Sharky Laguana and “Fair” Spotify Royalties

Over at medium.com, someone who goes by the name Sharky Laguana posted an article called How To Make Streaming Royalties Fair(er). It’s an interesting take on the whole Spotify royalty system. It’s also completely misguided. In this post, I’ll explain why.

For those who don’t know (which is probably all of you), his post is a continuation of some comments he made on a Hypebot article by Spotify’s Daniel Ek. I am the one who was debating him in those comments. I was actually thinking about posting a story about this sooner, because I find it kind of interesting, but figured that an entire post about someone else’s comments was probably not interesting to anyone else. But his article has gotten widespread attention from others – including Trichordist, in their ongoing war to present Spotify as The Most Horrible Thing Ever – and a response actually seems justified.

Laguana’s logic may seem sound at first blush, but quickly unravels the more you think about it. Here is the gist of his argument:

Let’s say I am a huge fan of death metal*. And nothing pumps me up more than listening to my favorite death metal band Butchers Of The Final Frontier. So I sign up for Spotify in order to listen to their track “Mung Party”. I listen to the track once, and then I decide Spotify isn’t for me. OK, So who got the benefit of the $10 I paid in subscription fees? […]

That money will largely wind up in the pockets of major pop artists like Calvin Harris, Meghan Trainor, Maroon 5, and Avicii. That’s right: essentially all of the revenue that was solely generated by a small death metal band will be divvied up among a bunch of major dance-pop artists.

His basic complaint is that all of the Spotify subscription revenue gets put into a giant “pool,” and distributed equally among all of the streams on Spotify. That is: people sign up for the service, and the service providers divvy up the profits according to how that service is actually used.

That probably seems fair to most people. Even Laguana admits as much: “It sounds perfectly fair and reasonable: if an artist wants to make more money all they need to do is get more plays.” But Laguana is against it. Instead, he suggests divvying up the money on a per-subscriber basis. When it comes right down to it, his solution is this: the less artists are listened to, the more they should get paid.

Faulty Assumptions

In order to claim that Spotfy’s system is unfair – and, hence, that his solution should be adopted – Laguana makes some fundamental mistakes.

  • He claims that his subscription money “will largely wind up in the pockets of major pop artists,” but this is not true. His subscription money raises the per-stream rates for every artist on Spotify. Just as the subscription money from people who listen to major pop artists raises the per-stream royalty rates for “Mung Party.” He may not like that pop artists get more streams, but that’s basically saying “I don’t like pop artists.” Fair enough for him, but not unfair on Spotify’s end.
  • He assumes people sign up just to Spotify only to listen to one band. This is a completely assinine assumption. Nobody (or almost nobody) will sign up to Spotify to listen only to “Mung Party.” (They would simply buy the single, and save $8.99 that month.) The people who sign up for Spotify do so because Spotify has a deep catalog. If a particular band or song isn’t on Spotify, it won’t keep most people from signing up, and it won’t cause people who did sign up to cancel their subscription. In reality, they’ll still be on Spotify; they’ll just listen to someone else. (This is one reason why I think Taylor Swift’s decision is short-sighted.)
  • He assumes that “music genres that have dedicated but small fanbases” have lower numbers of plays per subscription. I have no idea why he would believe this; in fact, it’s much more likely that this type of music would have more listens per subscription, with a wider variety of artists. In which case those artists would earn less than they are now. (I’ll go into this shortly.)
  • Later in the article, he claims money from inactive (but paying) subscribers “should be divided among all artists proportionate to their cumulative subscriber share.” But he never actually says what a “cumulative subscriber share” is supposed to be. It is somehow different than “artists who simply have listeners more likely to listen to the same tracks repeatedly.” Except that in the “Mung Party” example he brought up, Butchers Of The Final Frontier is exactly an artist whose subscriber “listens to the same track repeatedly.” By his own standards, Butchers Of The Final Frontier would have no “cumulative subscriber share” whatsoever.
  • He claims the only losers would be artists “who do not have passionate fans, have only released a single or two, or who mainly get played in passive listening enviroments in combination with large numbers of other artists.” In fact, this perfectly describes artists who are unknown indie artists – they gain exposure by being played with other artists who are (presently) more popular. In any case, if they’re only played “in combination with large numbers of other artists” and don’t eventually “have passionate fans,” they won’t get many streams, and won’t be getting large payouts under the current Spotify system. They wouldn’t be “losers,” because they’re not “winning” now.
  • He makes elitist assumptions about “passive listening.” Simply put, there is no way for Spotify (or anyone else) to tell if someone is listening to a song “in a passive listening environment,” or if they are an active listener who simply listens to more music. In addition, there’s absolutely no reason whatsoever to think that “passive listening” is less valuable to listeners than “active listening.” Say I passively listen to “Music for Airpoirts” in the background while writing code, but actively listen to “You’re Living All Over Me” if I want to rock out. Why should Brian Eno be less worthy of royalty payments than Dinosaur Jr.?

The End Results

If Spotify were to adopt Laguana’s system, the end result would not be that indie, “niche,” or underground artists would be paid more. In fact, they would almost certainly be paid less. Much less.

To see why, let’s see an example of what happens with two types of listeners. Now, obviously, this example is completely artificial; it also makes certain assumptions, and uses back-of-the-envelope calculations. Still, I think it’s a lot closer to reality than anything Laguana presents.

Our first type of listener is the casual listener. He is just your average Joe, who is not a particularly big music fan, but listens to enough music to pay for Spotify. He streams fewer songs overall, and when he does, he tends to listen to the same artists, all of whom are in the Top 10. In our example, our casual listener streams 800 songs, from 10 different artists, in one month.

Our second type of listener is an indie music fan. She considers herself a music lover, and seeks out different artists to listen to. She streams more songs overall, and when she does, she listens to a wider variety of artists. In our example, our music fan streams 2000 songs, from 40 different artists, in one month. For the sake of argument, we’ll assume that none of these 40 artists are from the Top 10.

Each one pays the same subscription cost per month, which we’ll round up (by a penny) to $10.00. Of this, 70% goes to the rights holders, so they get $7.00 from each listener.

The way Spotify royalties are distributed now, both the subscription money and the streams are pooled. This means that their combined $14.00 (to rights holders) is divided evenly among their combined 2800 streams. This works out to a rate of $0.005 per stream. (Depending upon who you talk to, this is a pretty accurate Spotify per-stream rate.)

Here’s how those payments are distributed now:

  • Casual listener
    10 artists: 80 streams ea. * $0.005/stream = $0.40 per artist
  • Indie music fan
    40 artists: 50 streams ea. * $0.005/stream = $0.25 per artist

Now, obviously this isn’t very much, and it does show that listeners with more streams result in lower overall payouts. Still, it’s pretty fair; the per-stream payout is the same, whether you’re a Top 10 artist or an indie artist.

