Should Indie Music Artists Deal With Spotify and other Free Services?

To Spotify or not to Spotify?

That is the question, if you’re an independent singer-songwriter or band who is trying to make ends meet and to get discovered. Spotify, to the uninitiated, is the largest mp3 streaming service in the world. And since they launched in the U.S. last year, many artists and music industry professionals have chimed in with whether this (and streaming services in general) is good, bad or ugly. Lots of these artists — particularly indies, who don’t have a major corporation going to bat for them — cried foul. Spotify responded, and the debate raged.

For more backstory, see Rolling Stone’s The New Economics of the Music Industry: How artists really make money in the cloud — or don’t and Noisetrade founder Derek Webb’s article Giving It Away: How Free Music Makes More Than Sense.

Derek Webb compares the business model of his Noisetrade (which offers free downloads in exchange for submitting your email address and zip code to the artist) with that of Spotify, and concludes that Noisetrade is the better deal for bands (Noisetrade also presents music lovers with an option to “tip” the artist and to give them free promotional support through social media. In addition, the artist receives the email address and zip code of everyone who downloads their product. This helps with email marketing and even tour-planning).

Is he right? Should you do both? How does each compare with the more traditional model of selling downloads for a set price (like through iTunes)? Here is mine and Kristen’s personal scorecard for our modern hymn “My Song In The Night,” which you can download for free from Noisetrade in the column to your right, or stream for free on Spotify:

• “Tip” money from Noisetrade (5 months): $40.00
• Spotify artist royalties (3 months): $0.42.

Everyone is confused over the actual royalty rate on Spotify, based partly on the fact that songs seem to generate a higher royalty if the listener is a Spotify subscriber versus someone listening to the free version of the service. Most of the musician bloggers I’ve read have thrown around figures like $0.0001 per stream and $0.00029. The royalty statement Kristen and I received indicated that Spotify paid various amounts per stream of “My Song In The Night,” but gave no indication at how they arrived at these differing amounts:

• $0.1609 per stream for some streams
• $0.02474 per stream for some streams
• $0.0101 per stream for some streams

Those figures beat the $0.0001 and $0.00029 figures I’ve read elsewhere, but of course are still quite a bit less than a penny per stream. This is all for the sound recording royalty — theoretically BMI should be sending us a statement and check for the songwriter royalties from Spotify at some point too, although I have no idea when or how much that royalty rate is. I would guess it will also be a matter of cents on the dollar.

During this same time period, we also made a few dollars in iTunes even though we actively promote the free download through Noisetrade. Some people simply prefer downloading from the iTunes brand, even though it costs $0.99.

Finally, we made a few cents through other services like Napster, and we gave away about 1000 downloads for free through the Sojournmusic.com Radio iTunes podcast. So monetarily, it seems like Noisetrade is the clear winner for us, iTunes is #2 despite the fact we didn’t even promote that we were on iTunes, and Spotify is a distant third. But now on to some intangibles:

We Give “My Song In The Night” Away For Free. 
Our primary goal was not to make money but to share the gifts we believe God has given us and to fulfill the mission he called us to, which is to give his Church the best songs for worship that we can give. This isn’t to say we wouldn’t sell an album — we do have to eat, pay our mortgage and things like that. But when we can give away a song or an EP, we’ll do so.

Also, speaking of mortgage, food and other bills again, we do make money from CCLI when churches sing our songs in their services. Last year our CCLI royalties came in much higher than the figures quoted above, and even a bit higher than mechanical royalties from the sales of the various albums that include our Sojourn songs, and from money Kristen earned from leading worship at conferences, retreats and other live singing engagements. So if giving some songs away can put them in the hands of more worship ministries, who then lead those songs in services, it helps defray the cost of our recordings and other music expenses.

Therefore, the fact that we made any tip money at all from Noisetrade was a nice bonus. All of our promotional efforts centered on the fact that we’re honored for people to simply download “My Song In The Night” (and our upcoming EP) for free. We are grateful for the tips, and we’ve decided to always pour tip money back into our recording budget so we can bring you more worship songs. But if we’d asked people to consider leaving a tip, as some bands do, we might have even made more money through Noisetrade. So let’s increase the score in Noisetrade’s favor.

