable too.

>In a year, Spotify makes about $14.67 per advertising-supported user [2], but
those folks if considered just typical Americans would spend $25 on average
[3]. That's just over $10 per year lost for each cannibalized person.

Why assume those people aren't buying music also?

~~~
aston
The projection graph _does_ assume flat physical sales. But it's a stacked
chart.

Paying to paying is not completely unreasonable, but imagine an airline using
the average fares of its Airline Club members (who are often flying first
class) vs the fares of average Americans. It's easy to inflate the number when
the group of people you're talking about are rich and predisposed to being
more engaged.

edit to your edit: It's not clear to me why you would be willing to listen to
Spotify for free, but then buy music on the side. Anecdotally, I've never met
anyone who does that consistently. I'd be interested to hear contradicting
anecdotes though.

~~~
earbitscom
Yeah, there is also a bit of this at play when Spotify talks about what they
pay artists. They say they pay an average of 70% of revenues, but they don't
explain that major labels get way better rates per stream, not just because of
the volume of streams. It would be akin to Wal Mart boasting an average $22
per hour salary for all workers because their CEO makes $100M a year while all
others make minimum wage.

~~~
wmf
That doesn't really square with Spotify's own explanation where equal market
share should get equal payout: [http://www.spotifyartists.com/spotify-
explained/#royalties-i...](http://www.spotifyartists.com/spotify-
explained/#royalties-in-detail)

~~~
earbitscom
In that first graph is says X 4 (Artist's Royalty Rate). So it is based on
market share, and some rate, which they would have simply said is Y had it
been the same for everyone.

------
freshbreakfast
Awesome Post Aston. You know, you can most year-to-year sales data directly
from RIAA. You're supposed to pay for the data but usually you can find
someone posting them.

Regarding that, I'm not quite as optimistic as your projections on digital
sales. I don't think it trends up forever. I don't have a crystal ball, but I
have a feeling that downloads sales will actually peak in the next 1-3 years.
At which point, the record industry will REALLY start freaking out (again).

------
pbreit
OP doesn't acknowledge that downloads may have peeked. I used to download
quite a bit but haven't in over a year due to the supreme advantage of
streaming.

