
Spotify’s Fatal Flaw Exposed: My Closed-Door Meeting Ended in a Shouting Match - deegles
https://webcache.googleusercontent.com/search?q=cache%3AAaLrQwumVT8J%3Ahttps%3A%2F%2Fwww.huffingtonpost.com%2Fentry%2Fspotifys-fatal-flaw-exposed-how-my-closed-door-meeting_us_5a512262e4b0cd114bdb33cd+&cd=1&hl=en&ct=clnk%E2%89%B7%3Dus
======
guitarbill
Utter, utter garbage. Please do not waste your time reading this.

> Spotify’s founder, Daniel Ek, made his initial fortune. At 23, he was the
> CEO of uTorrent, a pirate platform that became BitTorrent (arguably the
> largest rights-infringing platform in the world). He and their developers
> then used identical rights-infringing software in order to build his new
> golden goose: Spotify.

This is misleading, as BitTorrent Inc purchased uTorrent in 2006 to replace
their own BitTorrent client. But uTorrent was just one client for this "pirate
platform".

> Meanwhile, Spotify pockets 30% of all the revenue they collect––and they
> don’t make anything.

I suppose he has no issue with labels then?

> Spotify’s in trouble because Spotify doesn’t know what their product is.

> “No no…sorry,” I said, shaking my head in disbelief. “Your product isn’t
> ‘Spotify.’” He continued to stare at me. I said, “Sir, your product is
> music.”

What a muppet, going from "Spotify doesn't make anything!" to "Spotify's
product is music".

This is especially dumb because it's like saying "supermarkets don't make any
food, they just sell it!".

~~~
dan000892
> Spotify doesn’t make anything... television and film industries aren’t up in
> arms over Netflix the way music makers are up in arms about Spotify...
> because Netflix makes stuff. Great stuff... Meanwhile, Spotify pockets 30%
> of all the revenue they collect––and they don’t make anything.

I forgot that Netflix was a charity from its inception in 1997 until its first
original content launched in 2013.

------
ucaetano
This article sounds almost childish.

Spotify (the app) is Spotify's (company) product.

Music is the musician's product.

Spotify's (the company) product (the app) is a music delivery system.

People who have a Spotify (the app) account are Spotify's users.

People who listen to music are the artist's listeners.

Someone signed in to Spotify but who never played anything is a user but not a
listener.

Someone listening to a song being played on Spotify but without a spotify user
account is a listener but not a user.

Going to a meeting and being pedantic about such details shows nothing but
your own lack of understanding. And to be honest, a complete lack of maturity
as well.

~~~
elago
How is that either childish or pedantic. It just took you 7 lines to describe
your interpretation of the definition of product in this case.

I think it's a reasonable point to discuss. The author's example was good:
when at Starbucks, people are ordering a coffee, not a starbucks.

To me, this was an interesting point, not pedantic, because it's not true for
all businesses. Unlike Starbucks, when I was a kid, McDonalds wasn't just
french fries and a milkshake, the playstructures and happy meal toys made it
seem like more than a place for food.

That distinction seems quite relevant to a discussion about how much 'value'
Spotify (company) is adding when they take media created by artists and put it
on their computers for users/listeners to download/love.

~~~
voidlogic
>when at Starbucks, people are ordering a coffee, not a starbucks.

Except that is not true, they decieded to get their coffee at Starbucks. The
Starbucks product isn't coffee its "coffee distribution", Just like Spotifys
product is "music distribution". Both Starbucks and Spotify provide a
distribution channel to attract users, now this doesn't mean reasonable
quality coffee/music isn't important to them, but thats not the whole story.

So both are just like McDonalds IMHO, not different as you suggested, its just
that their value adds are different.

~~~
elago
Maybe I'm missing your point a little, however for me today Starbucks is not
like McDonalds when I was a kid.

Starbucks is interchangeable with any of the many coffee chains. The service
is fast, prices won't be insanely high, yet it won't be stale coffee sitting
for days in a warmer.

So I'll choose Starbucks over a boutique artisan coffee house and over a gas
station. But Starbucks vs Other_Coffee_Chain means nothing to me. EDIT: What I
mean is I don't "decide to get my coffee at Starbucks". I decide I want to go
for a walk and get coffee and I'll probably stop at the closest coffee chain.

