Spotify v Thom Yorke; new business model case study

I spent yesterday dwelling over that new Spotify v Thom Yorke + Nigel Godrich row and just kept thinking: “ugh, the grey area” but didn’t stop to think about it rationally until late in the evening when I had run out of words to explain.

It’s simple, though. Thinking about all the things I’ve used Spotify for both as a consumer and a marketer, I leaned more towards the streaming service.

I do understand Thom Yorke’s frustrations. Completely! and I do agree what Spotify pays the artist per stream is a mere change and definitely not near enough to work as a source of revenue for a less-than-global-megastar artist. And I can’t tell whether Spotify can increase that a little bit, a lot or not at all. I’d have to look at their whole financial plan as I have no clue how much it costs for them to run the service! I do, however, have more than just an idea of what they can do marketing-wise to counterbalance this story (and, since we’re at it, to enter the South American market. But I’ll come back to that at another instance).

But I think Yorke is being a little too radical and irrational: “For me In Rainbows was a statement of trust .people still value new music. That’s all we’d like from Spotify – don’t make us the target” – Radiohead is NOT “new music”. They are part of the global superstars team that can afford to operate like this because they have an enormous fan base which would actually think it was cool to pay for their album. But use that model to every artist on the planet releasing an album and see if people are going to pay for all of it too.

First of all, most people can’t afford to buy all the music they want to listen to. I’m one of them! At the moment, I can’t even afford my Spotify subscription but it’s a priority for me. Second of all, the novelty element of such move will cease to exist, therefore it won’t be as popular and seen as “cool” anymore.

The point is: Spotify and other streaming services are not substitutes to the old CD-purchasing habit. They simply spotted an opportunity in this new consumer behaviour shift from purchasing to simply having access to the music. Or at least that’s what they tell everybody. Maybe what they really did was invent this shift to make people believe that’s what all the cool kids are doing now. But let’s not ruin the magic and go back to the row subject.

As I said, I state my opinion from both my consumer and music bizz professional points of view. And I believe that the many different features and promotion opportunities Spotify offers outweighs the fact that most artists cannot make significant money directly from the service.

Superstars can treat Spotify as one more source of income even though these are the ones who actually do make money from CD sales, merch, gigs, sponsorships, endorsements and all; but small artists should view it as one more promotional tool.

B2C features:

As a consumer, I use it to discover new artists based on Spotify’s “suggestions”, listen to all the albums I want to as I can’t afford to buy them all, especially the foreign, imported ones, easily create playlists according to what I want to listen to. Not to mention all the apps that you can add – I don’t use many, mostly TuneWiki to read lyrics that catch my attention and Tunigo when I need a soundtrack for something like “studying”, “working” or something else that requires something not as distracting as what I’d normally listen to. Bandsintown I use on my phone, LastFM I have just to keep my profile going without actually having to use it – their catalogue is not that great and the website is quite messy).

And there are many more that add to listeners’ convenience, add value to Spotify and promote the apps’ services/websites/publications/whatever they offer (ie. Pitchfork, Guardian, Billboard, Songkick, other music mags, ticket agencies, labels, etc).

Now, Spotify social:Β You can show off to your friends on Facebook sharing that hip playlist you made (or hiding the “guilty pleasures” one), suggesting that latest track you became addicted to, send a song to the object of your affection and see if they get the message, make collaborative playlists with your friends, etc.

B2B

Spotify social for business – I’ve used it in several different ways and I’ll share two of them:

1) I worked for an indie label for a few years and they took their catalogue off Spotify for a while believing that offering it all for streaming was jeopardising their music sales.

They changed their minds though and, to encourage people to stream it rather than download illegally (or access it in whatever way that wasn’t actually paying for it), I created a user account for the label, divided the catalogue into artist playlists in order to make it easier for listeners to find what they wanted and also made a collaborative “fan faves” one (that didn’t really go anywhere, I have to say. It would’ve probably worked better for a different genre) and a new releases one to which listeners could subscribe and be notified everytime the label put a new album out.

The catalogue was mostly made of Brazilian jazz and bossa nova with some electronic and psychedelia and the label is a well-known reference for Brazilian music abroad.

When the BBC broadcasted Michael Palin’s documentary on Brazil over the course of four weeks on Wednesday nights, while he traveled around the country and shared information about the places he was visiting, on Thursday mornings I’d post a text about the latest episode talking about the music scene of that area. And for each post I’d craft a specific playlist featuring the songs and artists mentioned in the text.

At the time, we were promoting a new band whose debut we had just released and the popularity bars on the streaming service quickly increased.

2) I’m currently working with a pop duo who’s self-releasing their album. If it’s hard to get journalists’ attention emailing from a record company, imagine from your personal email address!

Either way, we’ve got to make things happen.

The plus side of working with pop music is that there is room for A LOT of creativity (and when the artist is independent = low budget!, you NEED that creativity…). And one of the main issues of promoting a new band without the backing of a label is: how do you get people to listen to them without major ads, radio station “agreements” and such?

I make a lot of playlists on my personal Spotify account. And one of them was filled with the songs I’d like to listen to at a party and I added one or two tracks from this duo.

It was actually a strike of luck that one of the main sources of pop music news on the web started following it (which also attracted their own followers to subscribe to it too), but I add a few songs every once in a while and, to make sure they listen to this particular band, I added a couple more tracks and soon will start emailing them to remind them of their existence and let them know they’ve got a new album coming out.

The interface: among so many streaming services, it’s got the tidiest, best and most user-friendly interface and it now offers a web-based version of it too (UK-only, I recently learnt) so you can listen to your playlists in any computer even if it doesn’t have the software nor it allows you to download it.

Anyway. Maybe Spotify should work their CSR and show some investment in new talent somehow. Here are a couple of ideas of what they could do:

– new band competition for those who already have an album but are self-releasing and offer to put the winner at the top of the “discover” page + promote their streaming 1 week prior to album release. There are a lot of details to consider, but it’s an idea!

– work with a music charity for underprivileged children orΒ create a digital-inclusion programme for them (that might be a good idea now they’re entering the Brazilian market)

Spotify might have responded decently to Thom Yorke’s remarks in terms of convincing music consumers and Yorke is one of music’s biggest influencers so let’s see what’s next for this new feud.

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