spotify-logo

10 Reasons Why Every Artist Should Be On Spotify

[Editors Note: By Kami Knake – founder of Bands Under the Radar music podcast, blog and record label. With over 15 years experience, she currently consults for digital music start-ups and independent artists.]

There’s a lot of buzz these days around music streaming subscription services and how they will impact the music business.  It seems like every other week some famous artist is ranting about how much they hate Spotify, the world’s biggest music subscription service, complaining about their low royalty rates.  To put it frankly, their vision is short-sighted.  Below is my attempt to shed some light on this controversial subject.

10 Reasons Why Every Artist Should Be On Spotify

1. Subscription Services Promote Artists’ Catalog Increasing Revenue All Around

There’s billions of dollars to be made in the music streaming market reports MarketWatch.  Apple, Google, and Amazon’s recent moves into streaming are expected to provide a revenue boost to labels and create fresh opportunities in the music industry.  It’s been a whirlwind year for music streaming with Amazon launching Prime Music in June, Songza being scooped up by Google in July and Apple buying Dr. Dre’s Beats Music for a whopping $3 billion in August.  

Further proof that streaming is a big priority, all three major labels have dedicated divisions for curating and promoting music playlists on Spotify: UMG has Digster, Sony has Filtr, WMG has PlaylistMe, and WEA, WMG’s distribution and artists services arm, bought Playlists.net last week.

The strategy is to market music through playlists and ultimately increase their catalog’s Spotify streams.  By attracting followers to playlists based on themes and genres, they can then use those playlists to “seed” new tracks as they are released.  Think of this kind of marketing as a new form of radio promo where the tastemakers are the playlist curators and where anyone can be a curator.  Labels, distributors, artists, celebrities, brands, TV shows, music fans, etc, are all examples of curators on Spotify attracting followers to their playlists.

A song on a curated playlist may be how Spotify users discover you for the first time, but because they can consume your music affordably, some will listen to every song in your catalog allowing them to become a fan of you as an artist, rather than having to cherry-pick which singles to purchase.  Many people wouldn’t have taken the opportunity to listen your music in the first place if they had to purchase the music first before getting a chance to hear it.  For example, U.S. independent artist Ron Pope added his music catalog to Spotify in 2010 which generated over 57 million plays in a little over 2 years and paid him $334,636 (As of Feb. 2014).  Pope was getting millions of streams on Spotify in Sweden most months, and as a result was offered a respectable guarantee to play a festival there.  In countries where Spotify is really popular such as Sweden and Norway, hardly anyone is buying music and almost all revenue comes form streaming.  This is why some artists can make 5-10 times more money on Spotify in these countries than in the U.S.. 

Let’s look at the numbers.  Spotify has over 40 million users worldwide with 10 million of those users paying a monthly subscription fee.  Over 3 million of those paying subscribers are in the U.S. alone.  Spotify launched in Sweden and Norway in October of 2008, but didn’t launch in the U.S. in July 2011.  The population in Sweden is about 10 million people, Norway is 5.1 million, and in the U.S. about 319 million people!  Just imagine the amount of money Spotify and other streaming services will generate for artists and labels once streaming becomes the norm in the U.S. and other highly populated countries around the world.  We are talking billions of dollars folks!  And Spotify is still a relatively small service when compared to YouTube who have 1B users and iTunes who now have about 800 million accounts.  As Spotify and other streaming services continue to grow so will its artist payouts.

To acknowledge the elephant in the room, yes we all know that artists make a lot more money right away when fans purchase mp3s, but think of streaming as a dividend that pays you every time someone listens to your music.  You will be surprised how quickly this money adds up as more people become paying subscribers.  Everyday we are getting closer and closer to the tipping point where streaming revenue will surpass digital downloads and CD sales.  After that happens, the sky’s the limit!

2. Curated Playlists Can Break A Hit

Dutch rapper Mr Probz song ‘Waves’ released late last year has over 2.4 million downloads globally and was streamed a million times a day on Spotify throughout summer.  ‘Waves’ received considerable support from club DJs in Europe, but how did it break America, travelling across the Atlantic and straight into the US Spotify top 40 chart by early April?  Careful interpretation of data from the months when ‘Waves’ first started to break shows that the ‘lean back’ mechanism of curated playlists (as opposed to the ‘lean forward’ method of search which drove European streams) led to the early success of Mr. Probz in the US.  Put simply, the lean-back mechanism of Spotify’s curated playlists carried a big hit in Europe across borders with next to no conventional support in the U.S. for this new artist.  By overlaying Spotify streams, Shazam tags and radio plays onto the same chart, what is really telling is that radio is seen to be lagging a full three months behind, and the actual number of its radio spins was barely noticeable.  