But We’ve Stacked The Deck In Favor Of Noisetrade Anyway
We chose to make Noisetrade the primary way we let people know about “My Song In The Night,” which is why we’ve embedded the Noisetrade widget in our blog. If we’d just thrown it up on Noisetrade but not announced it (similar to how we used iTunes) then we’d have had much less success on Noisetrade, and perhaps much more on iTunes or Spotify (if we promoted either of those as the primary way to hear our song). Then again, if we hadn’t uploaded “My Song In The Night” for free on the podcast or on Spotify, we’d have had more Noisetrade downloads, and possibly tips.

So Are You Saying “Don’t Mess With Spotify”?
No. You need to prepare for the ever-increasing reality that many people prefer streaming to downloading. I now see occasional tweets for FREE downloads (like through Noisetrade) with phrases like “This is so good I bothered to download it.”

This is radical: It has now become a bother to some people to have to download FREE mp3 files, even if they have many gigs of storage space and high-speed internet. A few years ago, they used to drive to a brick-and-mortar store and pay $18 for a physical CD, which they had to store on a shelf. Now, it’s too much bother to hit the mouse a few times and store cheap or free music files in iTunes, an iPod or some other folder/device. They just listen to songs on YouTube, Bandcamp, or a streaming service like Spotify.

Spotify Playlists
As a listener, I love Spotify. It’s a great user experience. I especially love how easy it is to create playlists of songs. It works almost exactly like playlist creation works in iTunes, but the benefit here is you can share the link to your playlist. Anyone on Spotify (even those with free accounts) can then listen to your entire playlist.

How is this good for you as an artist? You can create playlists that feature your own song. Include other good songs, from a variety of artists.

• Include artists much bigger than you — their name value may get people to listen to your playlist.
• Include artists smaller or in the same position as you — they may promote your playlist to their own tribe, because it helps them as much as it helps you.
• Most of all though, make sure all the songs are good, and that the playlist flows well. You don’t want your song to be connected to a stinker of a playlist.

Kristen and I did this very thing in our 30-song My Song In The Night Worship Music Spotify Playlist. And we do it with seasonal playlists, like our current Lent Playlist — one song for each of the 40 days of Lent.

Facebook Integration
Because of Spotify’s deep integration with Facebook Timeline, whenever someone on Facebook listens to your song, all of their Facebook friends see it. That’s a good opportunity. The advantage of this over Noisetrade’s integration with Facebook and Twitter is that it just happens. You listen to a song in Spotify, and it turns up in the Facebook Timeline. The user/listener doesn’t have to click a Facebook button, type a message or anything like that.

I’d guess, however, that this Timeline listing is less valuable than the kind of status update that listeners can send through Noisetrade if they choose to do so, since it is less prominently displayed in Timeline.

But why is this a good thing at all? Why do you want lots of people to know that they can listen to your song for free? Spotify claims that the kind of people who listen for free and never buy albums are people who were formerly pirating mp3s anyway. So isn’t it better for the artist to get a small royalty and social media promotion than to get nothing at all?

I think this is partly true, although it’s too big a stretch to say that Spotify doesn’t cut into album sales. Ideally, when people discover music on Spotify that they love, they will then purchase some of that artist’s music on their website, iTunes or a physical store. As a listener, I’ve done this very thing. But Spotify doesn’t include links to online stores where people can buy the music they hear in the Spotify stream. They want you to spend all your time on their service, not on iTunes, Amazon, Bandcamp and other download stores. So …

For both Spotify and Noisetrade, consider pushing items in your back catalog that aren’t big sellers, as well as singles, EPs, live cuts and various samplers. For major new LP releases, you may be better off choosing 3-6 songs from the release for Noisetrade (right away or even in advance of the album release) and Spotify (concurrently or later, after sales have begun to slow down).

Final Verdict

• If you primarily want to make money, push iTunes and your own “store” (whether Bandcamp, an e-commerce plugin or even selling CDs out of your car).
• If you want to build up your email fan database, benefit from some social media integration, and know that people are actually downloading/owning your music, get on Noisetrade and publish the Noisetrade widget on your own website.
• If you want to get in on the “streaming bandwagon,” and to put together public playlists that feature your songs, and you hope to be included on playlists that feature the work of more well-known artists, get some of your songs on Spotify.

For other articles relating to the business of music, browse our Music Business blog post category.

Photo by Ed Webster, used via Creative Commons license

Tagged as: Derek Webb, iTunes, marketing, Noisetrade, social media, Spotify