Anyways, to bring this analogy back, what is the Spotify value add? The
technical competence to host files on the internet? Putting a front end on CDN
hosted media?

~~~
elmalto
For me, it is my "adult" McDonalds. I have 5 artisan coffee shops in a two
block radius yet I mostly go to starbucks 3 blocks away for a few reasons:

\- I can order online and have the order ready for pickup when I get there

\- I actually prefer their latte

\- They never mess it up

It was similar on my last Asia trip. While I try to avoid any sort of non-
local food/restaurant while traveling, I enjoy the familiarity and quality I
get at Starbucks and frequent it wherever I go.

------
logandavis
>“And by the way,” I added, “Stop calling your subscribers ‘users.’ They’re
not ‘users,’ they’re listeners––our listeners in fact. You’re the ‘user.’
You’re using our music to monetize our listeners for your profit.” He looked
at me as if I’d just shot Santa Claus in the face. “No, man! You’re wrong!” He
was sweating now, and the dozen or so musicians who’d gathered around us began
heckling him. He shouted, “Spotify is our product! You don’t get it at all!”
He stormed off.

Then all of the very famous musicians in the room walked up to me and said
"Wow, Blake! You sure did show that nasty Spotify executive!" They began to
shower me with praise and small tokens of affection. Everyone was in awe of my
wit.

Beyonce said "Blake - those words you've said were the most beautiful that
I've ever heard. Will you write the lyrics for my next album?" And I said,
"Beyonce - I'm honored. Ordinarily, I would say no, but because #IRespectMusic
so much, I can't refuse this opportunity."

Next, Tegan and Sara came up to me. "Wow, Blake," said Tegan. "That was so
amazing. I can't believe how brave you are." Sara chimed in "and handsome!",
giggling. We made small talk for a few minutes, before they had to run to a
recording session - but first, they surreptitiously slipped me their numbers.

By the time I was done talking with Tegan and Sara, most of the other famous
musicians had already thanked me and left. I turned to finally leave the
building, when I saw one last hooded straggler, standing in the corner.
Suddenly, he looked up at me. "Tupac?!" I said. Indeed, it was Makaveli the
Don himself. He looked deep into my soul and said: "Blake... God isn't
finished with you yet." Then he smiled, a mysterious smile, and faded away,
just like Obi-Wan Kenobi in A New Hope.

And that was the day that I, Blake Morgan, saved music.

~~~
tzahola
And then the whole bus clapped!

------
bmelton
It seems this sort of debate goes on continuously with ideologues.

Statements like

> Spotify doesn't _make_ anything

and

> Your product is _music_

are flat wrong. Spotify, the company, makes Spotify, the music distribution
service. Music is their deliverable.

Of course it's true that Spotify would be nowhere if musicians weren't making
music, just as it's true that musician's would be nowhere if instrument-makers
didn't make instruments.

Spotify, the product, is a mechanism that allows for (perhaps too) user-
friendly music consumption. Artists, through whatever means, enter into music
arrangements that allows Spotify to be able to do so. The relationship may or
may not be predatory. Salaries at Spotify may or may not be inflated.
Regardless, those are valid critiques -- but assertions that Spotify doesn't
make anything, or doesn't know what their product even is are wrong, and
reveal an inability to understand that different parts of an ecosystem make up
the whole thing.

~~~
tptacek
It's interesting the different standards we have for ownership of
entertainment media versus our own work product. There are zero programmers
who feel Intel owns a stake in our work because without their computers, we
wouldn't be able to make programs. But even though musicians in fact _can_
create music that people will pay to listen to without instruments, you just
tried to take them down a peg from us by suggesting that they're just another
rung on a ladder of value that I suppose starts with, what, logging to get the
wood for the instruments?

~~~
bmelton
A fair criticism. I did not intend to imply that musicians were in any way
less valuable than instrument makers, recording studios, distributors, et al.
My statement would better have been expressed as "guitarists wouldn't make
guitar music if nobody made guitars."

The flip side of the coin, of course, is that you _can_ self-distribute music
without a distributor. People have done it. As a web developer, I could build
web pages that do things and distribute them via hard drives if ISPs did not
exist, or I could start my own ISP. Musicians have it even easier, as they can
just self-distribute on the internet -- but, whether by choice or by
representative proxy, musicians have chosen to allow their product to be
distributed by Spotify. They're of course free to haggle over the terms of
that arrangement, and there are likely valid criticisms of Spotify, or the
agents who negotiated their terms on behalf of the musicians... the only point
I intended, despite whatever inartful phrasing I may have used, is that
"Spotify doesn't make anything" is not a valid criticism of Spotify.

