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After recent Netflix drop: Will Spotify lose users, too?

What you'll learn in this post:
  • Netflix loses users for the first time and shocks the stock market
  • How this relates to the pandemic
  • The latest figures from Spotify and why music streaming has an advantage

The news that Netflix lost 200,000 users compared to their previous quarter has caused a sizeable shockwave. The stocks were sent further downhill with the warning that they will lose as many as 2 million users in the next quarter. In the music industry, many are wondering if Spotify or other streaming giants will meet the same fate. We’ve tried to assess the situation.

Less time and inflation

Because of the pandemic, streaming providers made disproportionately high profits, and it was foreseeable that this effect would subside or even be reversed as we approach pre-COVID normalcy. During the pandemic, many people suddenly had a massive surge of time they mostly spent within their own four walls. This is now changing again. Additionally, many countries are experiencing an inflation, which means that a lot of people have less money at their disposal. It therefore stands to reason that many will want to cut back on streaming subscriptions.

Spotify grows further in Q1

Has Spotify now taken a hit, too? Shortly after Netflix, they released the numbers from their first quarter and so far, no downward trend can be observed. Spotify currently has 422 million active users every month (+19% compared to Q1 2021) and 182 premium subscribers (+15%). Compared to Q4 of 2021, Spotify has gained 16 million new listeners, but only 2 million new premium subscribers. However, we must also keep in mind that Spotify’s decision to pull out of Russia has caused a loss 1.5 million premium customers.

Furthermore, Spotify was able to increase revenues by 24% compared to Q1 2021 to now reach 2.66 billion euro. In all, Spotify also saw a small loss of 6 million euro.

This data is probably of greater interest to investors than to musicians or labels. One of the most crucial numbers for these people, however, is the revenue per paying customer. Fortunately, this number grew, as well, by no less than 6% to reach 4.38 euro.

So, why is Spotify doing better than Netflix?

Music streaming has an advantage

Music streaming services have the advantage that all of them more or less offer the same music. Few people will use two music streaming services , but many will have a Sky, Disney, or Amazon subscription on top of their Netflix one, since there is different content on each of these. So, people are much more likely to cut back on a video streaming service than a music streaming service. The bigger risk here, at least for Spotify, is that users may switch from the premium subscription to the free one, which will, of course, impact the payout for musicians, as well. We can see the first signs of this already: Compared to Q4, free users grew by 7%, while premium subscribers only grew by 1%.

Another advantage, at least from the perspective of the music streaming services, is that they haven’t raised their prices in years, while Netflix has done so multiple times. However, for musicians, this is bad news, since considering the current economic climate, no streaming service will dare ask for higher subscription fees. For musicians, it is absolutely crucial that the revenues of streaming services increase, because the pie is being shared by more and more artists and everyone is getting a thinner and thinner slice.

Spotify remains optimistic and does predict further growth. Until the end of the second quarter, they expect 428 million active monthly users and 187 million premium subscribers. However, Netflix didn’t see their drop coming either, and thus, investors remain sceptical. Since the beginning of the year, Spotify’s stocks have lost 54% of their value. So, we will definitely keep an eye on any further developments.

SoundCloud: Higher earnings for artists thanks to fan-powered system

What you'll learn in this post:
  • Artists earn 60% more with the user-centric model
  • Other DSPs continue to keep a low profile

It’s been a year since SoundCloud at least partially introduced the user-centric distribution model, or, as they call it, the fan-powered royalties system. While all the other relevant streaming services use the pro-rata model, throwing all the revenues into one big pot, the money in the user-centric model only goes to the artists that the user actually listened to. Now, for the very first time, SoundCloud has released some of their numbers.

Revenues increase by 60%

The opportunity to profit from the fan-powered system is reserved solely for artists who use SoundCloud Premier, Repost by SoundCloud, or Repost Select. At the time of the launch one year ago, there were 100,000 of such artists. Now, the number has grown to 135,000. According to SoundCloud’s data, the switch has definitely paid off for these artists. On average, independent artists are reported to have made 60% more than they did with the pro-rata model.

