A Legal Blog by Aaron | Sanders, PLLC

Copyright and Music Explainer: Why Spotify Isn’t Really the Poster Child for Everything That’s Wrong with the Music Business

Maybe Spotify Isn’t Cannibalizing Music Sales, But Artists Still Aren’t Getting Paid

Spotify has become something of a punching bag for Everything That’s Wrong with the Music Business Nowadays. I once held out tremendous hope that Spotify would Fix Everything. It didn’t. Well, that’s not quite true. It did deliver on the consumer end. But as the years went by, the initial, hopeful trickle of new revenue for musicians never really increased. Millions of streams, but only a few bucks in royalties. What the heck was going on? Did Spotify somehow pull the wool over everyone’s eyes, including the eyes of the savvy giant music labels? Given how long the major labels held out before licensing their music to Spotify, that seemed unlikely. It was more likely that the labels got the better of the deal. But there was no one else to punch. And, where, precisely, was all the money going?

Some Light Shed, but Not Where We’d Like It.

FiveThirtyEight’s much-discussed article, “Maybe Spotify Isn’t Killing the Music Industry After All”, doesn’t really get into this, unfortunately. Keep that in mind when you see people citing the article to show that Everything Is Fine.

The FiveThirtyEight article is about the “music industry”…


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Help Us Spotify; You’re Our Only Hope! (Part 14 of our Online Music Services Series)

The Planets Align for the Music Industry. Will it Be Enough?

In our last post, we examined the overlapping music-licensing regimes to explain, in part, why it took Spotify two years to get licensed in the U.S. We also looked at the music industry’s unhappy history with the internet, which also helped explain Spotify’s licensing struggles.  We now look at what Spotify means to the music industry’s future. A lot might be riding on Spotify.

For all the technology firms looking to make money from music, consider how few of them even get as far as Spotify in being able to present the music industry a comprehensive internet-based scheme. A couple spring to mind: Rhapsody in 2001, and Apple in 2003.* This means that, when Spotify came calling, the industry actually had little practical experience on which to base a very perilous decision: how much to charge for music. Since the royalty rate is by far the biggest cost incurred by online music service providers–Rhapsody is said to pay 60% of its revenues in royalties, Pandora 50%–the royalty rate demanded by the music industry pretty much dictates the price of the product. Set it too high, and the service will founder…

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Spotify: A New Hope (Part 13 of our Online Music Services Series)

Or, the Attractions (and Distractions) of Licensing

Spotify has been available in the United States for a few months now. Until the recent kerfuffle involving its Facebook integration, the reviews have been positive. If you review the features list with which we started this Online Music Services Series, you’ll see that Spotify comes as closer to giving consumers what they want than any other service. In fact, it’s not even that close:

Portability: check: with Spotify Premium, you can listen to longs off-line and you gain access to Spotify’s mobile apps.
On-demand: check: you can listen to any song you want to in either your or Spotify’s catalog;
Music discovery: half-check: Spotify has a feature that allows others to share music with you, which should help you discover music you like, but nothing quite as robust as Pandora’s Music Genome.
Extensive catalog: check: Spotify’s catalog has about 15 million songs.
Low cost: half-check: Spotify Free has all of the features above except portability; for that, you need to shell out $9.99 a month, and you lose all access should your subscription expire.*

* If I were starting this series over again, I might have added “ownership” to this list. It’s important to me personally,…

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