Rick Redbeard, Spotify, Free Deezer and the Rights and Wrongs of Music Streaming


An unexpected pleasure has been brought to The Moon thanks to that great institution that is Chemical Underground Records. Rick Redbeard is the lead singer of The Phantom Band but has released a solo album that showcases his "quieter, more introspective material" If Neil Hannon of the Divine Comedy fame singing, with a Scottish accent, acoustic numbers written by Malcolm Middleton, sounds like your cup of tea then check it out via the Deezer playlist below for free in most parts of the world  - with the major exception of the USA.

It was going to be a Spotify playlist but then Mr Redbeard pulled the album from Spotify as he did not "agree with their valuation of music" and pointed us to a blog post from The Trichordist Musicians POV: Spotify Isn’t Good for You for further explanation. However, when looking into this issue for this post I has found out that Deezer has launched "Deezer Discovery" which means that you can sign up for a free account and listen for free for 12 months and 2 hours per month thereafter with a few adverts. Previously, you were restricted to just 30 second clips. The playlist below will play the first track for 30 seconds then ask you to sign in or sign up. If you are a mobile subscriber already you will need to create a new Discovery account to play the tracks in full on your PC. If you sign in via Facebook then the billion odd Facebook users will be able to find out what you are listening to unless you select "only me" or "friends" during the sign up or in privacy/apps in Facebook.

They have stolen a march on Spotify, in that there is no need to download an app and there is no number of plays restriction. To download the album do go to: The Chemical Underground Shop and not iTunes, as it is 49p less and one would presume that more of it will reach Mr Redbeard. Below the playlist you will find lengthy musings on the streaming issue....


It is not hard to understand why an artist might make the decision to pull out of Spotify, especially when you look at these plays per iTunes download stats:

Zune
15,159 = $437.58 = .028 = 25:1 Itunes Song Download

Napster
30,238 = $479.07 = .016 = 43:1 Itunes Song Download

Rhapsody
50,822 = $668.57 = .013 = 53:1 Itunes Song Download

Spotify
798,783 = $4,277.39 = .005 = 140:1 Itunes Song Download

* these figures are from an independent catalog of 87 albums / 1,280 Songs - BEFORE the distributor’s cut/fee. The iTunes figure is based on the 70 cents independent record companies receive per download.

But apparently the amount the artist actually receives from iTunes is nine cents per download. Presumably Mr Redbeards album will be staying on Deezer as they are reported to pay double the Spotify rate - see this blog from a Spotify enthusiast. But itt does look like he has got the mobile rate and premium rate muddled up, as some records are only available to premium subscribers and therefore the lower rate must be for mobile subscribers, the Orange Deezer deal is for mobile streaming only they are not Premium subscribers. This does mean that at an estimated current pay out of 1 pence per stream The Moon is well on the way to the 47 plays required to match an iTunes download of each track of Mr Redbeards album. As the album costs £7:99 from iTunes and assuming they then take the same cut that would mean 38 album plays on Deezer would cover the iTunes payout, if it were 15 tracks it would be around 31 plays.  Premium subscribers pay twice the amount and I presume that Premium Plus subscribers pay twice that amount again, but then the mobile rate when they don't use their PC, making the average similar to a premium user. These ratios could become a lot less if the streaming rates continue to rise as quickly or quicker than in recent years:

"Spotify’s payouts to Merlin’s 10,000-plus indie labels rose 250 percent from the year ending March 2011 to the year ending March 2012" See evolver.fm

Also see the increases from 2010-11 released by Independent label Uniform Motion

It is rather complicated, as there is different rates for different types of subscriptions in different counties with different aggregators, but it does look as though the 5m and growing Spotify subscribers are actually paying a similar rate as a mobile Deezer subscribers so around 50 plays per iTunes download in 2012. The main reason Spotify streaming rates on average are much lower is that it includes the many free streams that pay out only a share of the ad revenue. So with the launch of Deezer Discovery it might be the case that the Deezer average falls or at least stops increasing so much.

There has also been the recent news news that the music industry has actually increased revenue for the fist time in decades despite the difficult economic conditions the world over. This has been driven by increased streaming revenue with 4 million dollars (for 1.23 billion views at 0.325 a cent each) paid by Youtube for Gangnam Style by PSY, used as an example. So how do we square the circle? Is it maybe that, as ever, the record companies are taking too much of this extra revenue themselves?


Spotify do claim that eventually their payments will increase, as long as their subscriber base keeps growing and it has been - 3 to 5 million during 2012. It is argued that the same was true of CDs until they stopped being a niche product.  I do think that they could also help by paying more for the first so many plays and less as a track becomes more and more popular, a kind of income tax in reverse. This would help new artists and independent labels, as well as encourage major labels to support new music more. This could also be the case for streaming via Youtube and Grooveshark as they could get a higher share of the add revenue or clicks per play.