Unfortunately, SoundCloud doesn’t offer any more details. They only highlighted that for 97% of fans this year, at least 5 dollars of their streams went to one of their favorite artists. Inspired by Bandcamp, SoundCloud additionally wants to introduce a “Fan-Powered Friday,” where musicians receive 100% of the generated revenues.

The information is rather vague and they don’t exactly explain how this 60% increase in payouts came about, so it’s still too early to celebrate. Nevertheless, this first analysis is an indicator that artists are can profit significantly more than a French study comparing the user-generated and pro-rata models predicted.

Pro rata model remains standard

The big players continue to keep a low profile. Spotify, for instance, has announced on their Loud & Clear page that they were willing to consider a switch in distribution models if all parties involved, meaning artists, labels, and distributors, want it, as well. So, for the time being, the often criticized pro-rata model will remain the standard.

Spotify experimenting with fan payments

What you'll learn in this post:
  • What Spotify Fan Support is
  • What earning opportunities will be available on Spotify Live
  • The most interesting facts from the new Fan Study

As a fan, people can support their favorite artists on streaming platforms by following them, streaming their songs, and adding them to different playlists. But as iGroove Magazine has brought up multiple times, it is hardly possible to support these artists financially. Even if a fan listens to 100 of their favorite artist’s songs every month, only a few cents will get to them in the best-case scenario. It’s different with the Chinese streaming platforms, where direct payments from fans to artists make up a significant portion of the revenues. Now, Spotify, too, is taking their first steps in this direction.

Spotify Fan Support

In April of 2020, Spotify launched the “Artist Fundraising Pick” as a response to the COVID outbreak. With it, fans could support musicians or an organization that the artist in question had picked. It was used by around 200,000 artists. This tipping feature has now been renamed “Fan Support” and will thus be continued past the pandemic. How much it will be used by fans without getting anything out of it, remains to be seen.

Earning with Spotify Live

What could potentially be more promising are the sources of revenue planned for Spotify Live (formerly Spotify Greenroom). Artists will be able to set up their own “Live Audio Rooms” for their top fans and use it to sell merch, promote concert tickets, or receive tips from fans, as well. Spotify is thus trying to add features that are already working perfectly on Twitch or YouTube and that are a secure source of income for many creators.

However, it is also clear that for the time being, this is just an experiment. It remains to be seen how it will be received by the fans as well as the musicians. It is therefore not yet available for all artists, although you can apply for it if you’re interested.

It will certainly be interesting to see whether fan payments can take root within the Western streaming services, as well, and whether the features will be expanded in the future.

Spotify Fan Study update

Additionally, Spotify has recently published an update to their “Fan Study.” Here are some interesting facts we can learn from it:

  • Listeners worldwide streamed music from artists from an average of 14 countries per month. European users streamed music from as many as 16 countries on average.
  • 20.9% of songs that make it into the Spotify Charts do not originate from North America or Europe. Even though these two continents still very much dominate, their share is steadily decreasing. In 2020, only 15.2% of songs came from other parts of the world. In 2017, the number was as low as 9.5%.
  • International collaborations allow music to cross borders: if you work with artists from another country, an average of 84% of the streams will not come from your home country. For songs without a feature, foreign streams only reach 59.8%, and for tracks with a feature from the same country, the share only reaches 43.5%.
  • On average, 66% of an artist’s monthly listeners do not originate from that artist’s home country.
  • The biggest superfans are in Germany and South Korea. They stream their absolute favorite artists 63% and 46% more often than the world average, respectively.


How the Spotify algorithms work

What you'll learn in this post:
  • How detailed Spotify analyzes each song
  • How Spotify detects connections between songs
  • How the listening behavior of users is x-rayed
  • How the recommendations work

As Spotify recently revealed on their “Made to be Found” page, a third of all artist discoveries occur through algorithms. Understanding how these Spotify algorithms work is therefore vital to increase your reach as well as the amount of your streams. Although Spotify obviously keeps the workings of their algorithms secret, there are still quite a few things that are known and many that can be at least surmised. We’ve put it all together for you.

