It’s been ten years since Lio and Kay Kanine put out their first release: a compilation of 20 undiscovered bands, most of them from Brooklyn, titled NY: The Next Wave.
Lio Kanine (then known by his real name, Lio Cerezo) had landed a job with the indie distributor Alternative Distribution Alliance not long after moving to New York City. He spent his evenings putting on club shows around the city, DJing and booking bands up to five nights a week. His girlfriend, Kay, found work as a paralegal.
“We mostly gave them away,” Lio Kanine says of that first release. “But we sold enough to break even. And from there it just grew.”
In the very same timeframe that U.S. album sales shrunk by more than 60%, Kanine Records grew from a hobby into a bonafide and sustainable record label. Some of that took a bit of re-imaging what a label can and should do.
“At the end of the day, there’s nothing you can do about that other stuff, and you’ve just got to adjust with the times,” Kanine says. That first release “Showed us that there was an interest in what was going on at the time in New York. That it was a good time to start a label.” The rest they had to figure out for themselves.
No one gets into the music business to get rich. No one with any sense, anyway. And for all of his interest in quirky and unusual music, Lio Kanine comes across as a remarkably sensible guy.
“We have this kind of logic where if we don’t have the money, we’re not going to spend it,” he says over the phone before a flight out to LA for the 2013 F Yeah Fest with a couple of the bands on his roster. “If we don’t have the money to sign a band it’s not going to happen; we’re not going to take on something that we can’t afford.”
“It’s the same way we live our personal lives. We’re not the kinds of people who take on debt. And I think that’s part of the reason we’ve lasted so long. I’ve watched so many labels go under trying to take on projects that are so ambitious they just can’t afford it. They’re like ‘well it’s a gamble, you’ve just got to go for it.’ And I’m like yeah – ‘Well, a lot of people buy houses they can’t afford and they’re out in three years.
“Part of being a successful business, a record label, anything, is lasting. It’s like survival of the fittest,” he says. “If you’re out there the longest time, you’re going to eventually get bigger bands. They’re going to come to you because they’re going to respect you more for it.”
As much as anything, it’s this incremental attitude to growing a label that has kept Kanine moving forward steadily. After figuring out how to make their first compilation work, the Kanines tried their hand at solo releases, beginning with Oxford Collapse, a band that combined sheer noise with a dance sensibility and the aesthetics of Mike Watt-flavored American indie rock. They were eventually picked up by Sub Pop.
Not long after, Kanine began looking for a record he could sell at Other Music – at the time, arguably NYC’s most dominant independent music store. “My records weren’t weird enough for them!” he laughs. “They used to have this ‘In and Out’ section and I’d think to myself, ‘I thought I knew a lot about music and I hardly know anything on these walls.”
Through a friend, he heard about “this mysterious guy” who had “recorded a whole album’s worth of music in his Grandmother’s house out in the woods in Massachusetts” using instruments that were supposedly “made out of kitchen utensils.”
The mystery man turned out to be Ed Droste of nearby Greenpoint, Brooklyn. The project was called Grizzly Bear. Their first release, Horn of Plenty, put the band, and Lio Kanine’s label on the map.
“They fell in love with it instantly. It sold 500 copies in Other Music alone and went everywhere from there. To the UK, through Rough Trade. It was all very organic. People would just write posts. I remember the first show. It was a rainy, snowy Monday night, and it was sold out. People were just so excited.”
Kanine’s next big milestone came in 2008, when he was able to place the band Chairlift‘s song “Bruises” in a commercial for the 4th-gen iPod Nano, before their album had even come out. It was a significant cash windfall for the band and the label and it kept them both moving forward.
Nuts and Bolts
“I don’t think any artist or label nowadays can make money just selling records,” Kanine says. “I mean, it’s just not possible. Most of our bands right now recoup through syncs. And T-shirts. We sell a lot of T-shirts.”
It’s not that album sales are a non-factor. They’ve just become one piece of a larger puzzle; And a less dominant one than in years past.
