Spotify To Taylor Swift: Free Streaming Means Less Piracy, More Album Sales
Spotify has always been at the end of pointed fingers with accusation that the platform does not provide a sustainable method for artists to make money. After the high-profile Taylor Swift dumped Spotify on the basis of free music streaming, the company took upon themselves to defend the notions behind the streaming service.
Spotify CEO, Daniel Ek, posted the company’s business model with a proper clarification of the myths that surround Spotify. To Daniel, if free streaming is abandoned, it only causes a spike in piracy, not more album sales.
Spotify has paid an honest $2 billion since its inception to artists. With 12.5 million paid subscribers and 50 million free users, there has been 25% increase in users over the last six months.
“At our current size, payouts for a top artist like Taylor Swift (before she pulled her catalog) are on track to exceed $6 million a year, and that’s only growing—we expect that number to double again in a year,” wrote Ek.
At that rate, any artist who doesn’t see his/her album crossing the million mark in a week, should consider staying with the company of such potential. Ek then furthers cements his arguments with the point that musicians may want to check their labels regarding their share of the money Spotify is sending them.
According to him, Spotify’s interests are in line with the music artists. As the service grows, it is a win-win situation for both, as they both make more money. To date, the current rate set on contract is 70% for artists and 30% for the company.
Ek’s main argument, however, was whether free access to music actually devalues it and hurts artists. This point was also the focal point of the falling out between Spotify and Swift.
It also gave an edge to YouTube, as it is finalizing its own new subscription service. This service is going to set the mark on how digital distribution of music is going to be carried out at a large level – free music supported by ads, with premium services offered to those who are willing to pay.
Keeping Taylor Swift aside, many musicians prefer Spotify over ad-supported services like YouTube because it reaps more royalty rates. However, Spotify says services that combine free and paid tiers are a better business model. Free services don’t provide enough revenue for artists, and paid subscription services don’t always attract the free users.
“If you take away only one thing, it should be this: No free, no paid, no two billion dollars,” writes Ek.
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