3. Subscription Services Cultivate New Artists  

Music’s shift to an all-you-can-stream model has a hidden perk that could benefit everyone: Data.  Spotify, which is available in over 60 countries, has been amassing listening data from its millions of users.  The marriage of data and music will have a major impact on the industry as a whole, a process you can already see beginning to unfold.  The rise of Lorde, for instance, was fueled in large part by Spotify, whose data team noticed the pop star was trending on the service long before she became an international star. Internally, the company has a team of people dedicated to spotting these types of trends and cultivating the artists behind them. They’re also working with traditional radio stations to help spot regional surges in popularity previously invisible to deejays. 

4. Subscription Services Decrease Piracy

Studies have revealed that piracy rates are down by more than 80% in Norway, which continues to have the highest digital revenue per capita in the world, thanks to the rise of legal alternatives such as Spotify.  Australia’s piracy rates dropped 20% in just one year since Spotify launched.  Piracy fell by 25% in Sweden between 2009 and 2011.  In North America, file sharing now accounts for less than 10% of total daily traffic.  

5. Subscription Services Make the Average Music Consumer Spend More

Digital downloads have not been able to make up for the decrease in physical sales over the past 15 years.  Spotify’s model aims to regenerate this lost value by producing far more value per listener.  According to Russ Crupnick of NPD Group, a respected consultancy, of the U.S. Internet population of 190 million, only 45% buy music of any form.  The average annual music spend of this minority is only $55.45.  A Spotify Premium customer spends $120 ($10/month x 12 months) per year.  A Spotify Premium user delivers more than 2x the amount of revenue to the industry (per year) than the average US music consumer.  Spotify’s goal is to convince millions of people around the world to become Premium subscribers and by doing so to re-grow the music industry.

6.  Music Streaming Counts Towards Music Charts  

On-demand audio streaming has been factored into the U.S. Billboard charts since 2012.  In 2013 Billboard added YouTube streaming enhancing a complex formula for Billboard’s Hot 100, the preeminent singles chart, that now include on-demand audio/video streaming, digital downloads track sales, physical single sales, online radio streaming, and terrestrial radio airplay.  Never before have music fans had more of an influence on the chart’s rankings as they do today.

This year the UK added on-demand streams to it’s Top 40 singles chart.  100 streams will be weighted as the equivalent to one download or physical single in the chart compilation process.  Each song has to be streamed for 30 seconds to count as one stream. Subscription services which will contribute to the charts include Spotify, Deezer, Napser, O2 Tracks, Xbox Music and Sony Music Unlimited, and rara (powered by Omnifone).  Video views on YouTube and Vevo will not county towards the charts.

7. Social & Concert Recommendations = Free Promotion

Spotify users can easily share what they are listening to via their activity feed within the desktop app, via a deep integration with Facebook which all their Facebook friends can see, and via direct messaging other users.  When people listen on Spotify it’s social and your fans become promoters just by listening.  Spotify also automatically recommends nearby concerts to fans who listen to a lot of your music or follow you, and nearby concerts are shown to users visiting your artist discography page on Spotify.

8. Alerts & Notifications Makes It Easier To Stay In Touch

Spotify automatically generates notifications to your followers whenever you release new music so they never miss any of your releases.  Notifications include email alerts, push mobile notifications and recommendations in the activity feed.

9. Subscription Services Pay Higher Rates Than Online Video, Online Radio, & Terrestrial Radio

Spotify pays 70 percent of “every dollar” that it receives back to its rights holders which is on par with other digital retailers.  By “rights holders,” they are referring to the owners of the music that are on Spotify–labels, publishers, distributors, and, through certain digital distributors, independent artists themselves.  The royalty rates Spotify pays to rights holders is much higher than many alternative services such as your favorite video outlet, or online and terrestrial radio station.  Spotify is paying artists more than 2x the amount that popular video partners are paying out, and they are paying significantly more than online and terrestrial radio stations.

10. Streaming Has Already Won 

Digital sales decreased for the first time last year.  Weekly album sales hit new lows on a regular basis.  The public has made their choice, they want access over ownership.  For people resistant to change, you will always be able to get your favorite music in some physical form or as a download.  As CDs and downloads continue to decline, vinyl sales surge.  But to ignore streaming, is choosing to live in the past.  New cars or computers don’t even come with CD players anymore!  In the words of Bob Lefsetz, “Streaming won. Hell, it won in movies/TV first. We’re never going back to ownership. We’re never going back to windows.  So throw your sticks and stones. I don’t care, I’m on the winning side. I’m aware of progress. I can see where I’m going.  I’m not an ostrich with my head in the ground.”