The picture changes drastically under Laguna’s system, where per-stream payouts are calculated per subscription:

  • Casual listener
    800 streams: $7.00 / 800 = $0.00875/stream
    10 artists: 80 streams ea. * $0.00875/stream = $0.70 per artist
  • Indie music fan
    2000 streams: $7.00 / 2000 = $0.0035/stream
    40 artists: 50 streams ea. * $0.0035/stream = $0.175 per artist

Under Laguana’s system, the gap between payouts is vastly widened. The Top 10 artists make roughly 43% more than they do now, while the indie artists make 30% less. The fact that Trichordist supports this scheme is especially surprising, given their (supposedly) pro-indie bent.

Now, again, this example is artificial, and you can disagree with the assumptions. For example, you may think that the “casual listener” actually has more spins, and the “indie music fan” less; or you may think that fans of niche music actually listen to fewer artists than fans of pop music.

But I don’t think so. I believe that the underlying assumptions (if not the actual numbers) are sound. They certainly make a lot more sense than the unrealistic edge cases that Laguana presents.

But no matter how you slice it, the overall result is the same. Under Laguana’s system, the artists that are played by subscribers who listen to more music – no matter what that music is – are paid significantly less than the artists played by subscribers who listen to less music. You’re doing nothing other than punishing artists for having enthusiastic fans.

And I can think of nothing less “fair” than that.

Are PRO’s Unfair?

There’s one thing that I brought up in the Hypebot comments – that Laguana, for whatever reason (likely boredom), did not respond to. And that is that Spotify’s royalty system works exactly the same as the royalty system used by PRO’s (such as ASCAP or BMI).

…Well, it’s not always exactly the same. ASCAP, for instance, does not (and cannot) collect “per-listen” data. Instead, they use “sampling” of area radio stations, at different times of day, to calculate how many “spins” a song gets, and how many listeners are reached through each “spin.” They pool their collected royalties, then pay out songwriter royalties according to those calculations – whether they’re collected from terrestrial radio, bars, restaurants, live venues, or what have you. I’m not exactly criticizing ASCAP for this; they simply don’t have the ability to get the sort of granular information that you can get from online streaming.

So, you cannot claim that Spotify’s royalty system is unfair, without also claiming that the PRO’s royalty system is unfair. The problem with the former is exactly the problem with the latter: royalties – no matter who pays them – are doled out solely by what radio stations actually play, and not (for instance) by how much advertising money an individual spin brings in, or how many people a specific song brings into a bar, or which song a performer actually covers.

The main problem I have with this is that listeners generally don’t choose what songs are played on the radio. (It is a market that is almost entirely monopolized by the major labels.) But even that issue doesn’t apply to Spotify’s subscription service. The entire royalty system is determined by what the users choose to stream.

No matter what Laguana thinks, I just don’t see how that could possibly be unfair.

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20 thoughts on “Sharky Laguana and “Fair” Spotify Royalties

  1. This idea that all streams should be the same is outdated and doesn’t reflect the diversity in which music is consumed. It’s also woefully naive in that it leaves the system wide open to manipulation.

    You are arguing that a fan is more valuable simply because they hit the repeat button. They don’t even have to be *listening*. So the next logical step would be click fraud opportunities, which… lookie here: http://www.itnews.com.au/News/362462,hacker-spoofs-track-plays-to-top-music-charts.aspx

    Meanwhile god forbid someone creates music with a small fanbase and gets rewarded for bringing actual paying subscribers into the system.

    I am NOT arguing that “the less someone gets listened to the more they get paid”. I am arguing that artists should be trying to get more fans, not more clicks. One fan should never be worth more than the $10 they paid into the system. If you can command a good chunk of that fan’s attention then you’ll get paid accordingly. What you can’t do is turn a $10 user account into $300 (which in turn *reduces* the price for stream for all artists) by using virtual click machines.

    And that’s the other thing you don’t seem to be getting: the price per stream isn’t static in the current system either. It’s just calculated system-wide instead of by the user. So if there are lots of little fraudsters out there, eventually what will happen is the price per stream deflates. From .007 to .006 to .005 which is roughly where it’s at now.

    The subscriber-share model has been studied (which I didn’t know when I wrote my piece), and the changes in distribution were not dramatic. It turns out big stars are still big stars, exactly as I suggested they would be. What does happen though is long tail artists with real fans wind up getting paid faster, and a little more. Thats a good thing. Again, this isn’t conjecture anymore, there’s actual science.

    Oh and btw I addressed your ASCAP point previously: I get ASCAP checks and they are quite granular when it comes to TV and Film. I know precisely how many plays I got on cable TV in Kuwait last year for example. Radio is fucked for reasons that have nothing to do with PROs. Somebody else can go don quioxte on that one.

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    • Hey, first of all I want to apologize for this post showing up so late. I need to approve posts here, and for whatever reason, this one was missed. I’m going to work on this now, and see if I can fix it.

      In reply to your criticisms:

      You are arguing that a fan is more valuable simply because they hit the repeat button. They don’t even have to be *listening*. So the next logical step would be click fraud opportunities

      I’m not arguing that, at all, and I’m not sure where you got that idea. My argument is that music fans listen to more music overall, including a wider variety of artists, and so the artists that those fans listen to – whoever they are – would do worse.

      The “clickfraud” problem is kind of a red herring, and doesn’t really affect the basic idea. Besides, things like this are best handled by the security team at Spotify; it would be their responsibility if those failed. And all streaming services certainly don’t want that kind of stuff to happen – nor pay the “fraudsters” – so they would be very motivated to stop it.

      But my point stands. It is not up to you, nor anyone else, to decide when someone is “really” listening. If it were, then terrestrial radio would have a case to pay artists less, since the radio stations are often on all day at work. Nobody would buy that argument.

      Meanwhile god forbid someone creates music with a small fanbase and gets rewarded for bringing actual paying subscribers into the system.

      That’s not the scenario you described. And why should someone with a small fanbase, be more rewarded for bringing in subscribers than someone with a large fanbase?

      It’s also not how it works in the real world. Nobody signs up with a streaming service just so they can listen to artists with a small fanbase. They don’t even sign up to listen to mega-pop-stars. Hell, when Taylor Swift left Spotify, they gained subscribers at an even higher rate than they were before.

      I am NOT arguing that “the less someone gets listened to the more they get paid”. I am arguing that artists should be trying to get more fans, not more clicks.

      I’m not saying that’s your intent. I’m saying it’s the effect. It’s obviously an unintentional effect, but that’s what I was pointing out.

      The “more fans” vs. “more clicks” argument is certainly valid – from an artistic point of view. But it really isn’t relevant to this argument.

      “More fans” means more users streaming your song – so you’ll get paid more. “More clicks” means those fans are listening to your music, rather than someone else’s – so you’ll get paid more.

      Under your model, people who listen to more music (whether a wider variety of artists, or a greater number of streams) will be penalized. Is that really what you consider fair?

      And that’s the other thing you don’t seem to be getting: the price per stream isn’t static in the current system either. It’s just calculated system-wide instead of by the user.