“It’s just all about price points,” says Kanine. “If you’re smart about your price points, you can get people to buy. CDs should have never been more than $10 in the first place. You had stores selling CDs for $18.99, that was part of the problem. If you give people a good price, they’re going to go for it as long as it’s easy. And you know, a $9.99 CD is fine. People don’t mind paying that. Especially when T-shirts are like $30 now,” he says with a bemused laugh.
“We have a deal with our bands where we get one unique design per record that only the label can sell. The band can do as many other designs as they want, but we get one unique one so we can sell it on our site and other stores. That’s helped a lot.”
For Kanine, as with the rest of the industry, digital sales are growing, while physical albums remain a significant, though dwindling, force:
“It really depends on the band. Different bands have different fan bases. Fans of our more shoegaze bands tend to buy into the physical. Those fans are kind of collectors and they like to have stuff in hand. Our more electronic bands tend to be people who want stuff instantly and aren’t really collectors that way.”
For the more shoegazy and indie rock-focused bands, Kanine says the breakdown is about 60/40 in favor of physical. For the more electronic-tinged artists, fans favor digital sales by about 70/30. In both cases, vinyl is a minor player:
“CD outsells vinyl massively. When you hear otherwise, that’s just the press talking. The reality is, vinyl is only 1/10th of the whole sale. Vinyl is mostly done for cool points because that’s what people hang up in the record store or in pictures. The hipsters may buy the vinyl. Most normal people still buy CDs, because most normal people still have CD players in their cars.”
Digital though, is evolving. “The digital download stuff is going down compared to streaming. And the streaming stuff is really ramping up compared to the way digital downloads used to.” And the results so far have been a mixed bag:
“When Spotify started, they were saying it’s great because we’re eliminating stealing. And yeah, they eliminated stealing because now it’s free on the net. But it’s free on the net for everyone. That also taught people not buy anymore, which is bad. It doesn’t really pay either, which is hurting things a lot. So you have to go back to the artist and say ‘You’re only getting this tiny advance because we’ve got to be realistic and those are the numbers, you know?’ Which makes it harder for labels to sign bigger bands.”
Despite the challenges, Kanine keeps on growing because of hard work, an expanding network of allies, and an insistence on only taking on risks they can afford. Of course even at their modest scale, not every album is going to recoup its costs. But when the costs are low enough, a handful of strong releases can subsidize some of the natural losses that just come with the territory of being in a creative business.
When Lio talks about the realities of the businesses, his tone isn’t cutthroat. It might be best described as gentle, a little nerdy, but unflaggingly practical: “Every band on an indie has really got to pull their own weight and at least break even or make a little bit of money, because otherwise they’re not going to see any royalties. And the reality is that if the records aren’t selling I can’t afford to keep on putting out their band, and I’m going to have to let them go.
“The saddest part is that it’s happened before. And it has nothing to do with good music or bad. Sometimes a record just doesn’t stick. Or this one guy at the blog doesn’t like it and reams it to the world and all of a sudden everyone is like ‘oh this is a terrible band,’ even though their shows are packed. After a while, as much as you love the band, if you can’t afford to keep putting them out you just can’t keep doing it.”
Reality has a way of intruding on dreams. But at least the dream is there: “We’re doing it for love first,” Lio Kanine says. “Because someone’s gotta take a chance on these artists.” And sometimes those dreams last.
Living The Dream
So what makes a Kanine band?
“We mostly look for bands that are trying to do something unique and different, and who are also willing to be hardworking,” says Kanine. “When I first sit down with a new band I ask ‘Is this an art school project or is this a career move?’ Because I want to make career moves.
“I figure if you want to make an art school project, you can get your dad to fund it. I’ve even had bands call me a careerist: ‘You’re lame, you’re just a careerist.’ And I’m like ‘yes I am.’” His voice lilts upwards as he says this, chuckling yet again. “I want to make a future out of this. This is what I want to do. I don’t want to go work for someone else again. I’ve done that most of my whole life. This is a dream and I want to make it happen. But in order for me to do that, I need my bands to want that same dream.”
More than anything, Lio Kanine’s long-term success in music is tied to the success of his bands. “It’s like, Grizzly Bear is probably going to be around forever. Because this is what they want to do. And that just makes my catalog more valuable, because people are going to keep on buying their records for years to come. But if a band just makes one record and quits, it’s just not that viable.”