The algorithms pursue the simple goal of keeping the user on the platform longer by serving as an intermediary between the user and the artist – ideally with the artists that the user wants to listen to. When Spotify analyses a song, it does so in two different ways:

  • Content: Here, the track and its content is analyzed
  • Connection: Here, a connection is made between the track and other songs, based on the user behavior

These two components are what allow Spotify to correctly place and categorize a song directly after it’s uploaded.

Content

A majority of the information is contributed by the artists themselves, when they pitch the song and list all the relevant details. It’s therefore all the more important to take time with the pitch and to fill everything out as accurately as possible. This includes basic information about the song (title, genre, etc.), as well as mood, style, language, and instruments used. But of course, this is not the only data that Spotify collects on a song.

As soon as a new song is uploaded, it goes through the audio analysis process. How that works exactly is probably one of Spotify’s best kept secret. The audio analysis detects whether or not a song has vocals, whether you can dance to it, how high the energy level is, and also whether a track has a more optimistic sound or carries a more somber vibe. But this is just the basis for the analysis. The system goes a lot deeper and really, analyzes the entire structure of the song. At the end, the algorithm knows everything it needs to know about the characteristics of the track.

But not only the entire production is analyzed in detail, the content, too, is carefully dissected. On the one hand, the song lyrics are x-rayed to place the theme and the mood of the song. At the same time, the system scours the internet to find articles about the song on blogs and in the media and see how journalists describe it. And finally, Spotify makes use of the millions of user-generated playlists. If a song is included in a lot of playlists containing the word “sad” in the title, they can safely assume that it’s a more contemplative track.

So, Spotify now knows how the song sounds, what topics it revolves around, and how it is received by the outside world. That’s already a lot of information, but it only makes up half of the track analysis.

Connection

On top of the content, they also consider all the connections attached to it. Just because Spotify knows exactly how a track sounds and what it’s about, it can’t entirely surmise how users interact with it. That’s why this second step is crucial for recommendations.

The general assumption about how recommendations are made on Spotify goes something along these lines: If user A has listened to song X, Y, and Z, and user B likes song X and Y, then user B will want to listen to song Z, as well. But this is an extremely error-prone method, and experts assume that Spotify does not use it anymore, or if they do, then only in a very limited way. Rather, they pay attention to “organizational factors”, meaning, for instance, that two songs are probably similar if a user puts them in the same playlist.

To put it simply, it’s quite possible that a user will listen to hardcore trap music as well as a gentle soul ballad. But the likelihood of them putting these two songs in the same playlist is much lower. The fact that most users give their playlists names, revealing something about the contents, helps Spotify even further. Spotify apparently analyzes 700 million user-generated playlists, so only a fraction of all the playlists made by their consumers. They focus primarily on those that let give the impression that a lot of time and effort went into them.

By analyzing the contents and the connections, Spotify now knows what tracks are similar and therefore have the one side of intermediation down. The other side is, of course, the listeners on the platform.

Analysis of listening behavior

The analysis of users’ listening activity is slightly less complex what they do with the songs, and yet also a little more clever than one may assume. What’s clear is that Spotify thoroughly tracks its user listening activity: which songs are played, which are liked, which are skipped, and so forth and so

But of course, context is taken into account as well, because not every listening session can be assessed the same way. If a user listens to the new releases on their release radar, they might be looking at 100-200 tracks. If they listen to one of these for less than 30 seconds, that doesn’t necessarily mean they’re not interested. Maybe they just want to listen to it later when they’re less busy. If, however, they’re listening to a playlist for studying and skip a song there, it is far more likely that they don’t like the song and don’t want to listen to it anymore.

Generally, user feedback can be divided into two categories:

  • Active feedback: Saves, playlist adds, shares, skips, clicks on the artist profile, and artist follows
  • Passive feedback: Duration of the listening session, whether or not a track is played all the way through, and whether or not a track is played multiple times

Active feedback is clearly the more important one. Since music is often played in the background, a song played all the way from start to finish doesn’t necessarily mean that the user is in love with it. It could just be that they were taking a quick bathroom break.

Thanks to this feedback, Spotify has a detailed profile of each user. They know which songs and artists are their favorite, which genres, moods, and eras they prefer, and of course, demographic and geographic information are considered, as well. This profile is constantly updated, with the most recent listening activity given more weight. If someone has recently discovered a new genre they like, it will be taken into more consideration than other genres the user has listened to over the years.