      I am aware that, and I don’t see anywhere in the post where it even suggested it was static. My examples were simplistic and assumed the only users were the two on the site, but that doesn’t mean I believed the per-stream rates were fixed. If you mean something else, I’m not sure I understand what you’re saying.

      The subscriber-share model has been studied (which I didn’t know when I wrote my piece), and the changes in distribution were not dramatic. It turns out big stars are still big stars, exactly as I suggested they would be. What does happen though is long tail artists with real fans wind up getting paid faster, and a little more. Thats a good thing. Again, this isn’t conjecture anymore, there’s actual science.

      Can you point me towards this actual science? I’m not entirely surprised at what you say, but I’d like to see the data.

      Since I wrote this, I have seen some other blog posts about this subject, but these are pure opinion, not science. Example:
      http://rockonomic.com/2015/05/14/redistributing-the-music-wealth-why-listening-hours-not-artist-choice-drive-the-divvying-up-of-the-royalty-pot/

      Oh and btw I addressed your ASCAP point previously: I get ASCAP checks and they are quite granular when it comes to TV and Film. I know precisely how many plays I got on cable TV in Kuwait last year for example. Radio is fucked for reasons that have nothing to do with PROs.

      I haven’t looked at that thread in ages, so if you replied, I missed it. Sorry.

      ASCAP can be granular with TV and Film because the amount of plays is so much lower. There’s no way ASCAP could possibly be that granular regarding terrestrial radio.

      But the point stands: their model for radio is (roughly) the same as Spotify’s. So you can’t criticize one without criticizing the other.

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    • By the way, since I approved this comment, you shouldn’t have trouble again; comments by you will go through without moderation.

      Again, my apologies.

      Like

  2. Hi Karl,
    Doubling back everywhere I’ve been and closing the loops. You linked to the Rockonomic page, if you scrolled down you’ll see the engagements I had with David Touvre on the subject. We had off-blog conversations as well, and he proposed at one point we co-write a paper (which fell through due to time constraints). Just to underscore that I’m not in crazy land.

    “Under your model, people who listen to more music (whether a wider variety of artists, or a greater number of streams) will be penalized.”

    It’s a matter of perspective I suppose. If you believe a user paying a fixed fee is entitled to consume that fixed fee and then consume other people’s fixed fee simply because they click a lot (regardless of whether or not that click was an active listen, or even made with good intent) then… weird. So one guy clicking on an artist 10,001 times is more valuable to the artist and to the service then 10,000 people clicking on the artist once? That’s a good thing?

    My philosophy is that if you pay a fixed fee, then you can distribute that fixed fee however you like. Playing more artists will simply divide that fixed fee into smaller chunks. Streaming is like an all-you-can-eat buffet: you pay your money and you get to eat whatever you want. The more you eat the less the restaraunt makes.
    Some people think streaming services are the restaraunt. Nope they are just the cash register. Artists are the restaraunt, as they are the ones providing the food. Why on earth, if you eat at an Indian food all-you-can-eat buffet, should some of your money go to the Chinese food all-you-can-eat buffet? Makes no sense at all to me.

    You might have seen my follow-up piece which came out last week:
    View story at Medium.com

    In particular you will want to read the FAQ where I discuss some of the criticisms of Subscriber Share and provide links to the academic research (BTW 100% of the academic researchers who have actually worked with real data have publicly stated that they agree with my analysis, and that they believe Subscriber Share is “more fair”)
    View story at Medium.com

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    • If you believe a user paying a fixed fee is entitled to consume that fixed fee and then consume other people’s fixed fee simply because they click a lot (regardless of whether or not that click was an active listen, or even made with good intent) then… weird.

      I still have no idea what you mean by this. There is no such thing as “my” fixed fee vs. “your” fixed fee. Everyone pays the same for the service, and consumes as much or as little of that service as they want.

      The best analogy would be owning a library card. Both myself and my roommate have one. I don’t check out that many books from the library; my roommate checks out a lot. Because of this, the library is more likely to have multiple copies of the books she reads (to satisfy reader demand), and less of the books I read.

      But, who cares? As long as we can both check out the books we want, it doesn’t matter. Do I think it’s “unfair” that the library is spending more of my tax money on the books she reads, rather than the books I read?

      Not one iota, and I would consider anyone who does think this is “unfair” to be kinda loopy.

      You might have seen my follow-up piece which came out last week:

      I did, and I will probably write another post about it. You’re really doubling down on what I think is nonsensical. The only real takeaway from this is “if you want to support artists, get everyone to listen to less music, but still pay the same flat fee.” I think you can see how this will never win over music fans.

      p.s. Your comments should have been automatically approved. Apparently it’s still making me approve them; I have no idea why. I’ll keep working on it.

      Like

      • Some analogies flop on launch, and I think your library analogy is one of them: authors are paid for the sale of their book to the library. They are not paid based on how often the book is checked out, or how often the book is read. If their book is *never* read they still get paid for the sale of the book. If it’s read a million times, they don’t get paid more.

        I’m asking for the same treatment for music here: stop paying based on how often it’s consumed (which is a poor metric for the quality of art: you wouldn’t watch “Schindler’s List” 100 times, but that doesn’t make “It’s A Wonderful Life” 100x better), and start paying based on what percentage of an individuals consumption is devoted to that piece of art.

        “I still have no idea what you mean by this.”

        This is clear.

        “There is no such thing as “my” fixed fee vs. “your” fixed fee. Everyone pays the same for the service, and consumes as much or as little of that service as they want.”

        Yes that’s my point: everyone pays $10. So why is one user worth $600 in royalties in one month, and another user only worth $0.007?
        Shouldn’t every user be worth the same? In other words shouldn’t every user be worth $7 (after Spotify takes their $3)?

        When I am talking about heavy users “consuming” the fixed fees of light users, that’s what I’m talking about: for example a light user who only streams once generates $0.007 in royalties, so there’s $6.993 that’s left up for grabs.
        Another light user streams 200 times, generating $1.40 in royalties leaving $5.60 up for grabs.
        Along comes heavy user who streams 10,000 times, generating $70 in royalties.
        So he gobbles up his $7 contribution, and then he gobbles up both of the first user’s contributions, and then he gobbles up a bunch of other people’s contributions.

        Let’s say this guy is living off a settlement from a grocery market slip and fall, and listens to Nickelback 100% of the time.

        Now everyone is contributing money to Nickelback, when really Nickelback only has one fan, who is only contributing $7.

        I go back to the buffet example: if you go to an awesome all-you-can-eat buffet for indian food, would you expect some of your money to go to the chinese buffet on the other side of the town, simply because more people eat at the chinese one?

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      • Some analogies flop on launch, and I think your library analogy is one of them: authors are paid for the sale of their book to the library. They are not paid based on how often the book is checked out, or how often the book is read.

        The number of times a book is checked out will determine how many copies a library orders. So, it’s not that bad of an analogy.

        It’s certainly better than your restaurant analogy (see below).