There’s been a lot of nasty talk about record labels, “middlemen” and “gatekeepers” in recent years from cynical fans and advocates for the tech sector. They can say what they will about record labels, but when they work right, there can be a real symbiosis between labels and musicians. Labels like Kanine Records are never going to do well unless their bands do. And most bands are never going to do well unless someone like Lio Kanine can afford to take a chance on them, and to pay them well enough for them to keep on doing what they do.
It’s true that these days, bands technically can self-release more easily than in the past. But perhaps it’s telling that so few new bands do on a sustainable level.
“The first benefit of having a label is that most artists don’t even know what to do with their record once they make it,” says Kanine. “If you have the knowledge and you have the money, then sure, you can do it. But 90% of them don’t.
“You’re also getting a team behind you, which is big. When I call a booking agent or a blog or a distributor they’re going to answer. After we signed Surfer Blood they told me ‘We emailed a ton of people and no one responded. How did you get them to respond?’ Well, that’s the difference. I’ve developed relationships with these people. They know me, they trust my taste. It’s like when Pitchfork gets a record from Sub Pop. They’re probably going to listen to it. Where if it just comes from some band, it might just get put in the pile somewhere.”
Whether it’s ideal or not, the distribution, promotion and acceptance of music has always been, and most likely, always will be based, around trusting relationships, and real-life social networks.
That’s not a function of capitalism or of corruption, of old models or new ones. It’s not a symbol of an archaic world or of a new internet age. This is simply how humanity works. Music has travled this way since its very beginning, and there’s no reason we should expect that to stop anytime soon.
If you’re cynical, you can call them middlemen or gatekeepers or beancounters. But we need passionate and practical curators like Lio and Kay Kanine. They’ve done the bands on their roster a lot of good, and it’s allowed them to keep growing steadily year after year. And if Lio has his way, Kanine Records will still be there, putting out records worth getting excited about in 2023.
Justin Colletti is a Brooklyn-based producer/engineer, journalist and educator. He records and mixes all over NYC, masters at JLM, teaches at CUNY, is a regular contributor to SonicScoop, and edits the music blog Trust Me, I’m a Scientist.
You want to go see a show.
You peruse the upcoming acts at your local venues and decide that not only is there little in common from one band to the next, but a lot of the bands just don’t seem very good.
So then, how do you go about finding the good bands? It’s taken me years to find a small group of great local rock bands, and I’m heavily entrenched in the industry. Sure, there are sites that showcase independent music, but rarely with a combination of quality control, genre and geographical specifications.
Even if you dedicate an entire evening, do you have the time and energy to filter through garage recordings of mediocre songs to find the band that actually keeps you from incessantly clicking “next?”
Then, if you do happen to stumble upon one, are they playing anywhere worth going to?
How much are the tickets?! Oh, and there’s no parking. Great.
What else is going on? Oh, Seinfeld re-runs. Cool.
While I agree that Seinfeld re-runs are pretty fantastic, a great local rock show is an entirely unique event. Unlike a stadium show (which also has the potential to be amazing), you can get right up to the stage, stand in front of sonic art; musicians that you can talk to and interact with after the show.
The immediacy, the raw emotion, the intimacy and the energy, the bright lights and the searing sounds all aggressively take hold. The thump of the bass in your chest, the tearing guitars, the singers breath, the crushing drums, all in second to second frames; you scream because you can’t contain yourself, you laugh, you jump, you elbow strangers. The night flies by, broken only by the pauses between bands — enough time to get a drink and stand in line for a bathroom that has you contemplating the shrubs you saw outside.
You lose yourself in a sensory waterfall, and come out feeling emotionally and physically drained. If this sounds overly romanticized, then you haven’t seen an amazing local rock show.
If you live in LA, I am not surprised. I have lived here eight years and seen two.
As a hard rock fan and artist, I decided to pull some instruments and intellects together to change that.
Before I get into my insidious plan to shift the stagnating paradigm of LA’s local rock scene, however, let me, and the various other players in this scene, paint the picture of how it looks today, and how it needs to change.
I call it the revolving door.
Joey Flores, artist and founder of LA-based online radio station, Earbits, elaborates.