Various algorithms at work

So now, Spotify has all the information both about the song and about the listeners and should therefore be able to suggest the right songs in the right moment. This happens in all kinds of ways, be it via “Discover Weekly,” personalized playlists or personalized editorial playlists, suggestions on the home screen, personalized search results, playlist suggestions, or, of course, artist radio and autoplay features. Each of these spaces run on their own algorithms.

The algorithms are therefore capable of showing the user songs that they haven‘t listened to in a while as well as tracks that they don’t know yet, but that they might like due to their listening history. It’s a service that Spotify wants to provide its users, but the main goal is, of course, maximizing user retention and time spent on the platform. As an artist, you may only have limited influence on the algorithms, but with clean metadata and a well-maintained profile, you can at least lay the foundation for them.

What are fake artists on Spotify?

What you'll learn in this post:
  • How fake artists generate millions of streams via mood playlists
  • Who is behind these fake artists
  • How Spotify may have actively encouraged the rise of fake artists
  • Why fake artists are not the problem, but a symptom of the streaming system

Through the updated Loud & Clear page, we recently learned that out of the approximately 8 million artists on Spotify, 52,600 have generated more than 10,000 USD in the past year. For one, this is a pretty low number of people, and for another, it begs the question: How many of these are so-called fake artists? But what even are fake artists, and why are they once again grabbing the headlines? We’ve summed it up for you.

Millions of streams through mood playlists

Although the name may suggest it, fake artists are not bots or anything of the sort. There are actually real people behind fake artists, but they do not exist outside of the streaming platforms. They have neither a social media profile nor a fanbase. This is because they mainly produce music for so-called mood playlists – and generate millions of streams with it. Oftentimes, many of the fake artists have the same producers and companies hiding behind them.

Two of these companies recently appeared in two Swedish newspapers. One of them is Firefly, which releases music through 830 fake artists, generating 7 million dollars in revenues last year. This was possible not least because a number of their artists appeared in Spotify‘s own created playlists. No more than 20 songwriters are behind these 500 fake artists. One of them is even responsible for 62 fake artists with a total of 7.7 million monthly listeners.

Backroom deals with Spotify?

Another is the company Chillmi, which has released 2,500 songs for mood and chillout playlists. These have generated 2.5 billion streams already, meaning a million streams per track on average. What’s really interesting about this story, however, is that the founder of Chillmi was apparently directly approached by Spotify in 2015 and asked if he could create music for their chillout playlists. It therefore would be no surprise to find all Chillmi releases in the popular playlists for studying, meditating, or sleeping. Musicbusinessworldwide had already accused Spotify in 2016 of directly commissioning fake artists, which the company denied at the time. It has also been long speculated that Spotify has separate contracts with fake artists that stipulates a lower payout per stream in exchange for a guaranteed spot in the popular mood playlists.

Whether or not these backroom deals came to be, the fact remains that fake artists keep cranking out songs which clearly satisfy a need that listeners have. The phenomenon hasn’t escaped the major labels either. They, too, have released music made by fake artists and put together relevant playlists for them.

Mass product secures big slice of the streaming pie

According to Loud & Clear, there are a total of 719,000 songs with more than a million streams each. If a label like Chillmi alone accounts for 2,500 of these, we can assume that the hundreds of fake artist labels have released tens of thousands of tracks with more than a million streams.

If you add the numerous lo-fi producers who, despite actually existing outside of the streaming platforms, as well, still mainly cater to mood and chillout playlists, it becomes clear that a big share of these 719k tracks are instrumental songs that primarily serve as background music. With this mass product in the current pro-rata distribution model, they thus secure a sizeable slice of the streaming pie. And you can’t really blame the producers and songwriters either, considering this is a welcome and relatively easy way to supplement their income.

Streaming fuels passive music consumption

In one of their analyses, MIDiA reports that streaming isn’t necessarily replacing physical sales and downloads but rather radio and thus passive music consumption. Having a constant stream of background music is the more prominent trend than being a true fan. Even fans are increasingly turning into passive listeners and music into an omnipresent commodity. Fake artists are thus not the problem per se but more a symptom of the streaming system which puts the consumption of songs in the foreground rather than the artists and fans.

