Doing the math

So Spotify says it now has 12.5 million paying subscribers, and 50 million users overall.

Overlooking that conversion ratio, and having no idea how much each of those purported 12.5 million subscribers are actually paying, the only sure fact is, they’re not making money in the US.

That is partly so because, as they claimed in a blog post aimed at Taylor Swift after she pulled her catalogue from use by their service, they’ve paid $2 billion so far to stream the songs they are allowed to stream.

Spotify claims their purpose is to help artists. They say that if we can’t listen free to any song we want, we’ll steal those songs, and so, by inference, being paid by a small percentage of ungrateful cheapskates is better than no payment at all.

But wait.

Listeners can hear Taylor Swift’s songs free right now, on broadcast stations all over the world. And she knows with reasonable accuracy how much revenue that listening produces — and it’s more than she gets from Spotify.

It must be. She hasn’t pulled her catalogue from broadcast stations.

I don’t blame Taylor for being pissed off.

Her latest album became the largest selling album since 2002 within a week of its release. She’s proven she’s a pretty savvy businesswoman, so it’s a bit condescending to think she doesn’t understand her own best economic situation.

And the $2 billion number Spotify CEO Daniel Ek spit out at her is disingenuous.

He knows as well as anyone that the costs for streaming need to fall for those services to be viable. And yet, even at these rates, the complaints from the artists who produce the music Ek needs to hit his bonus are yelling ever louder about being ripped off.

The truth is, Ek and Spotify need Taylor Swift a lot more than she needs them. If every mainstream music artist pulled their catalogues, fans of any individual artist would still pay to hear their favorites, either by downloading specific songs from iTunes, or in a direct relationship with the artist and the artist’s distribution channel.

I like Emily Barker’s music.

She sent me a ‘personal’ email last week letting me know she has a new album available for downloading on her website. She suggests a fair price, but leaves it up to me to pay what I think it’s worth. I’ve thought she is worth more than she has suggested with both of the albums she’s offered to me.

Frankly, it’s insulting to lump all of us who love music and are willing to pay for it with the minority — internet thieves who don’t want to pay for anything, much less music they can hear on the radio for free, or rip off some piracy site.

Streaming services are running into the same wall broadcasters must deal with. We don’t want to pay for that which we can get free, but we also don’t want to endure a horrible listening experience in order to hear what we want for free.

They are adding advertising and trying to cut how much they pay for music.

Radio? We’re shooting ourselves in the foot, squeezing pennies out of a goose that could lay golden eggs for several more generations if we would be a bit less greedy.

What say you?

And for a totally different take on Taylor Swift and her spat with Spotify, check THIS out.