“Booking agents at your average [LA] clubs will book the first 4 bands that commit to selling a certain amount of tickets while ignoring the synergy of the bands’ styles and doing nothing at all to promote the shows. Each band brings their obligatory 20-50 people…people come, stay for their band’s set, hear completely different music start up after they’re done, and then have absolutely no reason to stick around.”
In a nutshell, that’s the scene. It’s a vicious cycle of ineffective promoters, bands feeding into the broken system and fans leaving after one set, feeling uninspired, ultimately pushing them to do anything but go out to a show the next time the opportunity arises.
As an artist, trying to build a fan base and bolster interest in your music through this revolving door is like trying to hold a meeting on a roller coaster. That said, there’s as much of a need for change from my perspective as a fan’s.
“As a concert goer I hate when I am forced to pay to enter a club and see a variety type lineup of mixed genres with no cross over or logic from one act to the next,” says Brian Marshak, producer and guitarist in my hard rock band, Rooftop Revolutionaries.
Michael Meinhart, founder, writer and singer of the hard rock band, Socionic, agrees, adding that L.A. today is lacking that destination venue where you’re guaranteed a night of good music.
“It used to be the Whisky, or Viper Room, where you could just show up, not knowing the bands on the bill and still know it would be a great show, but now it’s not like that anywhere,” he says. “If there was a venue like that, I would know about it, and I would tell my friends, and they would tell theirs. And we would all hang out there and listen to great music.
“The current approach really puts a ceiling on what a venue could be and stunts the growth of organically grown scenes and nights focused on quality and artistic message.”
Quality – that’s another thing – without trusted local taste-makers, the LA hard rock scene seems to have no quality control.
Under the pay-to-play mentality, if you can pay, or at the very least guarantee a certain amount of heads through the door, you can go up on stage and fart into a flute for half an hour, without complaints from the booker. Simple reality: quantity over quality.
I have seen many a terrible band perform on stage because they managed to drag their friends along, or because their parents paid for that time slot.
Bookers make the claim that they have to worry about the bottom line above all else because people don’t come to shows anymore. The bills have to be paid and fans just aren’t showing up.
Well why should they?! You give them absolutely no reason to!
The revolving door of obligatory friends and family will never equal (monetarily or socially) a night of complementary bands who work together to promote, bringing their fans for an entire night, not a half hour, of good quality music.
“Booking agents fail to see that they are the first gatekeeper, and by allowing shitty bands to pay to earn their way destroys the logic that good bands deserve good time slots and good nights. This in turn forces fans to much indecision and ultimately, a reason to do something other than go out and see local acts,” says Marshak.
So, if booking agents aren’t connecting fans with quality bands, why not go to the source and create the kind of night you want – for your bands, and your fans?
Brian Marshak considered this question a while ago and began booking entire nights for our band, Rooftop Revolutionaries, hand picking other local bands that would fit the bill, creating an entire night of cohesive and good music. He, like many others, saw it as the obvious move.
“Most band leaders could and should replace most booking agents because they know the ’scene‘ better and who would work well with who.”
Josh Buma, founder and guitarist of the hard rock band, Malaki (who we’ve booked on two of our nights) agrees, citing a recent example of his own: “We recently played a [Sunset] Strip venue where bands were booked by the venues. Nothing matched. None of the other bands’ fans would like us, and vice versa. The only way to successfully book local shows is if the bands themselves do it.”
He continues, breaking it down in an LA-friendly step program:
“Step 1, don’t let venues book your band unless you’re opening for a national act. Step 2, whoever books local shows, make sure each band not only draws, but kicks ass. Kicking ass is not as subjective as one might think.”
Michael John Adams, bassist in Opus Dai, puts it another way: “Those of us in bands know a good band when we hear one. And when we find a good band, we want to book shows with them!”
The logic is simple. “With like bands working together, there becomes more of a collective and cohesive resonance to the events. One that exudes energy felt by the bands as well as the fans…” says Meinhart.
In other words, “What is good for one band is good for all bands on the bill. Pack the club. Everybody will win, from the bands, to the club, to most importantly, the fans,” adds Marshak.
