The Apple Letter

https://on.wsj.com/32jk1Iq

The people on Spotify are much more active listeners.

The debate has been about money when it should always be about reach, have enough reach and there's plenty of money. In other words, the public has spoken, if you love music, if you just can't get enough of it, you're on Spotify. Never mind that Spotify is the company that continues to push the envelope, never mind this week's car device, how about the extra playlists generated based on your listening history...far superior to Discover Weekly and Release Radar, and the other companies haven't even touched those.

So, Apple pays a penny a stream!

But that's just because there are fewer streams. Apple is for the casual listener, subscribing to the service because they trust Apple, and are scared of laying down their credit card for Spotify. Also, Apple has a great reputation that it just works, and that pays dividends, i.e. signups here.

But the stealth operator is Amazon, which released opaque numbers today. But bottom line, with Amazon it's all about the bundle. Apple is trying this, but failing, it's just not enough of a discount. It is with News, but the further bundles of all their services...they don't incentivize anybody to upgrade, you've got to give me more off.

So Amazon sells you Amazon Prime, which every Amazon customer must have, for the two day delivery, its cost is a no-brainer, and it comes with all that video for free, and it comes with hobbled music for free. And, got to give Amazon credit for offering a higher res music option, which Spotify says it's going to provide, but it hasn't happened yet. In other words, you'd pay for Prime even if nothing else came attached, but you get so much more! Furthermore, Prime also sells so many other streaming platforms... Many people sign up for Disney+ and HBO Max and other channels via Amazon platforms, and therefore Amazon gets even more revenue, read this article:

"How Amazon Strong-Arms Partners Using Its Power Across Multiple Businesses - A heavyweight in retail, cloud computing, digital advertising, streaming and smart speakers, the tech giant compels vendors in one market to engage with it in others": https://on.wsj.com/3tlF9tv

Yes, this article is behind a paywall, but just like you're paying for TV, you'll find you'll have to pay for news. Did you see Reuters just went behind a paywall? This is the evolution of the internet...everything for free? Fuggetaboutit!

Meanwhile, knowing margins are so low on music, and the business doesn't scale, Spotify has diversified to stay alive, podcasts and more, and they're winning here too!

"Spotify podcast listener numbers will surpass Apple's this year": https://bit.ly/3wXyBUh

Apple had a first mover advantage and squandered it. Apple didn't need podcasts, Spotify does, amazing what hunger will have you do.

So, instead of bitching about Spotify, you should be embracing it. The war has been fought, Biden's bringing home the soldiers from Afghanistan, can't you understand that physical and files are dead? (Don't e-mail me about the de minimis numbers of vinyl or the declining numbers at the iTunes Store, that's the definition of an ostrich, someone whose head is so buried in the sand that they can't see the overall picture.)

Spotify can't increase payments, IT CAN'T! If it does, it will go out of business. But try explaining math to a musician, never mind the inane reporters in mainstream publications who eat up and spew out this crap. And in the Apple letter the company says:

"Like others, we have looked at alternative royalty models. Our analysis has shown that they would result in a limited redistribution of royalties with a varied impact to artists. Per play rates would cease to be the same for every play of a song. But more importantly, the changes would not increase what all creators earn from streaming. Instead, these changes would shift royalties towards a small number of labels while providing less transparency to creators everywhere."

Every study says this. I'm not against trying it, and maybe Apple doesn't want to pay for the infrastructure, but Deezer has...but the major labels won't allow them to try it, because the greedy labels hate change when in this case their partner says payments to them will actually go up!

So if you tie up with Apple, get on their homepage, the results will be less, whoever embraces your music will embrace it less. (Of course there are active users on Apple Music, but I'm speaking generally, you get it...or maybe you don't.)

Also, Spotify has its free tier, which killed piracy overnight (10% of the people will never pay, but that same 10% never bought physical either...you know, these were the people who needed to borrow your records to tape.) Free dilutes overall payments, because the rate to rights holders is lower. As is the rate on Pandora and other streaming radio platforms, as opposed to on demand. But you can't teach the truth to someone categorically against it. Hell, what are the odds people can understand how streaming works when they won't even get a Covid-19 vaccine. Yes, I'm so right I'm going to DIE rather than accept the truth!

You're better off getting a lower rate for more listens on Spotify. Because more listens means you have more dedicated fans, and they are what support your career, not those who come for the hit and then disappear. Active, not passive users, never forget it.

And if you're bitching about the per stream rate...you're probably not making that much to begin with, because if you've got hundreds of millions of streams, you're making serious dough.

Also, Spotify has said that the rich are not getting richer on its platform. That the overall share of streams/revenue to top artists has been declining! But rather than acknowledge that and have a sliver of hope, people on the bottom can't stop bitching that instead of their royalty payment being $10, it should be $12. Come on, it doesn't make a difference, $2 won't even buy you a cup of coffee!

As for all those articles saying so and so artist can't survive in music... They wouldn't have had a career at all in the old system, they wouldn't have even been able to participate! But, this generation believes everybody should get a trophy, everybody should win. And the boomers hate change, they keep yearning for the past, many are now adopting streaming, but they're the last on board. They'd prefer to play their favorite CDs, when the truth is both of my computers and my car stereo are CD player free.

So on paper it looks like the one cent per play at Apple Music is superior to the payment at Spotify, but it's not.

Data and transparency are the ethos of the era. I applaud Apple for releasing this information. But please, you must read it all in context, as opposed to applying the Steve Jobs reality distortion field.

And, you must applaud the huge numbers of streaming subscribers, it's good for music, it's good for acts. You can reach people all over the world for almost nothing. If you start a fire, people can feel the heat and go to their platform of choice and immediately listen to your music. And never forget, the recording is just the beginning.

It's hard, I know. But the smarter, the more educated you are, the better you play the game, only losers sit around bitching about streaming payments that they don't fully understand anyway!


--
Visit the archive: http://lefsetz.com/wordpress/
--
Listen to the podcast:
-iHeart: https://ihr.fm/2Gi5PFj
-Apple: https://apple.co/2ndmpvp
--
http://www.twitter.com/lefsetz
--
If you would like to subscribe to the LefsetzLetter,
http://www.lefsetz.com/lists/?p=subscribe&id=1

If you do not want to receive any more LefsetzLetters, http://lefsetz.com/lists/?p=unsubscribe&uid=0eecea7b60b461717065cbde887c8e25

To change your email address http://lefsetz.com/lists/?p=preferences&uid=0eecea7b60b461717065cbde887c8e25




-- powered by phpList, www.phplist.com --