Loud & Clear: How much does Spotify pay artists?

What you'll learn in this post:
  • Spotify paid out 7 billion to rights holders
  • 52,600 artists generated more than 10k, 1,040 more than one million
  • Why Spotify thinks they only have 200,000 professional artists on their platform

In March of 2021, Spotify released Loud & Clear to counter the criticism they received on their lack of transparency in payouts. The page has now received an update with the latest numbers. We dove in to categorize the data.

Spotify paid out 7 billion

First, let’s look at the biggest sum of all: last year, Spotify paid 7 billion dollars to music rights holders. This is significantly more than the previous years: In 2020, it was 5 billion dollars, and it 2017, the number only reached 3.3 billion. Since the creation of Spotify in 2008, the company has paid out more than 30 billion to rights owners.

Spotify’s profits in 2021 reached 10.63 billion dollars, which means that they pay out 66% of their revenues to rights holders and keep a third of the share for themselves. When looking at these payouts, it is important to note that they encompass both the master rights, meaning the revenues paid via a label or distributor, as well as the publishing rights, meaning the payments made to the copyright collectives or publishers. However, this data only gives limited insight into how much the artists themselves actually receive, since labels, distributors, and publishers take their share, too.

52,600 Artists generate more than 10k

Let’s start with the high-income earners: 1,040 artists generated more than one million dollars (it was 860 artists in 2020), 450 generated more than 2 million, and 130 generated more than 5 million. And the (upper) middle class? Well, 52,600 artists generated more than 10,000 dollars (2020: 42,500), 16,500 generated more than 50,000 (2020: 13,400), and 2,170 more than 500,000 (2020: 1,800). 203,000 artists were still able to make more than 1,000 dollars.

Another thing to keep in mind is that these numbers overlap, e.g., the 1,040 artists who made more than one million are also included in the 52,600 who managed to hit the 10,000-dollar mark. Examining the data separately, the numbers appear as follows:

PayoutNumber of artists
10,000 – 50,00036,100
50,000 – 100,0007,000
100,000 – 500,0007,330
500,000 – 1,000,0001,130
More than 1 million1,040

Only 200,000 professional artists on Spotify?

Considering there are 8 million artists on Spotify, 52,600 obviously look very meager. Spotify wants to counteract this impression by researching the number of “professional artists” on their platform and determining the number to be 200,000. To get there, Spotify has evaluated various data. It’s actually rather surprising: Out of the 8 million artists who have released music on Spotify, 5.4 million have uploaded fewer than 10 songs. Out of the artists who have more than 10 tracks, there are 165,000 who have more than 10,000 monthly listeners and thus a solid fanbase. Additionally, Spotify analyzed how many artists publicized a live show on Spotify in 2019, meaning before the pandemic (there were 199,000).

Thus, a quarter of these “professional artists” should have generated more than 10,000 dollars, and 8% of them over 50,000. This calculation of “professional artists,” however, gave cause for quite a few questions and criticism. Spotify seems to be taking the easy way out by chewing 7.8 million artists out and labelling them as “non-professionals.” That makes it look like it’s their own fault that they did not generate significant revenues.

DIY artists on the rise

Finally, however, there are some positive data, as well. Out of the 52,600 artists who generated more than 10,000 dollars, 28% are self-released, meaning they released their music without a label but instead via a distributor like iGroove. 72,700 DIY-artists have more than 10,000 monthly listeners and generated 1.1 billion, which is 15.7% of the total payouts.

Surprisingly, Spotify announced that they paid out more than a billion dollars for publishing rights, which supposedly surpasses the numbers in the CD era. With that, they are clearly taking a stance in the ongoing debate over raising the share of revenues for songwriters. At the moment, 75-80% of these go to labels and distributors, while 20-25% are paid out for the publishing rights.

Greenroom becomes Spotify Live

Additionally, various media outlets reported that Spotify will integrate their Clubhouse-clone “Greenroom” into the regular Spotify app and change its name to Spotify Live. This is set to happen in the second quarter already.