------
ng12
> What I don’t love is how little musicians get paid for all that streaming.
> It’s not fair––not even close. What’s more, middle-class music makers are
> the ones who are hit hardest, whose businesses are threatened, and whose
> families are put at risk.

I question this. I know Taylor Swift and Jay-Z hate Spotify, but I know some
of my favorite indie bands love it -- going so far as to release their new
music on Spotify before anywhere else. For small, independent artists the ease
of distribution and massive exposure well outweigh the lack of royalties. I
think it's classic a long-tail distribution and the people exploiting the head
are the ones complaining the loudest.

~~~
ghaff
There's also just somewhat of a path-dependent reality. If you want to offer
an all-you-can-eat music streaming service you pretty much have to offer the
best/most menu you can under the constraint of a $10ish subscription fee.

It's what the widespread expectation is and any artist that wants a
particularly special deal will just be dropped. Even big stars probably don't
have much leverage individually given that their fans can and will either buy
their music or acquire it from other sources anyway.

------
badloginagain
I find it surprising that Spotify isn't pursuing its own label. Netflix proves
that if your biggest risk factor is other's companies content, you have to
move to host your own content before the competition wisens up.

~~~
Cuuugi
A lot of record labels are part owners. That's how they are "getting away with
it". Musicians are the only ones getting screwed by spotify.

[http://www.swedishwire.com/jobs/680-record-labels-part-
owner...](http://www.swedishwire.com/jobs/680-record-labels-part-owner-of-
spotify)

~~~
adventured
Interestingly, listing publicly as they're about to do, will release them from
that binding over time. The ownership position will be majority non-label and
non-insiders with a modest amount of time. Large investment funds will demand
they make appropriate choices specifically to benefit the Spotify business,
even if that includes building their own label to compete with the major
labels. Assuming Spotify thrives over time, it would seem inevitable they'll
pull a Netflix. It makes far too much business sense given their between very
low and negative margins in the business as it is today (wherein the labels
persistently squeeze them nearly to death).

------
DarkTree
> “Wait,” I said, “Listen, it’s music. Your product is music. The reason I
> know that is because if we went out into the street right now and asked a
> thousand people what Starbucks’ ‘product’ is, they’d all say coffee. Not a
> single person would say ‘Starbucks’ product is Starbucks.’ Right?”

I whole-heartedly disagree with this. Sure, people might say coffee, but
Starbucks' product is really the whole package. The store design, atmosphere,
music, employees, drink names, drink combos.. these were all essential in
Starbucks' rise. You aren't just buying coffee at Starbucks, you are buying
the experience of Starbucks, therefore, that is the product.

------
sylvinus
> Meanwhile, Spotify pockets 30% of all the revenue they collect––and they
> don’t make anything

I think this demonstrates that the author has a very narrow understanding of
what it takes to build a music app with 140M+ active users.

Sure, they could pay artists more and it's legitimate to have that talk, but
taking it to such extremes makes no sense.

------
danieka
Why bring up that uTorrent technology was part of Spotify? Clearly guilt by
association and a bit of ad hominem on Daniel Ek. Had really hard to take the
article seriously after that.

Spotify and power dynamics in the music industry is fascinating, but there has
to be better treatments in the topic. Any tips?

------
ajaimk
Is this meant to be satire cause I can't understand the OP's logic at all?

While it might 380,000 streams to make 1 year at Minimum Wage, per the OP's
logic, one can say they get paid for 3 minutes worth of work (or the average
length per song).

~~~
whatok
I'm pretty sure it takes more than three minutes of work to compose, record,
mix, and master a song.

------
art4ur
> This was the year people started to connect the dots about how Spotify’s
> founder, Daniel Ek, made his initial fortune. At 23, he was the CEO of
> uTorrent, a pirate platform that became BitTorrent (arguably the largest
> rights-infringing platform in the world). He and their developers then used
> identical rights-infringing software in order to build his new golden goose:
> Spotify.

Holy hell that's a lot of bad history. Bittorrent existed far before uTorrent
was a thing. What are the dots that people connected? A quick glance at his
Wikipedia article?