        I’m asking for the same treatment for music here: stop paying based on how often it’s consumed (which is a poor metric for the quality of art

        The only way for you, me, or Spotify to determine “what percentage of an individual’s consumption is devoted to that piece of art” is by counting the streams, which is what Spotify is doing.

        In other words, it’s effectively synonymous with “how often it’s consumed.”

        If you don’t think that the number of streams is important, then why not take it all the way? Don’t base artist payouts on streams at all. Each user would pay $10, and that $10 would be split evenly among all artists that the user listens to, regardless of how often the user listened to each artist. If a user listens to Avicii once, and Butchers Of The Final Frontier 1000 times, then both acts get $5.

        It’s about as fair as what you’re proposing.

        you wouldn’t watch “Schindler’s List” 100 times, but that doesn’t make “It’s A Wonderful Life” 100x better), and start paying based on what percentage of an individuals consumption is devoted to that piece of art.

        Perhaps it would be better if you stuck to discussing numbers, rather than personal moral/aesthetic opinions. I have no opinion about whether “It’s A Wonderful Life” is better than “Schindler’s List.” But if “It’s A Wonderful Life” is watched 100x more than “Schindler’s List,” I don’t think it’s unfair that “It’s A Wonderful Life” gets more money.

        Yes that’s my point: everyone pays $10. So why is one user worth $600 in royalties in one month, and another user only worth $0.007?

        That’s an extreme example. It would mean that the first user listens to about 85,000 times the streams as the second user. That’s physically impossible; there are only so many hours in a day.

        You’re also ignoring the fact that the per-stream rate is not fixed (you levied this criticism against me in the previous comment). The user who is only “worth” $0.007 in royalties is driving that per-stream royalty rate up. Including the royalty for the one stream that he or she actually listened to.

        So, again, this is effectively all you’re saying: “get everyone to listen to less music, but still pay the same flat fee.” And, again, if we used your system, then artists whose fans listen to more music would be paid less.

        You may think this is fair. I do not.

        I go back to the buffet example: if you go to an awesome all-you-can-eat buffet for indian food, would you expect some of your money to go to the chinese buffet on the other side of the town, simply because more people eat at the chinese one?

        I would not. Just as I would not expect artists to get paid more on Spotify, because they had more listens on Tidal. (I also don’t expect performance royalties from live venues to be doled out according to radio airplay, yet that’s what happens.) But that’s where the analogy has to end.

        If you want to compare it to a buffet, then it would need to be a lunch buffet that offered both Indian food and Chinese food, and where diners could eat from both menus at the same sitting. In this scenario, the food court (or whatever) would get the total money from the lunch crowd, and divvy it up according to how much food was actually consumed.

        Obviously, heavy eaters (such as myself) will have more of an impact than light eaters (like my roommate). Would my roommate consider this unfair? Would she believe she was being ripped off?

        No, and I doubt anyone else would either. We both ate what we wanted, we both got our money’s worth, and all the food was paid for.

        Here’s what you’re suggesting. At the end of the lunch hour, the food court manager speaks to the Indian and Chinese chefs. He says something like this: “Well, the Indian food was more popular today. People who ate it usually went back for seconds. On the other hand, people who ate the Chinese food stopped at one plate.

        “So, we’re paying the Chinese chefs more.”

        That may be your idea of fairness. It is not mine.

        While I’m at, I should respond to the other comment:

        Which is more valuable to the artist, the label, and the streaming services: one guy clicking on an artist 10,001 times, or 10,000 people clicking once?

        That one user who streams your song 10,001 times? He or she is likely to proselytize – to put your music in his playlist, to tell his friends, etc. He is more likely to see your live performance. He is more likely to buy scarce goods (merch, access, etc). He is more likely to support you on Kickstarter or Sellaband. If he has connections, he’s more likely to set up a show for you in his town, or direct you to someone who can. Hell, if you really need it, he’s more likely to let you crash on his couch.

        The 10,000 people who listened to your song once? I’m betting absolutely none of them will do any of these things. If they really did listen only once, then they probably listened to it because they were listening to someone else’s playlist. (“Passive listeners” you called them.)

        So, obviously – obviously! – the person who listens to the song 10,001 times is “worth” more. This type of listener is exactly the type that you want to connect with. (Or, if you’re a marketing wonk, you want them in your focus groups, you want to target them in ad campaigns, etc.)

        I really do not understand the desire to punish the artists who have these kinds of fans. Especially since this is the only kind of fan that most indie/mid-level musicians have.

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      • Addendum:

        That one person who listens 10,001 times? He’s also far more likely to move from the free service to the paid service. (And if the streaming service doesn’t have a free tier, people like him are probably the only people who will sign up at all.)

        So, they’re “worth” more to the streaming services as well.

        Also: Your “silent September” will almost certainly get users in trouble with Spotify, because it explicitly violates their Terms Of Service:

        8. User Guidelines

        We’ve established a few ground rules for you to follow when using the Service, to make sure Spotify stays enjoyable for everyone. Please follow these rules and encourage other users to do the same.

        Spotify respects intellectual property rights and expects you to do the same. This means, for example, that the following is not permitted: […]

        (g) artificially increasing play count or otherwise manipulating the Services by using a script or other automated process; […]

        https://www.spotify.com/us/legal/end-user-agreement/#s8

        That’s assuming they’re using some kind of script, of course.

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      • “That’s an extreme example. It would mean that the first user listens to about 85,000 times the streams as the second user. That’s physically impossible; there are only so many hours in a day.”

        Assuming a 31 day month there are 2,678,400 seconds in the month (31 days x 24 hours x 60 min x 60 sec.).
        How many seconds do you have to play a track before Spotify will count it as a “play”?: 31 seconds.
        So what is the hypothetical maximum number of royalty earning plays you can do in a month? 2,678,400 / 31 seconds = 86,400 plays.
        At $0.007 per stream that’s $602.
        Keep in mind Apple Music’s threshold is only 20 seconds. Which means a fraudster could hypothetically stream 133,920 streams in a month. If Apple pays $0.007 a stream that will be $937.

        I notice you used the word “listen”. You realize that click frauders aren’t listening at all right? It’s all automated. This is precisely what Eternify was exploiting. Google it.

        And even normal users might not be listening. My wife streams music with the volume on 1 and just leaves it running all day. She just likes the sound of something playing lightly in the background. That’s actually where I got the idea.

        “The only way for you, me, or Spotify to determine “what percentage of an individual’s consumption is devoted to that piece of art” is by counting the streams, which is what Spotify is doing.”

        Both methods count the streams. Both methods use pools. The Big Pool approach is to assign royalties as a percentage of overall streams. So all streams go in one big giant pool. This enables click fraud. The Subscriber Share approach is to assign royalties as a percentage of individual streams. So every subscriber is their own pool.

        “Don’t base artist payouts on streams at all.”

        That’s not what I’m proposing, and is not something I’m interested in at all.

        “But if “It’s A Wonderful Life” is watched 100x more than “Schindler’s List,” I don’t think it’s unfair that “It’s A Wonderful Life” gets more money.”