The music industry makes record profits

What you'll learn in this post:
  • Physical sales also grew in addition to streaming
  • Revenues from ad-based streams have risen sharply
  • Why the IFPI may be underestimating the sales of indie artists

Since 1999, the recording industry association IFPI collects data on the „Global Recorded Music Revenues“, meaning the revenues of the music industry – and they have never been as high as in 2021. Compared to the previous year, worldwide revenues increased by a whopping 18.5%, reaching 25.9 billion dollars. That makes it the seventh year in a row in which they’ve grown. The main responsible party for this? You’ve guessed it, streaming. And yet another piece of good news: These revenues are growing in all regions of the world.

Streaming but also physical sales grow

Of these 25.9 billion, 16.9 billion can be credited to streaming. For the first time since 2001, however, the sales of physical products have increased, as well, and are able to reach 5 billion. The remaining 4 billion are shared between downloads (1.1 billion), performance rights (2.4 billion), and sync (500 million). Publishing or revenues from live shows are not taken into account.

In total, streaming revenues grew by 24.3%, not in the least due to the 18%-growth of premium subscribers (from 443 million in 2020 to 523 million). Yet what is also surprising are the revenues garnered from ad-based streaming. Compared to the previous year, these have grown by 31% to reach 4.6 billion. Thus, so-called “free streaming” has garnered almost as much revenue as CD and vinyl sales.

Growth of independent labels and DIY artists underestimated?

Every year, the market analysis company MIDiA releases its evaluation a few days before the IFPI. They actually found the growth to be as a high as 24.7% and the revenues to reach 28.8 billion. How can this difference of almost 3 billion dollars be explained? MIDiA sees two possible reasons for it. One the one hand, they believe that the IFPI, which is dominated by the major labels, massively underestimates the revenues of the independent labels and the artists who release their music themselves (meaning, via a distributor such as iGroove).

MIDiA estimates that independent labels made 8.4 billion and the artists who released independently 1.5 billion, totaling 9.9 billion. The IFPI, however, only reports 7 billion, which would mean that the independent sector grew significantly less than the major labels. The second factor is that MIDia also takes into account streaming revenues generated from TikTok, Meta, Snap, Peleton, or Twitch. They put these at 1.5 billion, and they assume that these numbers are missing in the analysis done by the IFPI.

Regardless of whether the IFPI or MIDiA has the more precise data, it was an incredibly strong year for the music industry. Considering these growth figures, it is also inevitable that many musicians will ask themselves why they themselves don’t receive a bigger share of these record revenues.

Should I remove my music from the streaming services?

What you'll learn in this post:
  • There are more and more artists who remove their music from the DSPs or don't upload it at all
  • Why streaming is no longer as unrivaled as it seemed
  • What the motives of artists like Kanye West, Snoop Dogg or Neil Young are

To call it a trend would certainly be an exaggeration, but lately, there have been quite a few artists who have either removed their music from streaming services or didn’t even upload it there in the first place. On the one hand, these include artists like Neil Young, Joni Mitchell or India Arie, who removed their music from Spotify as a protest against Joe Rogan. On the other, there is also Kanye West, who never even made “Donda 2” available on streaming platforms, as well as Snoop Dogg, who had the entire Death Row catalog removed.

Growing number of alternatives to streaming

While the reasons may vary, the signal sent out is the same: streaming is no longer as unrivaled as it previously seemed. Some of you may have asked yourselves already whether you should do without the tips from streaming providers and rely on the direct-to-fan route instead. After all, with NFTs, subscriptions, Bandcamp, and sales via a personal website, more and more doors have been opened in this area.

Protest against Spotify

But first, let’s take a closer look at the previously mentioned artists and their motives. As we said, Neil Young, Joni Mitchell, India Arie, and others had their music removed from Spotify out of protest. But this only applies to Spotify – the music is still available on all the other DSPs. So, it’s not a protest against streaming per se. Additionally, these are all established artists who can stomach the lost revenues and afford the idealism.

Is Kanye leaving the fans out?