Kami Knake is founder of the Bands Under The Radar (BUTR) music podcast, blog, and record label.  She has a B.S.E. in Electrical & Computer Engineering from the University of Iowa and has worked for Agency for the Performing Arts and Warner Bros. Records.  With over 15 years experience, she currently consults for digital music start-ups and independent artists.  If you need help promoting your music digitally or want to submit a song to be featured on BUTR, email Kami at butrmgmt@gmail.com.
  • muzzol

    spotify as a music platform is awsome, as a company is the same greedy shit we’ve seen always.

    when I talk about we, I mean the musicians. spotify gives near to
    nothing to artists. sure, you get visibility and distribution, but
    beyond that, you can’t even pay the cost of maintaining your web page.

    take a look at yorke’s opinion about this: http://www.nme.com/news/atoms-for-peace/71447

    as always, once you’re on the top, you’re fine, but spotify will hardly help you to get even to the first floor.

    and the saddest thing is that spotify could fix this easily increasing
    the percentage that musicians get for every song played. maybe they
    will go from fucking-pig-riches to just fucking-riches if they do that
    move, so don’t hold your breath.

    • tunecore

      Thanks for your feedback! We definitely welcome the opinions of streaming and models from all of our artists – glad to see that you’re checking the blog. We’re hoping to offer as many diverse & helpful topics, tips and news so that our independent artists can benefit from TuneCore beyond our distribution, publishing and artist services!

      • muzzol

        and that’s the typical bullshit response you can expect for a ADrticle like this

        • tunecore

          Sorry if it wasn’t the response you were hoping for. Don’t get us wrong, we love Spotify as one of our stores, but we assure you that the company isn’t paying us anything to publish this article. As an artist with a choice, are you streaming on Spotify to get your music out to more people, or choosing to stick to stores that may generate a higher revenue like iTunes and Amazon Music?

      • Pawn Raul

        Of course Spotify didn’t pay you. Why would they? Indies are the long tail, and are viewed by majors as the scum that takes dollars away from their mind controlled slave artists. Most artists here are naive about this, but you know better. Don’t play dumb. It makes you look even more foolish.

        You need to drop Spotify.

        You think that it makes you credible. Or perhaps it fulfills some meaningful check box that appears great on the surface, but still amounts to nothing.

        All it does is create distance between you and CD Baby, and not in a good way. Now your growth is seen by most indies as malignant rather than healthy.

        The ass kissers will deny that their lipstick is brown, and gladly lick your heels in order to get a co-branded marketing campaign, interview, or case study. Hey maybe they’ll even get that elusive soul-selling contract. It’s all so transparent and phony.

        More listeners better art.

        Distribution “more fans”

        “More fans” increased meaning

        Any artist or label that expects to make a profit becomes the janitor of all artists regardless of their status or popularity contest. Art relies not on $, the scourge and punishment of all who love her. This is figuratively why Madonna is Jezebel. Jezebel was eventually thrown out of a window by Eunichs and eaten by dogs to fulfill prophecy. All distributors, digital streaming companies, and labels, including Spotify and TuneCore, will also fulfill similar prophecy. Before the end of 2016. Wake up.

    • Pawn Raul

      How is Spotify an “awesome” platform?

      If you break down the technology portion of it, I concede that billions of packets flowing on the Internet to play music (and other things) is “awesome”. But the platform’s features don’t reward consumers or artists. The platform price-fixes royalties, pays signed artists more (it’s true, do the math), and caters to the big labels, occassionally shuts down (yes eliminates) no name artists that have many plays, and makes you believe that YOU discovered some artist when in fact it is Spotify that was paid to show you some up and coming artist. Spotify has Oz’d you. It’s a big charade.

    • Pawn Raul

      Spotify is broke. They are not profitable. They are a distraction to the real problem: The labels love that independent music is huge with tons of “white noise”. They don’t like the lost revenue, but they love that there’s “too much choice” for the consumer. So the consumer looks to the headlines to see who they should listen to (the data supports this). Spotify exists to create confusion while all the major artists get plays that are now trackable, and thus billable.

      So Spotify becomes a handler for guaranteed trackable plays and payment, while appearing to be a separate entity.

      Follow the money. When something g is not profitble, yet still exists, then something else is going on.

  • Steve Byrd

    Tell that to Taylor Swift.

  • minimal

    …what a crock…SPOTIFY (and the rest of the streamers) are ripping off the folks that make the music…most of them pay a whopping 1/100th of a penny per stream…so, for every million streams you sell, you make $100…whoppee!…
    stand up to these crooks and boycott streaming….

