Why Strategically Taylor Swift Leaving Spotify Is Important

I am going to admit two things that, for me, are hard to admit.  First, I am a fan of Taylor Swift.  I'm listening to Blank Space as I write this.  In the past, I have always been vocally anti top 40.  I have traditionally had the same opinion of top 40 as I do of McDonalds: it's shit but somehow millions love it and will pay for it.  Second, I paid for Spotify.  That's hard to admit because Spotify is the devil.  I am sure you react to that as most of my friends do.  "It's better than piracy."  Not the best response, yet exactly what Spotify says in this response to Taylor Swift deciding to leave their service.  That response should come as a shock to no one.  It represents a big threat to their business model.  It also shows what artists think of their service.  It just doesn't pay well.  Allow me to explain from their response.

"Myth number one: free music for fans means artists don’t get paid"  I assume they are suggesting their service is free.  It isn't.  You pay for it.  They have a free version but as I found out recently, once they have you as a  paying customer, if you try to listen to them for free, they will charge you.  Fuckers.  "Today, people listen to music in a wide variety of ways, but by far the three most popular ways are radio, YouTube, and piracy – all free. Here’s the overwhelming, undeniable, inescapable bottom line: the vast majority of music listening is unpaid. If we want to drive people to pay for music, we have to compete with free to get their attention in the first place."  That is pretty misleading.  Two of their three channels pay, as do they.  Radio pays labels, although I am not sure of the econimics.  I don't think it is much, but it was always thought to drive the sale of albums, which I think many would say still holds true.  YouTube will serve commercials infront of content if the content owner requests it.  That too is a closely gaurded secret but I have heard it can be about $25 per 1,000.  If that is true, Taylor Swift might have made as much as $8.8 million from Shake It Off from YouTube.  For the same number of plays on Spotify she would have made under $3.8 million.  I can only assume this must be true or she would have pulled her song from both YouTube and Spotify.  I think someone realized all plays are not equal and she could be making 3 times as much on YouTube.  Then again, VEVO is the second biggest channel on YouTube, so the economics is probably better than $25 per 1,000.

"Myth number two: Spotify pays, but it pays so little per play nobody could ever earn a living from it."  So what can people live on?  The median income in the US as of 2013 was $51,900.  Spotify states that, "the equivalent of that one play and its 500 thousand listens on Spotify would pay out between three and four thousand dollars."  So an artist would need to have 6.5 million "listens" a year, assuming there is just one person.  If it is a band, you can multiply that by the number of people in the band.  A group of four would need 30 million listens.  To put that in perspective, Pearl Jam's Alive has only 20.6 million listens on Spotify, which comes out to $41,286 per band member.  If fucking Pearl Jam can't make it on Spotify, who can?!?!

"Myth number three: Spotify hurts sales, both download and physical." Spotify is drinking the Kool-Aid if they believe that.  Clearly a service where people can listen to tracks on demand is going to hurt sales.  The whole reason people use Spotify is that they can listen to as much as they want and only pay $120 a year.  Presumably they would spend more than $120 a year on albums if Spotify is a better option.  Spotify claims that this isn't true because it isn't true in Canada, where they point out they don't operate.  Well guess what, Spotify, you aren't the only fucking streaming option, you arrogant ass of a service.

The only reason that Spotify is still in business is because their model, evil as it may be, is better than piracy.  And since piracy is a real threat, Spotify wins.  After all, they have 12.5 million paying subscribers.  The most damning part of all is they claim they have paid out $2 billon in the last 7 years, $1 billion of which was just last year.  12.5 million subscribers times $120 a year is $1.5 billion, of which they say they paid out $1 billion.  That would be 66.7% paid out to artists or their reps.  Uber pays more than that.  Maybe Uber should get in the music streaming service.  They pay out 80% to drivers.  Good for you, Taylor Swift.