from Sam Rosenthal | Friday, September 23 2011

Projekt is no longer available at Spotify, Grooveshark, Rdio, etc. On July 29, 2011, I instructed IRIS (Projekt's digital distributor) to remove all Projekt Records releases from all-you-can-eat digital services such as Spotify, Grooveshark, Rdio, etc. The tracks are down; I am ready to talk about it.  Century Media pulled their material August 9, Prosthetic Records became the third reported label to remove their material September 20. It is good to see other labels have reached the same conclusion I have about these services: they are not a viable way forward for the music industry. What is our objection? Century Media put it nicely: "Obviously it is ultimately up to the music fan and consumer, how they access their music, whether it is buying, streaming or stealing. There needs to be awareness though, that how you will consume your music has direct consequences for the artists, who we are all trying to support." There is the crux of the problem. Artists would like fair compensation for our creations. I believe in a world where fans value the music they enjoy, and are willing to put some of their money towards it. Paying artists is THE RIGHT THING TO DO. There is value to music, just as there is cost to creating music. Personally, I believe in creativity, art, value, doing the right thing. Spotify claims, "The overwhelming majority of our indie label partners are thrilled with the revenues we're returning to them." Honestly, I doubt that is true. Spotify further claims to be "monetizing an audience the large majority of whom were downloading illegally (and therefore not making a penny for the industry) before Spotify was available." Yes, it is true that torrents gave no artists any money. Spotify gives all artists almost no money. For a stream on Spotfy.... NOW READ THIS CLOSELY..... on average $0.0013 is paid to Projekt's Digital Distributor. 5000 plays generates around $6.50. In comparison, 5000 track downloads at iTunes generates $3487. To be clear: I am not suggesting that every stream would have been a sale at iTunes. Believe me, I understand the reality of the music business. I am providing that as a comparison for you. Let's look at this another way: To earn the U.S. monthly minimum wage - $1160 - 892,307 plays a month are needed at Spotify. This is not a viable number for artists. You have probably seen this article in The Guardian; over a five-month period, 1-million plays of Lady Gaga's hit 'Poker Face' earned just $167. Really. I talk about this with my 9-year-old son; he fully understands we all have a basic right to earn a paycheck for our work. See this chart for a comparison of how much is earned via different sales formats. To earn the U.S. monthly minimum wage - $1160 - 892,307 plays a month are needed at Spotify. This is not a viable number for artists. It is not that we are even aiming for the minimum wage. We only desire something equitable. $0.0013 per play is not. In the world I want to live in, I envision artists fairly compensated for their creations, because we (the audience) believe in the value of what artists create. The artist's passion, dedication and expression is respected and rewarded. Spotify is NOT a service that does this. Projekt will not be part of this unprincipled concept. I hope our fans continue to purchase music via sources that give the artist a fair payment for their work, such as iTunes, brick & mortars, the Projekt.com website, etc. As always, I thank you for supporting the music. If you want to link to this release on-line, it is posted here.

On Friday September 30, Spotify responded, here

Spotify Responds to the Projekt Records Pullout...   On Wednesday, Brooklyn-based Projekt Records pulled its catalog from Spotify, while blasting the company as 'not a viable way forward for the music industry.'  Now, Spotify has offered this detailed response to Digital Music News, which includes direct challenges of several parts of the Project missive. We asked about specific, details payouts shared by Projekt, in particular a $0.00029 per stream royalty.  This was Spotify's response. "Spotify does not sell streams, but access to music. Users pay for this access either via a subscription fee or with their ear time via the ad-supported service [just like commercial radio] - they do not pay per stream. In other words, Spotify is not a unit based business and it does not make sense to look at revenues from Spotify from a per stream or other music unit-based point of view. Instead, one must look at the overall revenues that Spotify is generating, and how these revenues grow over time."

On Monday, October 3 I sent this response to Digitial Music News

Projekt Keeps Fighting; Calls Spotify an "Unprincipled Concept..."   What started as a pullout is turning into a battle, and lots of indies are paying attention. And now, round two: just this morning, label founder Sam Rosenthal continued to blast Spotify for devaluing artists and their music, while deliberately misleading indies with 'nonsense' and secrecy. But Rosenthal also corrected some math. In his letter to Digital Music News this morning, Rosenthal also responded to questions about his estimated per-stream payouts. It is not $0.00029 per play, as he previously mentioned, but an upwardly revised $0.0013. Here's the letter... _______________ Hi Paul ------ To be clear, based on recently pulled data, Spotify paid Projekt $0.0013 per stream. "Better," but still not a viable number. As to their response, it is interesting how they turn this into an accountant's game of obfuscation, while ignoring the over-arching reason why labels like Projekt pull their music from all-you-can-eat services: In the world I want to live in, I envision artists fairly compensated for their creations, because we (the audience) believe in the value of what artists create. The artist's passion, dedication and expression is respected and rewarded. Spotify is NOT a service that does this. Projekt will not be part of this unprincipled concept. Specifically, to the contention that, "Spotify is not a unit based business and it does not make sense to look at revenues from Spotify from a per stream or other music unit-based point of view." This concept is nonsense (and the sentence does not even make sense). I look at how much Projekt is paid by Spotify, divide by the number of tracks streamed and get a per stream total. This makes sense to me. What I see is $.0013 is not viable compensation for using artist's music as fodder to sell their service. "Spotify does not sell streams, but access to music." Personally, I like access to coffee, Spotify's rate requires 3,461 streams to buy a mocha at my local cafe here in Brooklyn! : ) Artists deserve fair compensation for their creations. For these and other reasons, Projekt is no longer available on all-you-can-eat services. I thank everyone for supporting music and purchasing in ways that fairly reward artists for their creations. Best, Sam Rosenthal