        I was trying make a narrow point here (using frequency of consumption as the sole metric for determining what subscribers are paying for is a bad idea). I see how that confused you, my bad. Let me take another approach:

        Let’s imagine 100 jazz fans. These fans work full time jobs, but enjoy listening to jazz for a couple hours on Sunday mornings. They happily pay $10 a month so they can hear their favorite jazz artists, as well as new and emerging artists.
        So they pay $1000 into the system. Each fan streams 8 hours of music per month, average track is 5 minutes long = 96 streams a month = $0.67 cents in royalties payable per fan = $67.00 total for all 100 fans.
        These royalties are paid to real musicians, who genuinely entertain jazz fans.

        Now let’s imagine one click frauder. The frauder steals an account (like this guy’s: https://medium.com/@hcarlens/how-i-lost-control-of-my-spotify-account-ed4db080e470) and then stream their fake artist in 31 second increments. As outlined above this one person generates $602 in royalties payable.
        These royalties are paid to a fake music account, which didn’t entertain anyone, and the money winds up in the pocket of the click fraudsters.

        So which group do you think is more valuable?

        If you only count streams, and don’t factor in the number of fans, you get this distortion. If you don’t think this distortion is a potential problem, then we’re done here.

        “The user who is only “worth” $0.007 in royalties is driving that per-stream royalty rate up. Including the royalty for the one stream that he or she actually listened to.”

        I can’t believe your advancing this with a straight face. If that $0.007 is being paid to an artist, the artist will take no consolation in the fact that the royalty is now $0.0070000000001 due to the fan contributing to the Big Pool, and the fan is not doing anything to materially help the artist that they enjoy listening to. It’s a non-event. And all of these one-stream subscribers in aggregate are only lining the pockets of people already getting large numbers of streams to begin with.

        “So, again, this is effectively all you’re saying: “get everyone to listen to less music, but still pay the same flat fee.” And, again, if we used your system, then artists whose fans listen to more music would be paid less.”

        You still don’t get it. It’s not on a continuum like you are imagining. If your fans listen to more music you will still get paid more unless most of your fans are above average usage subscribers (which in my mind would be very suspicious because as I explained in my piece, most users are *below* average, thanks to the “Bill Gates effect”). So unless you are an artist who 1. Appeals to the small minority of high usage subscribers AND 2. gets a lot of clicks from those high usage subscribers, you will most likely do better under subscriber share.

        Here’s a spreadsheet that illustrates this effect:
        https://docs.google.com/spreadsheets/d/1deZPYe5Mddgc4SsXkn4Tq4j9KL6y1TVUwXqH_YdGEmE/edit#gid=645492468

        Subscriber share is ultimately about mindshare. You can only capture up to 100% of someone’s mind. Once you’ve done that you need to get more fans if you want more money.
        So subscriber share cares about how many clicks you get, but it also cares about how many people it took to generate those clicks.

        Or let’s put it even more simpler: If you are a REAL artist with REAL fans, then you absolutely want subscriber share. Because Subscriber Share is ultimately about developing fanbases.

        Like

  3. “The only real takeaway from this is “if you want to support artists, get everyone to listen to less music, but still pay the same flat fee.” I think you can see how this will never win over music fans.”

    Yeah, that’s not the takeaway, or it’s a simple-minded takeaway. You can listen to as little or as much music as you want. Either way your favorite artists will get your money, proportionate to how much mindshare they had. There’s no advantage to listening less, they won’t get more if you do. It’s not saying “listen less” – it’s saying “stop obsessing over the number of plays and start obsessing about mindshare” which is a FAR more useful metric for measuring the impact a given piece of music has on revenue for labels, services, and artists.

    Not worried about winning over music fans – well over 100k readers so far. Can’t win em all, but from what I can tell it’s a landslide victory so far.

    Like

  4. Maybe just answer this question.

    Which is more valuable to the artist, the label, and the streaming services: one guy clicking on an artist 10,001 times, or 10,000 people clicking once?

    Big pool says the former, subscriber share (and common sense) says the latter. What do you say?

    Like

  5. “(g) artificially increasing play count or otherwise manipulating the Services by using a script or other automated process;”

    Key word is artificially. We aren’t asking anybody to use scripts or bots. Just asking people to use the repeat button which the services have provided specifically for that use.

    Like

    • > We aren’t asking anybody to use scripts or bots.

      Ah, OK then. Your followers should go for it.

      …I really do mean that. They should go for it, and listen to indie artists as they sleep (of course, this assumes they didn’t already do that).

      I say this because they will be making indie artists richer – but only because Spotify will consider them bona fide streams.

      On the other hand, they will ALSO be driving down the per-stream royalty rate for everyone on Spotify, including the artists they are silently streaming.

      This would be a problem if your listeners were actually massive enough to affect the per-stream rate. They’re not. Spotify has over 20 million subscribers. It would take more than a couple hundred thousand to drive down the per-stream royalty rate to the point where major labels would even notice the change. To major labels, it’s a rounding error.

      But, thankfully, the indie musicians who are listened to silently will get roughly the same per-stream royalties. To indie artists, that “rounding error” will result in a whole lot more money.

      For September. After that it’s business as normal.

      Like

  6. “That one person who listens 10,001 times? He’s also far more likely to move from the free service to the paid service.”

    This makes no sense. He’s already a paying subscriber. Nothing I am talking about has any bearing on the free service whatsoever. I am talking about Premium Subscribers across the board.

    Like

    • This makes no sense. He’s already a paying subscriber.

      My point is that people who listen to a lot of music are also valuable to streaming services. They’re the ones who are more likely to sign up, and stay signed up.

      If you penalize their listening in any way, they will be less likely to sign up for the service (and may, possibly, drop it).

      Like

      • How are they being “penalized”? Under subscriber share 100% of their $7 goes to their chosen artists! There’s no penalty.
        You mean they will feel penalized that they don’t get to decide where other people’s money goes? I find that difficult to believe.
        And what makes you believe heavy usage subscribers are individuals who will notice or care what happens to the royalties? My local gym streams music. No license, just the owner’s Spotify account playing whatever the employees put on the Sonos speakers. I hear Spotify in offices all the time.
        At any rate most aficionados are already subscribers. And they are only 17% of the population. We need to entice the non-aficionados to stream music. That’s where all the future growth lies. But how can an artist even afford to try if they don’t get any money for bringing light usage subscribers to the system?

        Like

  7. “That one user who streams your song 10,001 times? He or she is likely to proselytize [live performance, scarce goods, kickstarters, etc]”

    You’ve completely missed the point. In the scenario all users are equal, they simply have different listening habits. So both the one guy, and the 10,000 people, are *already* fans, they already proselytize, and they already go to shows and buy “scarce goods” whatever that is (t-shirts lined with blood diamonds?). Or they all sit in their rooms and don’t do anything at all. But they are all the same.