------
zoltaan
This bloke is fatally and arrogantly wrong! Spotify's product is not the
music, it is the product of the musicians! As a musician he should know this
fundamental fact very well like alphabet - especially when thinking about his
copyright. When I buy a Sony Walkman from Amazon that is not the product of
Amazon - if we want to stick to the stupid analogy stream started by the
author at Starbucks. The Spotify's product is the delivery system and that's
it! Which is very important! I listen to music for many decades now, I love
music and to date Spotify is the best form to carry it out and unleash the
experience. Much less bound by physical medium and the unavoidable maintenance
cost and effort. It is allowing us to use existing generic infrastructure
(computer or other gadgets, internet) and access virtually infinite amount of
products. The same is not true for vinyl, CD, not even right managed files
which all need to be bought, stored and delivered to the right special
gadgets. From a fragmented set of stores in various ways. Need to go and buy
manually again, and again - I bought so many music repeatedly just because the
media got outdated or lost that it is unfair towards me, the listener. The
Spotify form of delivery is something important for listeners, the end clients
of the musicians, musicians should be much more respectful what is good for
their audience. Without proper delivery methods their music was lost in the
space!

If he is dissatisfied I urge the author to do better! For all of us!

------
mynegation
I feel for musicians, but to say that Spotify does not make anything is BS.

I started listening to _more_ music on Spotify. This by itself does not
necessarily pays more to the musicians that I used to listen to, compared to
buying their CDs and tracks piecemeal. But I started to listen to two orders
of magnitude more artists than before. I may not spend more on music, but my
money are now spread over a longer tail.

What Spotify makes is a distribution and discovery product that - by itself -
creates a huge value for me.

------
Deregibus
As far as whether or not Spotify is good to musicians, or takes too big of a
cut, or distributes revenue fairly, I don't know. It's certainly possible that
there's a better payment structure that would be better for musicians that
results in no difference to the consumer.

But as a long-time paying user of Spotify I disagree with the premise of the
article: Spotify is the product, the music is not.

For a fixed amount of money each month I can just play almost any song,
whenever I want, regardless of whether I even know I want to, with zero
friction. I don't have to decide whether or not a song is worth the money, I
don't have to decide exactly which songs I will play, I can have shared
playlists with friends where we can listen to music from our various
overlapping tastes.

The extensive collection of music is a key aspect of the platform, but short
of a massive dropoff in what's available, if an album isn't on Spotify the
most likely outcome isn't that I'll go somewhere else to listen to the album,
it's that I'll just listen to something else on Spotify.

------
creaghpatr
The product, besides co-opting the artists' music, is playing a centralized
kingmaker, from whom artists or their labels can purchase influence. Now it's
starting to go beyond music though.

I've begun to notice politics creeping in to their "overview" page as well and
do not like this one bit. Music (like sports, before ESPN) was/is a form of
escapism and putting a 'support DACA' themed playlist on the front page
damages the brand, unless they dynamically start to offer playlists targeted
to your personal political beliefs, a terrible idea and one that is
incompatible with Spotify's publically progressive culture.

------
sabmalik
I love Spotify. For me its a music discovery service. I dont care if you call
me a user or a listener, all I know is that last year I listened to 1800+
artiste/bands. A few years ago I was stuck listening to the same 20-30 bands
that I knew about or someone recommended. I now know about artists (possibly
OP is one of them) that I would have never come across otherwise. I think that
is their product and they do a pretty great job of it.

------
seorphates
Horse shit. Fatally flawed article. But I see the comments pretty much have
that covered.

I wonder where the other 70% is..

I wonder where the collective of artist streaming sites are..

I wonder who's making stuff..

I. Just. Wonder.

------
apersona
What did I just read?

This feels like a "that happened" post:

> He looked at me as if I’d just shot Santa Claus in the face.

> “No, man! You’re wrong!” He was sweating now, and the dozen or so musicians
> who’d gathered around us began heckling him. He shouted, “Spotify is our
> product! You don’t get it at all!” He stormed off.

------
dom2
Why was this article taken down by HuffPo?

~~~
ucaetano
Because it is a childish rant about someone being uselessly pedantic for the
sake of being pedantic and confrontational.

I guess that's too low even for HuffPost!

------
lux0n
>music is your product

And podcasts are what..?

