**The biggest news story in the music world last week was David Lowery's response letter to the NPR intern Emily White about the moral implications to not purchase music. This has been a massive debate ever since Napster hit over a decade ago. My post below was written before Lowery's letter, but I'm releasing this now because it fits in the discussion and hopefully this will help indie artists understand Spotify, iTunes and other online streaming/purchase services a little bit better and how to use them effectively.**
One of the biggest debates in music right now is should you put your music on Spotify or reserve it exclusively for pay by mp3 download sites like iTunes. I've read countless arguments for both sides. My conclusion is: there is no correct answer right now, but a mix. I will say, though, don't not put your music on Spotify out of principle. This is blockheaded and in the long run will tremendously hurt your career and you will eventually come around.
What does this mean? Let me backtrack and give you some simple background on the debate. The only way Spotify was able to enter the US market was by striking horribly skewed and "unfair" deals with the 3 major label parent companies: Warner, Universal and Sony. If you don't know, these 3 Majors have various major labels beneath them such as Columbia, RCA, Virgin, Island/Def Jam, Capitol etc.
SO Spotify realized that the only way they could gain the catalogs of (virtually) ALL major label artists was to bend over and take it from the majors, then get up turn around and say thank you very much let's do this again sometime, k? Too graphic? Well that's what it feels like as an indie artist or label.
No one (other than Spotify and the Majors) knows what major label artists earn per stream, but it's considerably more than the amount indie artists earn per stream. 1 Ari Herstand stream does not equal 1 Lady Gaga stream. In addition (or concurrently) the labels basically own a percentage (I've heard 20-50%) of Spotify's TOTAL earnings. This means that if Spotify brings in $100 million then they have to pay out the Majors between $20mil-50mil before even calculating streams! Now some of these figures are speculative as I can't find hard numbers (assuming because non-disclosure agreements), if you find it please post it in the comments.
The amount I (and every other indie artist) gets per stream (as of today) is around $.0056 (again the numbers aren't posted anywhere - found this on Hypebot's post). This will most likely fluctuate over the coming years, but I can't imagine by too much. Yes that's less than 1 penny per stream.
Ok so now as an indie artist you're enraged and you want to boycott Spotify right? Well don't. You think, "I make SO much more on iTunes ($6.99 for a $9.99 album) so why not just put all of my music there?" Good question. Many indie labels and artists have stopped their thinking here and pulled all of their music from Spotify in protest. This is very short-sighted and will hurt your career.
Like I mentioned in It Doesn't Take a Web Genius, don't make people work to find your music. If they check for you on Spotify and you're not there they will move on to another band - NOT scour the internet trying to find a full song of yours to listen to. So right there you just lost a fan.
Regardless of how annoying you think the Spotify integration into Facebook is there's no denying it gives YOU tremendous exposure when someone listens to you. If your band starts appearing in the News Feed over and over again people will take notice.
The overriding factor here is that the music industry is shifting dramatically. People are buying less music, but they still want music. You could join the tiny minority of purists who believe they should be compensated for their art at full value (full value, mind you, used to be $18.99 in the late 90s/early 2000s) and by allowing people to listen for free (or giving their music away) devalues it, but these were the same people that refused (initially) to put their music on iTunes (and CDs back when) because the quality is so diminished and you can't physically hold the artwork, etc etc. You must MOVE WITH THE TIMES!
Sure, you're going to make less money from your recorded music, but you can make up for that in ticket sales and merch sales. Would you rather have 1000 people pay $10 to download your music and no one able to listen to you online for "free" or 300 people pay $10 to download your music and 10,000 more people stream your music for "free" online? Sure you'll make less money in the latter initially, but I bet you some of those 10,000 people will buy a ticket to your concert when you come to town or fund your Kickstarter, follow you on Facbeook/Twitter, etc.
The best argument I've heard about holding out on Spotify (which I may actually do on my next release) is what Bon Iver, Gotye, Coldplay, Adele and others have done: release their album on iTunes for the first few weeks/months/year(Adele) and get their die hard fans to buy their albums first (because they will) and make that immediate income and then put their album on Spotify when they feel like sales have slowed to grab a wider base and increase ticket sales for an upcoming tour. In Adele's case, however, she is an anomaly and has sold stupid amounts of her album 21 so it was smart for her to hold out on Spotify because she's still raking it in in sales and doesn't need the extra exposure. For Bon Iver, Gotye, Coldplay and the likes selling, let's say, 1 million downloads the first few weeks of the release by holding out on Spotify was a smart business decision because they made $750,000. Eventually their albums hit Spotify and by that point every die hard fan who was going to buy it already had.
Remember though, even though Spotify is one of the most talked about services in music over the past year, the majority of the American public aren't on it - yet. Music lovers are, however.
I just stumbled upon this article actually presenting hard statistics that explains that Spotify users are twice as likely to purchase music than non-Spotify users. If that isn't case and point for putting your music on Spotify I don't know what is.
In addition, I'm going refute my point above about the possible benefit of holding out on Spotify for a little while to get your die hard fans to purchase the album first. Mumford and Sons released their new album Babel on iTunes and Spotify on the same day and had the biggest sales debut of 2012 surpassing 600,000 copies in its first week. Need any more evidence to get your album on Spotify?