    Why do they have different listening habits? Because people fucking do. Some people have to work jobs, and can’t listen to music unless it’s on the weekends. Other people are trust-funders and have nothing better to do than kick out the jams all day long. Just because somebody has less time to listen to music doesn’t mean they are less of a fan or spend less on t-shirts, tickets, kickstarters, etc.

    In fact my personal experience is the people with jobs actually spend a lot *more* money, because they actually have money to begin with. There’s data to back this up: no one listens to music more than teenagers. And no one spends less money on music than teenagers. Weird, huh?

    But let’s pretend that what you said had any relevance at all to the point I was making.

    I’m a former professional musician (indie *and* major label – and not a shitty one either: SPIN magazine best new artist at one point). I’ve played in front of tens of thousands of people, performed on network television, done cable TV specials, and had my songs in major movies. I can tell you absolutely, and unequivocally, that if you put 100 musicians in a room, and asked them which they would rather have, 100% of them would rather have 10,000 people play their music once then 1 person play them 10,000 times. Even if the one guy was the biggest super fan of all time. The kind that freaks you out and makes you want to leave the room (you don’t know how weird it is until you meet them: it’s weird). It’s a no-brainer. It’s such a no-brainer that I’m astounded you would even try to argue the opposite. In all the times I’ve presented this scenario – all sorts of musicians, including some who are in the Rock and Roll Hall Of Fame, some who present awards at the Rock and Roll Hall Of Fame, Grammy winners, baby bands, as well as numerous managers, label executives, etc – not once has anyone ever even implied that one person clicking 10,000 times is better than 10,000 people clicking once.

    I can’t imagine that a streaming service would rather have 1 heavy user instead of 10,000 light users either. Why? If you can keep 10,000 people around who are clicking just once, that’s an amazing sign. That means that all of the currently unsubscribed people out there are yours for the taking. And even if that wasn’t the case 10k people is $1.2M in annual revenue, and one person is $120.

    You are so incredibly off base with your assumptions, and the economic impact of those assumptions. One person is awful. Ever played a show to one person? It’s one of the most painful things you can do. You drove all the way there, unloaded all your equipment, set everything up, waited around for hours, months of rehearsal to get to this point and… one super fan, sitting there with arms folded, looking sort of embarrassed for both of you. Music requires crowds for the magic to happen. Bands that sound like total shit in front of 10 people become amazing in front of 500.

    10,000 people is 10,000 opportunities. If you are good enough to convert just 1% of them you now have 100 fans, which is a shitload better than 1. You can build on 100 fans fairly quickly. You can make a smaller club seem like it’s reasonably full.

    One fan is equivalent to having your mom clapping in the basement. You are at square one, and you aren’t going to get anywhere anytime soon. There’s no venue that will book a show with you so you can come play to your one fan.

    “I really do not understand the desire to punish the artists who have these kinds of fans.”

    We aren’t “punishing” artists with heavy usage fans. They still get as much as $7 from that fan every month. Saying we’re “punishing” those artists is like saying we’re punishing bribe recipients because we outlawed bribes. The small number of artists who have benefitted from heavy-usage subscribers have been the benificiaries of a slanted system. If we remove the slant, and make it neutral and fair, then they have to compete for fans like everyone else – which up until recently was how music worked. This idea that you can game the system and make money with clicks alone is new, and it’s not good for anyone: fans, musicians, labels, or services.

    “Especially since this is the only kind of fan that most indie/mid-level musicians have.””

    I’ve toured and/or played shows with Guided By Voices, Built To Spill, Spoon, Pavement, the National… I can’t even remember all the shows. There is no such thing as “only kind of fan”. There’s every kind of fan you can think of, and more than that. Little scrabbly kids, gutter punks, famous actors and actresses, suburban moms, rich tech douchebags, blue collar contractors, farmers, bankers, etc. They all have different listening habits.

    “If you want to compare it to a buffet, then it would need to be a lunch buffet that offered both Indian food and Chinese food…”

    You clearly don’t understand what’s happening here. Spotify is not the restaraunt. They aren’t making or selling the food (i.e. the music). They are just the platform, the cash register if you will. The artists are the restaraunts – they are the ones making the food, and they are the ones going out there and selling it.

    When you subscribe so you can hear your 10 favorite indie bands, and 80% of your money goes to a panoply of pop, EDM and hip-hop artists you’ve never heard of that’s a fucking travesty. Your money should go to the artists you listen to. If those artists want more money than what you can give, they should go get more fans – not encourage you to stream them constantly so they can get money from the fans of other artists. It’s common sense, and most people get it very quickly, but either you haven’t grasped this yet, or you enjoy being a contrarian. Either way, you got a couple essays out of me. Enjoy your weekend.

    Like

    • Hey again. This is probably the last comment I’m going to do on this story. I plan to write another (more detailed) post about all of this, and it would make more sense to move the conversation there.

      You’ve completely missed the point. In the scenario all users are equal, they simply have different listening habits. So both the one guy, and the 10,000 people, are *already* fans, they already proselytize, and they already go to shows and buy “scarce goods” whatever that is (t-shirts lined with blood diamonds?). Or they all sit in their rooms and don’t do anything at all. But they are all the same.

      If those 10,000 people have only listened one time, they are not going to do any of these things. You honestly believe that people will suddenly become proselytizers after listening to a track only once, and never again?

      Of course, part of the problem is that your example is completely, off-the-rails artificial. In reality, almost nobody will fall into either of these categories.

      In fact my personal experience is the people with jobs actually spend a lot *more* money, because they actually have money to begin with. There’s data to back this up: no one listens to music more than teenagers. And no one spends less money on music than teenagers. Weird, huh?

      So, why do most music marketers target teenagers and young adults? Simple: regardless of how much teenagers spend on music now, cultivating a love of music will result in a larger market when those teenagers grow up and do have money.

      This matches my own experience. The kids that I performed in front of at house parties, grew up to be the adults that paid for my merch or albums, and went to my shows in bars when they turned 21. (Many of them later formed bands themselves.)

      I’m a former professional musician (indie *and* major label – and not a shitty one either

      I’m not questioning your music cred. But the experiences of you and your friends do not represent the entire industry, just as mine don’t.

      I can tell you absolutely, and unequivocally, that if you put 100 musicians in a room, and asked them which they would rather have, 100% of them would rather have 10,000 people play their music once then 1 person play them 10,000 times.

      Obviously, because it’s an artificial example. You’re asking a leading question.

      Here’s a more realistic question. “Which listener is more valuable to you: one that listens to a lot of music, and plays your songs a bunch of times? Or one that doesn’t listen to much music, and only listens to your songs if they’re sandwiched between Top 40 hits?”

      Try asking that, and see what response you get. I’ll wager that even Top 40 musicians will prefer the former listener.

      I can’t imagine that a streaming service would rather have 1 heavy user instead of 10,000 light users either. Why? If you can keep 10,000 people around who are clicking just once, that’s an amazing sign.

      And that will never happen. In reality, they will have 1 heavy user who pays for the service, 10,000 people who never use the service at all. Your entire premise is wrong-headed.