Since booking our own shows, Rooftop Revolutionaries, has seen the benefits both online and in person. Even something as simple as creating one event page on Facebook that includes all the bands for the night as opposed to four separate ones, can make a significant difference in turnout and online interaction.
Fans want to be introduced to new good music. They’ve already heard your band, they already like your band. Give them something new, show them where to look for other good music in your genre, and the cross promotion from other bands will bring you more fans as well.
This idea of introducing fans to more good music in my scene (hard rock) served as the foundation for my current scheme with the audio app, Soundrop.
It began as a conversation over a cup of coffee in Downtown LA. My fellow Swede and Spotify tech friend asked me to think of ideas on how Spotify could work better with and for independent bands. I jumped at the chance.
While researching and exploring the digital soundscape of Spotify, I happened upon one of their apps, Soundrop. I was immediately struck by the simplistic yet unique layout of this app. For those of you not familiar, the basic gist is that Soundrop hosts a variety of “rooms” based on artist, genre, and themes (working out, chilling, falling asleep, etc.). Listeners have the ability to create their own rooms as well, or add to existing rooms.
What began as me uploading tracks to the Soundrop “Rock” room gradually became a digital blueprint for pushing the LA hard rock scene out of the dark ages.
This concept also tackles one of my issues with Spotify — that there’s no obvious pathway to “underground” or “unsigned” artists. The homepage is reserved for artists you’ve already heard of and it would take you a week’s supply of espresso red eyes and Mother Theresa style patience to eventually find good quality unsigned bands.
Soundrop had a similar issue. Even though listeners, such as myself, could add whatever music I wanted to the rock channel, so can everyone else. You can see where this is going.
When sitting in a playlist of hundreds of songs, not even categorized by ‘type of rock,’ my uploaded track quickly got lost somewhere between Imagine Dragons and the end of the world. Not to mention that this lack of quality control ups the quantity of disjointed rock far past the point where fans are willing to look for new music.
After spinning off bullet point after bullet point of ideas for Spotify, I decided to dig deeper into Soundrop.
I created the channel, “LA Unsigned Rock,” and uploaded what I felt to be the best local LA hard rock. After sending notices to these bands, posting about the channel and including it in our band’s newsletter, I wasn’t thrilled with the performance of my new creation.
It just sat there at the top of my Soundrop landing page, unbeknownst, it seemed, to anyone but me.
So, I reached out to Soundrop, a Norwegian company with offices in LA.
I connected with their VP of Marketing and Communications, Thomas Ford. And later, at a comfortable little cafe on Fairfax, I poured my ideas out onto the table.
Soundrop is in the process of building and bettering their platform, so Thomas was open to ideas that will not only help local bands (monetarily and socially) but that will direct fans and listeners to their app, knowing that Soundrop has a unique and unusual handle on the local unsigned music scenes.
The next week, he put the LA Unsigned Rock channel on Soundrop’s home page. Within two days, the channel had gone from 11 visits to over 1,000.
I reached out to more friends and bands with this newfound inspiration, adding more listeners, more fans and some new bands I discovered. Now, fans are engaging, listening, suggesting bands and appreciating the new ones. And bands are enjoying the sense of community. Promoters…what promoters?
Even in its short life span, this Soundrop room has proved a useful tool for fixing a broken scene.
“In Opus, we’ve spent so much time in our studio over the last couple years working on new material that we’ve lost touch with the LA scene a bit,” Adams says.
“To amend this, we’ve been refreshing our list of local bands that we feel are a good fit with our sound. The “LA Unsigned Hard Rock” Soundrop channel has allowed us to expand that list quite a bit. As I was listening to the channel, I thought to myself (more than once), ’Why haven’t I heard of these guys before??’”
The channel, as of now, has 23 tracks from local LA hard rock bands.
There is quality control; not just anyone can add tracks as they please. They have to be suggested and confirmed by the room manager.
Thomas and I are working on the monetization of Soundrop: holding Soundrop concerts that feature the bands in that room, adding links to buy music after a certain number of listens, adding PSA-style commercials from the bands themselves to pepper into the channel.
Ideas such as these are moving forward, catalyzing help and input from various other players in the scene, not least of all the response I got for this article.