A few final thoughts

I understand that many fans feel the "exposure" Spotify offers is worth the almost non-existent payment They tell me that Spotofy is a way to build a new fan base for the music. I understand that, AS A CONCEPT. However, comments from fans of Spotify consistantly include some variation of the phrase, "I no longer buy music now that I can get it for free on Spotify." While Spotify claims to have caused a decrease in piracy, in my mind they are just creating a form of piracy with the appearance of being Legal. Their claim that they provide compensation to the artists causes listeners to assume it's honest and fair compensation, and therefore acceptable. Spotify is just a new variation on the "Free" price-point. Most users do not pay to stream music, they take the route with the ads (which means even less royalty to the artists). People argue that Spotify is no different than radio, which is incorrect. As Projekt fan Greg Clark posted on my Facebook page, "Radio pays a royalty, but you can't choose what the station plays." Exactly right. Spotify allows you to chose what you want to hear, when you want to hear it. That is not like radio or Pandora. The other meme floating around is that artists make most of their money off Touring and Merchandise, so who cares about the royalties!? This might be true for massive artists (IE: Lady Gaga, Rolling Stones, Michael Jackson, U2) but it certainly is not true for us independent artists (I suspect that 90% of the income that sloshes around the music industry is earned by the top 10% of the artists. This might skew the belief that musicians are all rich, spoiled, and living in a palace. Artists like Metallica and Gene Simmons did not help anyone with the way they made their case about illegal downloads.) I am talking about what happens to the rest of us, the indie artists that you love and support. Ask your average Projekt artists what they make touring and they will most-likely roll their eyes and say, "We break even, at best." Suggesting "the new model for artists in the music industry is earning a living from touring and selling condoms with their logo on it" pushes the negative effects of Spotify's compensation model onto concert goers. It is easy, but irresponsible, to expect the consequences of one's actions to be mopped up by others. Royalties are the main way that most Projekt artists earn money. Replacing that income stream with $.0013 isn't viable. Here's my analogy: Let's say you earn $50,000 a year, and your new boss (Spotify) says your salary has been reduced to $200 a year. However, if his customers start subscribing, he'll pay you $800 a year. Would you be able to keep paying your rent and afford your son's shoes? The answer is "No" and you would not keep that job. HOWEVER, a lot of people are arguing that artists should keep the job. Not workable. Scott Cortez of Lovesliescrushing put it this way: "Spotify is like someone stealing your record collection and some dimes fall out of their pocket onto your floor as they leave. Forget that." October 27, an interview with Dominion/Terrorizer interview @ Terrorizer "Music is just the chum, for Spotify to take in the ad money. They're just a few steps above illegal downloads, as far as I am concerned." "There are too many unworkable business models out there. They expect us to say 'yes' to everything, because they sell us on the idea that we are so desperate for exposure. I'm not buying it." November 27, 150 words at The Music Void Q: Are streaming royalty payouts to artists fair and equitable when compared to other royalty pay out rates? Or should streaming royalty payouts be increased? Sam: In the world I want to live in, I envision artists fairly compensated when the audience listens to their creations. Spotify and the other streaming sites are not offering rates that respect the artist's passion, dedication and expression. Their rates are not fair and equitable, thus I removed Projekt's music from these sites. Music cannot be the chum to line their pockets and fuel their eventual IPOs. I agree that streaming royalties should be increased, but it will require a different model. Free is not a price point that works for creative endeavors. I envision a world where the artists I love receive fair payment for creating ephemeral objects that enrich our lives. I am glad people are having these conversations and asking these questions. Thank you for supporting artists with your digital and physical purchases. - Sam Rosenthal, Projekt Records, Brooklyn NY NPR - WEEKEND EDITION (THE RECORD with Audie Cornish) 12-4-11 | Listen Here A transcript of a portion of Sunday December 4, 2011 THE RECORD on NPR ---- as Spotify's CEO David Ek avoids my points. @ 2:25 Audie: One of the big criticisms that we've heard from artists is that the royalties they get from Spotfy are so low, that it might as well be piracy. Davd Ek: Yeah, I do want to address that because i feel that its important to mention it is still early days and Spotify is only two years in (using the service almost three) but in that short period of time now we have become the second largest revue generator for the labels in Europe. And we've paid out more than $150,000,000 back to the music industry. @ 3:05 Audie: When I was on-line I also discovered an artist, Sam Rosenthal, who is the founder of a label called Projekt Records. He recently wrote on his blog that 5000 plays on Spotify generates a little more than $6 and in comparison 5000 