      It would be better if you didn’t use such a deliberately artificial example. (It would also be better if you stopped using the derogatory “clicks” for “listens.”) Instead, talk about ten users who pay $9.99 for 10 listening hours per week, vs. nine users who pay $9.99 for 15 listening hours per week.

      And, again, you’re just re-stating what you claimed I got wrong: “get everyone to listen to less music, but still pay the same flat fee.” This may fly with your 100,000 (self-selected) followers. It certainly will not fly with Spotify’s 75 million active subscribers.

      We aren’t “punishing” artists with heavy usage fans. They still get as much as $7 from that fan every month. Saying we’re “punishing” those artists is like saying we’re punishing bribe recipients because we outlawed bribes.

      First of all: will you please stop conflating heavy listening with unlawful activity (“click fraud,” bribes, Spotify TOS violators)? It’s incredibly insulting.

      Second: Your proposed model would give less money to artists who have heavy listeners, compared to the current system. Heavy listeners are the few listeners who don’t listen exclusively to popular artists. The artists that would benefit are the artists that are already popular. So your proposed model only increases the disparity between the 1% and everyone else.

      I don’t like that result. I consider it unfair. You apparently do not.

      And, it’s hard to see how you’re not trying to “punish” these (less-popular) artists, when you call them “benificiaries of a slanted system,” saying they currently don’t “have to compete for fans,” and compare them to “click fraudsters” and so forth. It’s ridiculous.

      Now, as to the users. Aside from whatever outrage you’ve managed to manufacture, listeners don’t seem to find the current system particularly unfair. Just like me and my roommate don’t find libraries or all-you-can-eat buffets unfair.

      Everyone with a brain knows that with any service offering a flat-rate plan, some people will use the service more than others. That is true for libraries, lunch buffets, subway passes, Netflix, and so forth. Obviously, the light users will always “subsidize” the heavy users – but as long as the light users get their money’s worth, nobody cares.

      So, why are you trying to change their minds, by manufacturing outrage, when the end result is a greater income disparity among musicians?

      EDIT: Missed some things.

      You clearly don’t understand what’s happening here. Spotify is not the restaraunt. They aren’t making or selling the food (i.e. the music). They are just the platform, the cash register if you will.

      In my example, Spotify is the food court. I thought this was obvious.

      And you still haven’t answered the question. If more people eat the Indian food than the Chinese food, how is it fair to pay the Chinese chefs more?

      When you subscribe so you can hear your 10 favorite indie bands, and 80% of your money goes to a panoply of pop, EDM and hip-hop artists you’ve never heard of that’s a fucking travesty.

      Will you please stop phrasing it this way? It’s incredibly deceptive.

      First of all: if you’re paying for the service, and using it less than average, you’re driving up the per-stream rate. Just as if you use it more than average, you’re driving down the per-stream royalty rate. You do this for both the bands you listen to, and the bands you don’t.

      This is the only thing that happens. Once the per-stream royalty is calculated, then that royalty goes to the bands you listen to, and only those bands.

      Second of all: if 80% of your money is going to bands you don’t listen to, then you’re using the service 80% less than the average user. You’re not getting “ripped off” because you increase the royalty rate for all artists; you’re getting “ripped off” because you’re paying too much for the service.

      Once most users recognize the details, they’ll probably react in one of three ways:

      1. “Hey, I should be paying a lot less for Spotify.” Result: less in royalties.
      2. “Hey, I should listen to more music.” Result: less in royalties (though not as bad as #1).
      3. “Who cares? It’s how flat-fee services work.” Result: no change. (I’m betting that this will be the majority response.)

      Some users may initially side with the “User-Centric” model – until they realize they’ll only be helping artists that don’t really need it.

      Third of all: You are absolutely focused on people who listen less music than average, and completely ignore the users who listen to more music than average. Are you going to start a campaign, targeting these listeners, with the tag line “You are ripping off Spotify artists?”

      If you are being consistent, then you have to. After all, the royalties from the artists that they listen to are being increased by the people who you claim are being “ripped off.” You would have to say garbage like “80% of your money is being stolen from a panoply of pop, EDM and hip-hop artists you’ve never heard of, and given to the musicians that you like.”

      But somehow I doubt you’re going to do that. It’s just as accurate as anything you’re saying, but it won’t generate outrage among users.

      Like

      • One more response and then I’m done. I won’t be back. I don’t get the feeling I’m speaking to someone with an open mind, and as a result this conversation isn’t going anywhere, and I’m wasting my time. The impression you are giving me is that you are a contrarian for contrarian’s sake.

        “Of course, part of the problem is that your example is completely, off-the-rails artificial. In reality, almost nobody will fall into either of these categories.”

        It’s a hypothetical to illustrate the problem. In the hypothetical ALL USERS ARE THE SAME. The only difference is their listening habits. That’s the independent variable. Anything that changes as a result is the dependent variable. This is a commonly used method in science:
        https://en.wikibooks.org/wiki/The_Scientific_Method/Independent_and_Dependent_Variables

        In this case the independent variable is the number of clicks. We aren’t considering anything else because *it’s irrelevant to the question*. So we look at people who click a lot, and people who click a little, and the impact that has on revenue.

        In the big pool, the only thing that impacts revenue is clicks. The number of people listening doesn’t matter. It’s literally not a factor at all.

        In Susbcriber-Share there are two independent variables: you need clicks to get mindshare, and you need listeners in order to get minds. Getting one without the other won’t get you anywhere.

        “It would also be better if you stopped using the derogatory “clicks” for “listens.””

        How can a bot “listen” if it doesn’t have any ears?
        Or what if music is streaming in an empty house? Is that a “listen”?
        What if it’s an office or a bar, and it’s so low below the noise floor no one can even recognize what’s playing. Is that a “listen” too?
        If a user is streaming 24 hours a day, are they “listening” while they sleep?

        Those are clicks my friend. No one is listening in these instances.

        So if we want to talk about this, clicks is the right word.

        “Which listener is more valuable to you: one that listens to a lot of music, and plays your songs a bunch of times? Or one that doesn’t listen to much music, and only listens to your songs if they’re sandwiched between Top 40 hits?”

        If I’m trying to make a living off of music I’d rather have 10,000 of the latter than 1 of the former. No question about it. Can’t make a living with one person, no matter how big a fan they are.

        If it’s just comparing one super fan to one semi-fan, well then of course you want the super fan – but what does that have to do with anything with regards to royalties? A superfan would be more valuable than a semi-fan no matter which method you used.

        You aren’t even considering the problem now, you are just talking to yourself.

        “First of all: will you please stop conflating heavy listening with unlawful activity (“click fraud,” bribes, Spotify TOS violators)? It’s incredibly insulting”

        Are you denying unlawful activity exists? It absolutely exists. There are people bragging about it (I linked to them in my article). Why do you think Spotify is cracking down on payola in playlists? People are buying and selling spotify clicks just like people buy and sell facebook likes and twitter followers.
        So you have to consider it because it has an impact on royalties. It’s theft from artists and the fans that support them, plain and simple. Why are you so committed to burying your head in the sand about this?