Musicians want to be part of a scene, and get understandably excited when they see an opportunity to move their music forward. As Meinhart more eloquently put it, “We are more effective and poignant when standing together.”
Adams, from Opus Dai, also inspired by the concept, came forward and offered to help in building a free-standing site for the channel as well.
The site will expand on the idea of the Soundrop room, incorporating band profile pages, an “Angie’s List” type forum of good vs. bad venues and bookers, local music news, a show calendar and more.
Again, it’s a way to allow the Soundrop app onto various platforms (as in, not just Spotify) while continuing to build and push the local scene, bringing it to the attention of fans who want to hear good music but need a guide to ensure they won’t waste time or money on endless playlists or pointless live shows. This platform can be that fan’s guide.
“…a place where fans could trust and go in order to find out about quality bands within a genre that they would be interested in listening to and seeing,” Meinhart envisions.
“Trusted quality aggregators such as this could play a great role in cultivating quality scenes online and eventually in venues.”
It won’t change overnight and there is, as you can see, a lot of work to be done. As a local artist and fan, however, it is easily worth it.
As one final note, I would like to send a challenge to local venues and bookers – not just in LA, but everywhere there is a scene that could use a push.
Here is the challenge: give a shit.
Care about the bands that you put on the bill, spend some time with their music and create a bill that flows, just like we spend time on our set lists and our track listings. Then use the tools you have to promote the hell out of that show in targeted places and to targeted audiences; do your best to make sure the fans stick around between sets.
“Offering a drink discount between bands might make people stick around for the next one,” Flores suggests. Yet he cautions that all your deals and specials “only matter if you book bands that complement the one that played before them.”
Hope to see you all out at the shows. Until then, listen to the playlist here, or check it out below…
Eleanor Goldfield is a Los Angeles-based writer, musician and studio tech. She is lead singer in the hard rock band, Rooftop Revolutionaries, and chief tech at The Village Studios.
Spotify made big news again in mid-July when producer Nigel Godrich and Radiohead’s Thom Yorke pulled their music from the streaming service.
Their move was not without precedent. Just a few months earlier, Jeremy DeVine, head of the indie record label Temporary Residence Ltd, came on to our InputOutput podcast to discuss his plans to withhold new releases from Spotify. Earlier this week, The Huffington Post confirmed that several other independent artists planned to follow suit.
Ever since then, a misleading and hopelessly outdated infographic that I thought I’d never have to see again began resurfacing and making the rounds on social media. It claims that artists would need to rack up over 4,000,000 plays each month – more than 130,00 every day – just to make minimum wage.
How Much Does it Really Pay?
In reality, we’re continuing to see average gross payouts just shy of a half-cent ($.005) per play for ad-supported streams, about three-quarters of a cent ($.0075) for “unlimited” streams, and around one-and-a-half cents ($0.015) for “premium” streams.
This means that if you self-released your music and only attracted listeners on the ad-supported service, you’d need about 230,000 spins each month – about 7,700 plays every day – in order to earn minimum wage for just one person. Bleak, perhaps, but a far cry from 4 million.
On the premium service, you’d need more like 77,000 plays a month – or 2,600 plays each day – to crack that same nut. Not every band in the world is going to attract this much attention, but for many of the good ones, it is an achievable goal.
Although this revenue share is far better than the $0.00 offered by pirate websites, it remains an unworkable replacement for recorded music sales. Even at $.015 per stream, you’d have to listen to your favorite artist’s song 46 times in order for them to earn the same $.70 they would have ended up getting if you had bought that song on iTunes.
(Do me a favor real quick, and check your iTunes library to see just how many songs you’ve listened to that many times! The answer tends to be “not that many”.)
Despite falling technology costs, musicians’ biggest expense in making music remains time. And costs there have not gone down as far as some might expect.
At this point, we haven’t even gotten into factoring in the additional costs faced by artists who have labels, managers or more than one member — Not to mention artists who have the expectation of making more than minimum wage off from one of their primary products!
Just as with iTunes or physical album sales, if you have a record label or management team, chances are you’ll owe them a portion of this revenue. Self-released artists with managers often expect to share 10% or 15% of their income. Traditionally, artists on big indie labels might share 50% of their recording revenue. And if you’re on a major label? Numbers vary widely, but chances are your net take will be significantly less than 50%.