That said there a few reasons why music streaming might well end up being rather good for artists and for music:

1. Music Streaming Drives Sales.

This is especially true of Spotify as presently they have 5 million subscribers out of 20 million active users, as of December 2012 and now with Deezer Discovery limited free streaming will further increase. On Spotify in the UK, free users can only listen to a track for free 5 times, so if they like a track/album and want to listen to it on their smartphone legally then they would have to pay for the download. Also, it allows fans to make much more informed purchases; it is doubtful that Oasis would have sold as many of their 3rd LP if they could have heard it a few times first and the same in reverse would hopefully be true about their last one. Fans are also more likely to listen to more music and therefore purchase more music that might well be more diverse. See Myth Dispensing: The Whole 'Spotify Barely Pays Artists' Story Is Bunk with anecdotal evidence that using Spotify increases the purchase of music in the comments, as I did before becoming a subscriber.

Grooveshark and Youtube have tens of millions of users and so are obviously best for sharing. Content is not as secure as Spotify or Deezer and is often uploaded without the consent of the artist but still for a fan to get an album on their smartphone legally or not they have to download it and sync it to the cloud. It is not hard to imagine that most people will soon not want a PC full of MP3s or have to manage them in the cloud, just like they don't want to have shelves full of CDs and DVDs. It does look as though people will turn to subscribing to streaming services more and more and that critical mass will be achieved to make it viable for artist to earn a fair amount from streaming. This is apparently already happening in Sweden where a third of the population are now Spotify subscribers ,and some artists are actually earning the majority of thee digital income from streaming -  such as Jonathan Johansson  and his material is also fully available on Grooveshark and Youtube.

2. Streaming is Good for Longevity

This might be hard to believe it you check the streaming charts which are pretty much in line with the Top 40 chart, but streaming has brought the cost of getting new music to people a lot easier, especially in combination with social media. So record companies really ought to be able to spend more time nurturing new artist and not lumbering the with too much debt. It might also stop the number of "crash and burn" artists, as they will not earn so much in such a short space of time. If an artist does make music that people will want to return to for the rest of there lives then they are likely to still earn a lot but just over decades rather than a year. Established artists should also benefit from subscribers paying to stream albums that they can not be bothered to get out of the box in the attic to burn onto a PC and then copy onto their smartphone. I may well have paid Chemical Underground the equivalent of a iTunes album download for the Delgaldos Petroleum album in Spotify and Deezer payments, the CD of which is now in a box in that garage along with the single releases.

3. Streaming is Good for Expanding your Fan Base

This is the most obvious advantage of streaming. Grooveshark is the best for fans to share the albums they love with their friends or followers. In the past it would he been done via cassette recording now far more people are sharing, and from that sharing they will increasingly then sync the album in a platform that they subscribe to or download and sync via the cloud. Youtube is obviously a great way to promote single tracks that for some such as PSY or Lana Del Rey one track/video can actually earn them a fortune.

The Venerable Billy Bragg as recently criticised Spotify for its radio service as it just technology recommending the same kind of music to users, just like last.fm etc, which he compared to the diversity that was found on the John Peel show and can still be found at BBC 6 Music. Far more powerful however are the recommendations from your friends and people you follow such as other artists. It is also so very easy these days, just a click of a "Like" button. It is definitely true that I am is listening to more music and more diverse music since starting to to use streaming services. So hopefully artists will be listened to more on average, and earn as much, just not as much per fan and income will be more evenly distributed among more artists. With more fans there are other ways to earn a living such as:

4. Streaming is Good for Touring

More fans through streaming and sharing makes touring more viable and is a major income source for artists, especially for established artists. For new artists streaming and social media make it so much easier to get their music out there. Also, for established artists it must be frustrating to go on tour with your 5th album when many of your "fans" just want to hear the songs from your hit 2nd album, especially if you think your new material is better or at least as good. Streaming should help with this, as it will just be so much easier to listen to new material and via social media to let people know about it and just keep up the engagement with fans. For the most established artists touring will generate extra income by the fact that fans won't be dusting off old CDs after reunion shows, but are likely to start streaming old albums and so paying again. So in the long run, streaming is likely to reward the artists that produce music that is remembered, consistent in quality and are good live. This should be good for everyone and good for music.

Conclusion

So the Moon would recommend that Independent record labels should follow the "Swedish Model" and allow there material on streaming services and on the likes of Spotify and Deezer, allow streaming to start before the release date at the same time as the reviews appear in the music press,. They could also learn a lot from an old chap called David Bowie. With Youtube it best to limit content to just your videos of your recorded material. The same could be said for Grooveshark, though that is easier said than done by all accounts. They do need to come up with a system that at least allows time for an artist/label to object to new user generated content which then stops it going live, and they need sort it out with the majors and bring in payment per play for their subscribers. Independents should get their own agreement in place with them so they at least get paid for there content, but also work to limit the content to singles initially at least unless Grooveshark come up with a more secure platform. That said making your material available to the 20 odd million mainly American users might be worth the risk.

Grooveshark is great for finding unreleased material and it s a great way for an artist to release material that a record label will not. It can also be great for new artist to get their material out there. It may be that Gooveshark takes this niche role.

Spotify does now need to match the Deezer Discovery offer and become a web app. It will be interesting to see how their streaming rates compare and number of active users/subscribers in a year or so and what Google will offer.

Artist need to find out what the services are paying per subscriber stream and compare that to iTunes revenue. They should also regard every non subscriber stream as a free advertisement for their music, for which they actually get paid a slice of the accompanying advertising revenue.

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