        Are you a click frauder and I’m fucking with your business model? That would explain a lot.

        “Your proposed model would give less money to artists who have heavy listeners, compared to the current system.”

        Under the Subscriber Share model artists who have a fanbase made up of heavy-usage users can get as much as 100% of the money their fans pay in to the system. Is there some reason they deserve more than 100% of what their fans pay?

        “Heavy listeners are the few listeners who don’t listen exclusively to popular artists.”

        Here let me help you with a word that is incredibly useful when talking about subscription streaming users:
        https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#safe=off&q=heterogeneous

        You are living in a fantasy world where a given segment of users are [some monolithic characteristic]. Some heavy users are quite diverse in what they listen to. And some light users are quite pop oriented. But there’s also plenty of the opposite. For example:

        I go to a gym four days a week. They are a heavy-usage subscriber. They play exclusively popular artists all day long on their streaming account. All. day. long.

        I’m not a heavy-usage subscriber (very few people are). So when I put on Meredith Monk, Naked Raygun, Team Dresch, Henry Cowell, or Franklin Bruno it doesn’t count for shit.

        This guy is not a heavy-usage subscriber either. Many of his choices I’ve never heard of:
        https://docs.google.com/spreadsheets/d/1JL949OVEJ0p7Wn-pOrW4ucLDvd8Tp7GwfLYxBHEmn3E/edit#gid=0

        Heavy usage subscribers who have diverse playlists will also listen to a lot of the most popular tracks too (see Anita Elberse’s research into this). So they don’t help out the niche artists as much as you think they do.

        The bottom line is that a bunch of academics took real data from a real service and looked into this. And there was no big increase in disparity between the top 1% and everyone else. In fact, it didn’t change much at all: the big artists still made most of the money, and the tiny artists were still tiny. But as you went down to the level of the individual artist you could see some pretty big movement between individuals in every segment. What happened is that real artists with real fans (i.e. artists who scored high on Lamere’s Passion Index [google it]) pretty much always did better, no matter if they were a brand new up and comer, or an established superstar. And artists who scored low on the passion index did worse.

        So taking the jargon out and putting it in plain english: do your fans give a shit about you? You want subscriber share. Are you faking it by getting on to playlists, manipulating the system, and just being in the right place at the right time? Then you don’t want subscriber share.

        Subscriber share exposes artists that just aren’t that good, and don’t have any real fans. They aren’t bringing value to the system.
        But artists that are good, *even if they aren’t popular*, will have fans that enjoy listening to them. Those artists will do better. It doesn’t matter if they have a lot of fans or a little, and it doesn’t matter if their fans are heavy or light users – if the fans truly enjoy playing their music, they’ll do better.

        “listeners don’t seem to find the current system particularly unfair”

        Most listeners are completely unaware of how the system works. Many of them could care less how it works. This is a problem for people who care. There’s plenty of people who do. I’m not worried about the people who don’t care.

        “Obviously, the light users will always “subsidize” the heavy users – but as long as the light users get their money’s worth, nobody cares.”

        The “subsidy” is the 30% that goes to Spotify. Light users will continue to subsidize heavy users regardless of which method you use. The 70% that goes to artists is not subsidizing the service. It’s a reward for making content that users enjoyed. It’s designed to incentivize creators to make more content that users enjoy.

        There’s no reason for artists to subsidize each other. It doesn’t serve any useful purpose. If you disagree, I will happily accept money from your future music income. You can subsidize me if you like.

        “In my example, Spotify is the food court. I thought this was obvious.”

        I wasn’t referencing your example (the food court), I was referencing mine (the buffet). I ignored yours because that’s a fantasy. Have you ever been to an all-you-can-eat food court where you pay a flat fee and numerous independent vendors all compete and then the food court owner divvys up the revenue in the end to all the vendors? Me either. Because there is no such thing. It’s not economically viable. It’s just too much work to compare spotify to imaginary food courts, so I’m going to pass.

        “You are absolutely focused on people who listen less music than average, and completely ignore the users who listen to more music than average”

        I haven’t ignored them at all. I’ve discussed heavy users at length, in explicit detail, and I’ve stated quite clearly that I think they are entitled to distribute the money they pay in however they see fit. I’m totally cool with that. I just don’t think they should be able to distribute other people’s money.

        I’m realistic about the challenge here. But I came up with something to try, and I’m trying it. Instead of just sitting on my ass and complaining about someone else’s blog I’m doing something. And I can try again next September if I like. Now that the idea is out there, we’ll see if it gathers any momentum of it’s own.

        Let’s just cut to the bottom line here, and then I’ll call it:

        I could get behind the idea of clicks/listens being the best way to divide the revenue, if they were the soul source of revenue (i.e. if users paid a flat fee for every click). That would make total sense.
        But clicks don’t generate revenue. Someone who clicks 40,000 times doesn’t pay any more than someone who clicks once.

        Revenue comes from subscriptions. So we should be paying artists for generating subscriptions, not clicks. How do you measure if they are generating subscriptions? Well the first thought is that you count the clicks. Surely subscribers who click a lot are happy customers right? But music is weird, different people listen to music differently and have different habits. Most people are not heavy users. And the heavy users are a LOT heavier than normal users. 40x 50x 60x etc. And then you get click fraud on top of everything else. So if you only count the clicks all the money clumps around the heavy users, who might not even be real people, and you wind up incentivizing the acquisition of heavy users. This sounds fine until you learn they are a small minority of the population, and by and large are already subscribers anyways.

        Most people are light subscribers. And nearly all of the people who have not subscribed yet are light subscribers. So it’s crazy to say light subscribers are worthless. Services really *really* want those light subscribers.

        It’s far more sane to say every subscriber is equal, and every subscriber is worth $7. Because that’s the truth.
        Does this mean that light subscribers are more valuable? No. They are worth $7, just like heavy subscribers.
        Does this mean that an individual stream from a light subscriber is more valuable than an individual stream from a heavy subscriber? Well sure. Before we had streaming we had CD’s and Vinyl. And artists got money from the sale of every CD regardless of whether it was played once or a million times. So if you want to obsess over the number of times the CD was listened to, artists got $15 per play from people who played it once, and $.0015 per play from people who played it 10,000 times. That didn’t bother us then, and it shouldn’t bother us now.

        You like to think about the potential of heavy subscribers. What about the potential of light subscribers: if you can get those unsubscribed light users to join up, they might become heavy users eventually. Isn’t it more interesting to increase the number of heavy listeners? What would that do for the music industry?

        And if subscribers realize they can make a difference in an artists life to the tune of $7 every month, they might become more interested in their choices, and listen more closely. That might make them deeper fans. And wouldn’t that be a good thing to?

        Like I said, I won’t be back. You got my thoughts, you either agree or disagree, and we should both move on.

        Like

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