So: How Much is Enough?
The good news is that despite all of this, we’re not too far off. It may take some kicking and screaming and full-throated advocacy, but it’s feasible that in time artists could be looking at fair rates for music streaming – whether it’s from Spotify or an alternative service.
If we could get rates up to just $.02 per play, streaming would start to become a pretty fair deal artists. At that rate, you’d need a bit over 55,000 plays per month to crack minimum wage, or somewhere near 1,900 plays per day.
This sounds pretty reasonable to me – Especially when you account for the fact that even people who don’t like your record still end up kicking you some coin. (If someone listens to your song 10 seconds, hate it to pieces and write the most scathing Facebook review in the history of the universe, you’d still be getting paid.)
Get the rate up to $.03 per play, and streaming arguably becomes a better deal for musicians than iTunes ever was. At this rate, you’d just need 39,000 plays a month or 1,300 plays each day. What’s more, it would take just 23 plays to equal one iTunes download. And once again, even people who hate your song still end up contributing to these play counts.
Is Raising Rates Even Possible?
With high-profile indie artists beginning to pull out of the service? Maybe so. But wait: By now, you’ve probably heard that Spotify isn’t even profitable. How is it supposed to find that extra cash?
Well, the reality is that Spotify isn’t profitable because the company’s CEO, Daniel Ek, doesn’t yet want it to be profitable. “The question of when we’ll be profitable actually feels irrelevant,” he said just last year. “Our focus is all on growth. That is priority one, two, three, four and five.”
(Consider it “The Amazon Approach”: Undercut everybody and become a near-monopolistic behemoth that the competition just can’t touch. Then start worrying about profit.)
With a few minor tweaks, the company could easily pay out higher rates or even become profitable quite soon. They’d just have to give up their goal of growing to a market-dominating size as swiftly as possible.
There is a legitimate question as to whether some artists have a slightly better deal with their labels or with Spotify than others do. (People who have exceptionally great contracts usually don’t like to discuss the details too openly. Such is the nature of leverage.)
But with that aside, the fundamentals of Spotify’s business model aren’t that cryptic at all: Basically, the pay-per-stream is calculated as a percentage of gross revenues, divided by the total number of plays across the service. (This is done separately for the ad-supported and premium streams.)
Spotify actually claims to pay out 70% of gross revenue, which is right on par with iTunes. So the problem isn’t so much the split – rather it’s the company’s income, when compared with the total number of streams.
Fixing this simple problem would require either raising income or lowering the number of steams. To do this, Spotify’s options are: A) Put caps on how much listeners can stream, B) Raise subscription fees, C) Increase advertising rates or the frequency of ads, D) Eliminate or restrict the ad-supported model, or E) Some combination thereof. That’s pretty much it.
If they were smart, Spotify could get creative with these fundamental options. Back in 2012, I suggested that they let artists cap listening on their albums after a certain number of plays. Then, they could allow listeners to “unlock” unlimited listening of an album by “tipping” the artist, say $5.
Not only would this be an immediate source of revenue and a way for fans to directly support their favorite artists, but it would also significantly lower the number of streams in the pool, raising pay rates across the entire service!
If Spotify doesn’t adopt creative ideas like these, some other company will, and not too long from now, and they’ll be the ones to attract all of the best artists.
Does It Pay To Protest?
As a music fan, I love the Spotify service. It’s convenient, it sounds great, it’s an insanely good value for the listener, and if you subscribe to the premium service, its payout rates are fairly ethical (although certainly still too low) at around $.015 per play.
Still, I’m glad to see some of my favorite musicians boycotting the company. In a market economy, valuing your own work enough to say “No, you can’t have it for anything less than a fair rate” is one of the most surefire ways to keep others from devaluing it.
But if you’re going to make demands, it’s a good idea to know what you’re demanding.
If you want my opinion, I’d say hold out for $0.03 per play. Once you account for all the people who’d never buy your album but end up kicking you some coin anyway, that’s arguably as good of a return as music sales ever were – and possibly better.