It’s different with Kanye: his decision to release “Donda 2” exclusively on Stem Player is a clear sign of protest against the streaming economy. 3,000 units of these Stem Players are produced every week. Due to their production capacity and their steep price of 200 USD, there have only been at most of a few hundred thousand fans who have listened to his album (through legal means). With his decision, Kanye has thus excluded millions of fans who would have otherwise streamed “Donda 2,” as well.

This doesn’t really hurt him financially, as according to Kanye’s own accounts, he has already made 9.5 million dollars with the Stem Player. That’s great news for the self-proclaimed rap billionaire, but the decision also hits a sour note as many fans are left out for the sake of profit. He thus positions himself closer to the big companies that he has seemingly criticized rather than the artists, for whom he purportedly wants to show alternatives.

What are Snoop’s plans with the NFT-label Death Row?

What’s still a little unclear are the motives surrounding Snoop Dogg and the iconic label Death Row which he recently acquired. While he did announce that he would turn Death Row into an NFT-label, it is still written in the stars whether this means that the releases will not return to streaming platforms. Should Death Row’s releases really be available as NFTs only, he would create a similar sense of exclusivity as Kanye, making the product more expensive and leaving out a lot of fans. At first glance, Kanye’s and Snoop’s moves seem like self-empowerment, but really, they are primarily directing the profits from the DSPs right into their own pockets.

The superstars’ path

To their credit, you could say that they at least motivate many artists to think about the alternatives that are out there. But they took the superstars’ path, which is not adaptable for the average artists. So, should you remove your music from the DSPs? No! Streaming is no cash dump, but it is one of the best showcases for your art. And you can always look for alternatives on top of that, too. But as long as NFTs, Bandcamp sales or Patreon subscribers don’t pay the bills, you shouldn’t keep your music from the streaming audience.

Will Spotify offer NFTs soon?

What you'll learn in this post:
  • There are first signals that Spotify might offer NFTs in the future
  • Why this would give music NFTs a boost
  • Why Spotify has to take a lot of criticism for the FC Barcelona sponsorship

Many questions surrounding NFTs are yet to be answered, such as how you can prevent people selling a song as an NFT when they don’t have the rights to it. Plus, there are still the big hurdles for the average consumers. Still, it’s important to note: The NFT hype is real. This obviously didn’t escape the tech giants either, who while not necessarily creating trends, have always been good at adapting to them in a quick and user-friendly manner.

Spotify as a boost for music NFTs?

From Instagram to Twitter to Reddit, various platforms have announced that they will incorporate NFTs. Now, we can see the first signs that Spotify, too, is flirting with the idea. As the Financial Times have discovered, Spotify has published various job postings in the Web 3.0 department. This points to an expansion into the areas of Blockchain, NFTs, or the Metaverse. In general, it will be exciting to see how we can avoid the Web 3.0 being dominated by the same players as the current Web 2.0, but that’s a whole different debate, of course.

The fact is that if Spotify does enter the NFT market, it will give music NFTs an enormous boost due to their huge user base. This will be the case especially if they were to make the buying process a lot easier, so that crypto-savvy users aren’t the only ones who can participate. Additionally, the competition would be forced to follow suit, which would accelerate the progress for music NFTs even further. At the moment, this is still a long way off, but we will keep a close watch on these developments.

Spotify under criticism

Additionally, Spotify is making other headlines, as well – this time for sponsoring FC Barcelona. Spotify is ready to shell out 310 million dollars over the course of four years for it. In exchange, not only will the Spotify logo be printed on the jerseys, but the stadium will also be renamed Spotify Camp Nou. Quite of few, however, are probably wondering why this money isn’t going to the artists.

Let’s take a look at some numbers: In the last four years, Spotify has invested 3.96 billion dollars into their marketing. The Barcelona deal would therefore only make up 8% of these costs. Suddenly the number doesn’t seem so big anymore. And of course, Spotify is of the mind that the musicians will benefit from the deal, as well.

The folks at Musicbusinessworldwide have calculated how many streams it would take to garner 310 billion dollars. Based on their findings, that would be 89.08 billion.