track downloads at iTunes generates for him $3400. I mean, it's a big gap there. Davd Ek: Yeah, the first thing I will say is those numbers definitely sound way off, but again what I sort of emphasize is we're paying the labels we don't pay the artists directly. I also want to say that this model is very very different from the one that iTunes and other music players have had in the past. And what Spotify really is changing here is we are talking about access to music. I mean we have 2,500,000 customers who are all paying us monthly access fees. If I had been in the studio, here are some notes on what I might have brought up in response.... @ 2:25 Audie: One of the big criticisms that we've heard from artists is that the royalties they get from Spotfy are so low, that it might as well be piracy. Davd Ek: Yeah, I do want to address that because i feel that its important to mention it is still early days and Spotify is only two years in (using the service almost three) but in that short period of time now we have become the second largest revue generator for the labels in Europe. And we've paid out more than $150,000,000 back to the music industry. Sam comments: 1) I would like to see evidence that Spotify "royalties" are actually #2 in Europe. My guess is he included the big upfront bribe to the majors in that number. 2) How much in actual "royalty" was generated by listeners using Spotify? IE: how much of that $150 Million convereted into royalties and will be paid out to Artsts? My guess is $150 Mil is one of Ek's typically deceptive numbers. 3) Ek sounds like he thinks he works for "the labels" and "the music industry" and implicitly the majors, and explicitly not the artists. 4) The question was about the rates being so low (per stream) that they might as well be piracy. Ek completely skipped the question, when he answered. @ 3:05 Audie: When I was on-line I also discovered an artist, Sam Rosenthal, who is the founder of a label called Projekt Records. He recently wrote on his blog that 5000 plays on Spotify generates a little more than $6 and in comparison 5000 track downloads at iTunes generates for him $3400. I mean, it's a big gap there. Davd Ek: Yeah, the first thing I will say is those numbers definitely sound way off, but again what I sort of emphasize is we're paying the labels we don't pay the artists directly. I also want to say that this model is very very different from the one that iTunes and other music players have had in the past. And what Spotify really is changing here is we are talking about access to music. I mean we have 2,500,000 customers who are all paying us monthly access fees. Sam comments: 1) Audie clearly said that I am an artist and the record label. Ek first respond about paying labels, not artists (which is nice, but irrelevant since I serve as both). Some sort of obfuscation to perhaps imply the label took some of the artist's money????? Fact is $.0013 is what Projekt was paid per stream, from Spotify. Other labels I know have reported the same. 2) He never addresses the big gap between $6 and $3400. 3) He avoids the gist of the question, with that "access to music" nonsense, again. 4) He was asked about what the artist is paid. He says it "sounds like" my numbers are off, then turns it into a big picture discussion. Fine, big picture is wonderful. There is a place for that. It seems to me that the creators - the artists - are the chum that he uses to line his pockets. It is great to see that the meat of Audie's challenges to Spotify come from points I have brought up here on my blog and elsewhere. Ek, once again, avoids the hard questions. I guess that's his job though. : ) December 9th CNN ARTICLE: Spotify founder: I'm not music industry's savior Wow, Seems Ek lifted my language, nearly verbatim, to try to make it sound like they are paying fair rates! Spotify CEO Daniel Ek: "I don't think we see ourselves as the savior of the music industry," Ek noted. "We are passionate about making it so that users enjoy the music that they want to enjoy but at the same time fairly compensates artists. That's not the same as saving the music industry." Ek must have studied his Orwell. Say the opposite of what is true, so people will think it's true. December 22th Digital Dilemma in Auxillary Magazine #19 I wrote a full page editorial that gathers my thoughts on Spotify and illegal downloads. On page 4 in pdf format. A few quotes: Spotify (and the other streaming sites) claim they are legal alternatives to piracy. If you ask me, Spotify is just a few steps above illegal downloads. They operate with a flawed business model; they have no pathway towards compensating artists respectfully. Music is the chum, for Spotify to line their pockets. Those CEOs and "fans" who live by this meme are really saying, "I want to listen to your music, but I don't want to pay for it. I am going to pass the responsibility for compensation down the road to some other customer. You need to find some new way to make a living off THAT person's enjoyment of your art. Oh, but keep making music, because I want it for free." Join the conversation on my Facebook page. Image Download for your article: Sam Rosenthal Web Res Press Pix High Res Press Pix Web Res Press Pix High Res Press Pix High Res Web Res

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Projekt Pulls Out of Spotify / Labels pull music from Spotify / Indie's refute Spotiy's claims / Spotify Is Good For The Music Industry, Its CEO claims.