We come in peace. That's the main message Spotify founder and CEO Daniel Ek addressed to recording artists in a lengthy post on the company's blog today.
"All the talk swirling around lately about how Spotify is making money on the backs of artists upsets me big time," Ek writes, alluding to the recent debate sparked by Taylor Swift choosing to remove her catalogue from the streaming music service.
Spotify is helping artists monetize digital streaming and collect revenue that would otherwise be lost to piracy, Ek says. According to company figures, Spotify has paid $2 billion back to artists, songwriters, and record labels. Despite her stated opposition to the free-to-listen online model, when Swift had her music on Spotify she was on track to making approximately $6 million in payouts this year, Ek says.
Spotify is not the only service with big pay-out potential for artists. Today, the Financial Times reported that YouTube had inked a deal with a rights agency representing 20,000 independent record labels to launch its own Spotify competitor. Researchers estimate that YouTube's music streaming service could reach $500 million in revenue in its first year, a considerable boost for the $15 billion global music industry.
Big as those figures sound, it's hard to know just how much to read into them, particularly for musicians who aren't already megastars. Would a new artist have enough traction on Spotify to get substantial revenue from streaming alone? Would Swift herself have sold over 1 million copies of her latest album if she'd let Spotify stream the whole thing to its 50 million users?
Without knowing all the unknowables, the only certain takeaway is that not one digital music distribution strategy fits all, and the strategy that works best this month may not be the right one next month. As the creators, musicians have the privilege of deciding which distribution platforms make the most sense it terms of revenue and exposure.
Such decision is not one-note: Whether to put music up on Spotify or not. Releasing new material should be accompanied by a carefully thought-out distribtution strategy. Giving Spotify just one or two promotional singles could work to entice users to purchase the entire album. Timing is a crucial part of the equation as well. The last time Taylor Swift released an album, her team waited months before putting it up on Spotify to encourage her most loyal fans to purchase it on iTunes.
The great thing about being an artist today is that you don't have to be Taylor Swift, Inc. to have access to data that helps you decide which distribution channels to embrace. Tools like NextBigSound and MusicMetric collect data from Spotify, iTunes, YouTube, Pandora, SoundCloud, and other streaming services to help paint a picture of where the fans are and how customer engagement can change over an album's lifespan.
If an artist notices that their fans are primarily listening on YouTube and SoundCloud (or downloading their music illegally), then shifting some of that listening behavior to Spotify can be a way to turn nothing into something, or at least pennies into dimes.