    • Mogli

      I’m completely independent.I make half a penny per stream for U.S. streams. Over a penny per stream in Europe. If artists are making that little, it is because their label is stealing it from them, not Spotify. In addition, the discovery network on Spotify has led to a documentable trend in boosting actual album sales

  • Tim

    First, we don’t see much of a distinction between piracy and paying artists a fraction of a cent per stream. Both are taking owned content for nothing for all intents and purposes.

    Also, we see a giant distinction between streaming services that promote and sell as an integral part of their model and those that don’t. From our point of view, Spotify and it’s ilk are about starving the artists so we won’t participate in those services. Pandora, which actively promotes new music based on listening preferences, helps us build audience and sells our music, we currently do support.

    As artists, we have to decide where our content is going to be available. Leaders like Cold Play, Taylor Smith and many more have decided not to support the open streamers and we appreciate and support that stand.

  • Jerome Taylor

    The reason for the decline is that artists like Taylor Swift who has decided to pull her music from Streaming venture has a little to do with it!! Yeah, there are billions made alright, by the streamers, not the artists! I personally like my CDs and sometimes my old cassette tapes even, why, because on them are some of the most cherished music that is untarnished by the new wave of so called technology that for some reason changes like the weather!! Most of my music has been sold to those who preferred the CD disc to play in the vehicles as they go to work, school or to the grocer!!

  • KLUSO

    Tunecore. Can you/we use the collective weight of Tunecore artists to establish a minimum standard for streaming revenue?
    Why should we all be supporting the likes of Spotify and Pandora biz model (to their benefit and not necessarily ours) when other companies such a Muve and Deezer and some others pay a reasonable amount of 1/2 to 1 cent per stream?
    (btw – even ITunes streaming revenue is in the gutter).
    We obviously have an individual choice as artists but most of us don’t have the power of a Taylor Swift, e.t.al.
    We need Tunecore’s help on this one.
    Kluso

  • Frank Afka

    If this article had been posted 5 years ago there would have been 90 comments instead of “9”.
    Most likely a lot of folks are confused by the changes in technology that seem to take place every 2 weeks and require another 12 year old whiz kid to get a handle on it.
    Here’s the thing: you have to actually like playing and writing music and you have to some kind of feedback for your effort to support that feeling.
    The problem is that if you are aiming at fame and fortune and you think you’ve paid your dues and you’re still not “making it” you wont like living thru “The New World Odor”
    It stinks, and it never has been fair.
    But, fear not, the market model will change again and a whole new batch of hopefuls will jump on the bandwagon as another bunch fall by the wayside.
    If you’re young enough to withstand the heat and old enough to get out of the way you just might get enough to eat and then feel good enough to play.

  • Pawn Raul

    This is the most blatant pro-Spotify propaganda I have ever read. In fact, because of this article I am not renewing all 15 of my labels bands from TuneCore.

    The owners of TuneCore are NOT the original founding member a of TuneCore.

    Make music avaliable in limited channels and bypass streaming/distribution unless it goes through YOU. Work the publication angles and embrace the economic theory of scarcity.

    Spotify has NEVER made my label a penny. It NEVER will. Spotify is a tax write off and designed to slowly fail while keeping millions of artists hopeful and poor. It is the equivalent of a label signing you and forgetting about you.

    I piss on you, Spotify.

    • Mogli

      I’m completely independent.I make half a penny per stream for U.S. streams. Over a penny per stream in Europe. If your label isn’t making any money, its because its poorly marketing, or nobody wants to hear it. In addition, the discovery network on Spotify has led to a documentable trend in boosting actual album sales

    • http://musicpage.com/Opsy-Q Opsy-Q

      Nice talk bro, these organizations are just taken advantage of we artists that put our materials under them, I’m really pissed off, they are not generating revenew for me as I thought it would be

  • Steve

    Love the streaming logic. In the US you will make .001 per stream (In Europe .005 – .001) so in the US you need to stream 700 to equal one download. Music Industry was Built on Screwing the Artist and continues to become better and better at it. Good luck paying your bills on streams. And thanks fans for the continued goal of getting it all for free! you will soon have nothing of artistic value.

  • Sean Jay

    how long does it take for tunecore to pay you.

  • Justin Rifica Douglas

    Very insightful blog. It opened my eyes to lots of things. I would like to point out that the reason downloads are hitting an all time low is because of streaming services like Spotify and Apple music. Unless you are a known mainstream artist or well known indie artist you are making pennies because of these streaming services.