But if it was me? Honestly, I’d probably settle for an increase to $0.02 on the premium service to start. (So long as I could limit or block listening on the ad-supported service.)
A 30% raise would be a huge step in the right direction, and a potentially easy battle to win: Simply raise basic subscription fees from $9.99 to $13.99. Or, just create a new, slightly more expensive product tier for the highest-frequency users. Do either of those things, and the service is already there. Done. And that’s without implementing a single creative idea.
Artists have subsidized Spotify’s growth for quite a few years now. Perhaps today, with countless legal alternatives to piracy priced cheaper and made more convenient than ever before, it’s about time we took off the training wheels.
Now that legal, convenient and affordable alternatives to piracy exist, why should new artists continue to subsidize Spotify? The only “public assistance” that a huge company like Spotify should get is a concerted effort to crack down on illegal and exploitative pirate sites.
Collectively, pirate sites rake in millions in advertising and pay out $0. Realistically, if we really want legal streaming services to pay well, we’ll all have to work together to clamp down on those kinds of services. This would increase the viability of legal competition to Spotify, giving artists more streaming providers to choose from, and increasing payouts.
We live in a market economy, and it’s about time to let Spotify sink or swim as a real business. If Spotify can be convinced to start putting greater limitations on the free service and begin paying out a fair and sustainable rate to artists, they’d certainly win me as a customer. As it stands now, that’s the only thing holding me back.
Justin Colletti is a Brooklyn-based producer/engineer, journalist and educator. He records and mixes all over NYC, masters at JLM, teaches at CUNY, is a regular contributor to SonicScoop, and edits the music blog Trust Me, I’m a Scientist.
If you’re a musician, a studio geek or a music fan, you’ve probably been hearing a lot of information — and misinformation — about Spotify, royalty rates, streaming services and the modern musical economy. Input Output hosts Geoff and Eli filter out all the noise in this new three-part series on the compensation and creative rights of musicians and producers. Whether you’re angry at “the man” or just wondering what the big deal is, it’s our humble opinion that the following interview may be among the most edifying and grounded conversations you’ll hear on the subject.
This week’s guest, Jeremy deVine, started the indie label Temporary Residence Records while working at a hardware store in Baltimore. He even went without heat in the dead of one winter just to help scrape together the funds for the first Explosions in the Sky album — a release that would put them, and his new label on the map.
Since then, deVine and Temporary Residence have signed countless popular niche bands like Pinback, Mono and Maserati, and have put out new tracks from Low, Mogwai and Will Oldham. Recently, distressed by his labels’ returns from Spotify (about $30,000 for around 18 million plays) deVine sent a well-considered letter to the bands on his roster, asking for their permission to remove the label’s entire catalog from Spotify. His goal: to compare a year’s returns with Spotify, to one without.
Although deVine is optimistic that on-demand streaming could someday become a valuable resource, he’s unconvinced that time is now. Impressed by deVine’s scientific and unemotional approach to the issues, Geoff and Eli ask Jeremy about his experience with Spotify, and about what the service would have to do to help attract and sustain smaller-scale releases in the future.
Plenty of people have opinions about the business of music, but not many are willing to put their money where their mouths are. Jeremy deVine is one of the few, and his edifying take on the issue comes grounded in real-world numbers. We hope you find this interview as insightful and eye-opening as we did.
In this episode of Input\Output, Geoff and Eli talk to David Lowery, the former frontman for Cracker and Camper Van Beethoven, who is now an economics professor at the University of Georgia.
Last summer, Lowrey wrote an open letter to Emily White, an NPR intern who claimed to have had almost 12,000 songs in her personal library, but to only have paid for just over a dozen albums. This letter generated a firestorm of attention, drawing upwards of a half million visits a day to Lowrey’s artists’-rights blog The Trichordist.
As a label-owner, econ professor, a former “quant” for the financial sector, and a platinum-selling musician with indie cred and a cult following, Lowery brings a singular perspective to the business of music.
In this podcast — the first in a 3-part series where Geoff and Eli talk to experts about copyright and intellectual property in the 21st century — Lowery offers some compelling ideas about how we got where we are, and where the industry is headed next.
Download or listen to the podcast below!