As it turns out, there is not a single artist on Spotify who has reached this number of streams. The record holder is Drake with 62.84 billion streams, although 17.57 billion of these come from features. For the 45.27 billion streams of his own releases, approximately 157 million have been paid out – far from what Barcelona is getting. This is especially hard to swallow for the songwriters, whose share of the pie Spotify continues to try to beat down.

Epic Games buys Bandcamp: What does that mean for musicians?

What you'll learn in this post:
  • Gaming giant Epic Games buys indie darling Bandcamp
  • Why many are skeptical about Epic Games
  • What the reasons for the acquisition could be

While streaming services are often vilified, Bandcamp is seen as a hero by many – and not without reason. Artists can register their releases or merch and set the price themselves. On average, they receive 82% of the revenues they make. Bandcamp thus became an important source of income for many independent artists. That’s why it was all the more shocking when it was announced that gaming giant Epic Games has now acquired Bandcamp. Are independent artists losing an important platform or will this collaboration actually offer them new opportunities? Let’s take a look.

Will everything stay the same?

In a press statement, Bandcamp’s CEO has asserted that nothing will change for fans and artists for the time being. The popular Bandcamp Friday, a monthly practice in which Bandcamp waives its cuts of the profits for one day, will also be continued. However, it is doubtful that Epic is investing just to keep everything running the way it was. Epic has not revealed the reasons for the takeover nor the price they paid for it. That’s why there are already lots of speculations about how this fusion between the gaming and music world came about.

Criticism towards Epic Games

But why has much of the feedback been negative? Epic Games, known, among others, for Gears of War, Infinity Blade, and especially Fortnite, has received much criticism in the past for how it handles music licenses. This is one of the reasons why many are skeptical Bandcamp will remain the “most artist friendly platform.” Additionally, many are worried about Bandcamp’s independence, since 40% of Epic’s shares are owned by Chinese media company Tencent, which not only runs some of the biggest Chinese streaming providers but also holds shares in Spotify and owns 20% of Universal Music Group. That all sounds very contrary to Bandcamp’s humble, indie approach.

New financial options for Bandcamp

One obvious benefit, on the other hand, can be seen on the financial side of things. Although Bandcamp has remained profitable since 2012, they’re a small fish compared to the other DSPs dominating the market. Because of the deal with Epic, however, there are now more resources available, which is why Bandcamp has announced increased international expansion and investments in its products. If this can attract the attention of more consumers, it is certainly a clear advantage.

What role will Bandcamp play?

We can only speculate about the reasons why Epic decided to buy Bandcamp. But it’s beyond question that there is a great deal of overlap between gaming and music, especially since both companies focus on fandom and a direct-to-consumer model. On both platforms, fans can express their devotion in various ways, be it through in-game purchases on Fortnite or vinyl or t-shirts on Bandcamp. In the gaming world, the direct-to-fan approach is considerably more established than in music, and some hope that Epic will put that knowledge into good use in the music industry, too.

Time and again, the word “Metaverse” has come up, as well. Music also plays a big role there, of course, and thus it is presumed that Bandcamp will serve as a supplier. Many also see potential in the organization of virtual events/concerts or in the licensing of music for games or films. Another possibility is that NFTs may be added to Bandcamp, as well. If a user is traversing the gaming world, they shouldn’t have to leave it, even when they want to listen to a certain song or better yet, intend to purchase it. With the integration of Bandcamp, this can certainly be achieved.

Cautiously optimistic

So, it’s clear that the overlap and potential is there. But of course, when a tech giant takes over a smaller company, there is always the risk that they radically change the acquired platform without taking the previous clients into consideration. There is also the risk that over time, Bandcamp will slip further and further down Epic Games’ priority list and then stagnates. All we can do is hope that one of the most important platforms for independent artists can come out of this deal stronger than before.

TikTok expands to 10-minute videos

What you'll learn in this post:
  • TikTok increases video duration and enters direct competition with YouTube
  • Whether this is desired by the creators and users at all
  • What this has to do with advertising budgets

When TikTok announced last summer that it was increasing their video duration from 60 seconds to 3 minutes, it seemed like an eternity for a platform that originally became known for 15-second videos. Now this is being extended again to 10 minutes and by now with the latest it’s clear that TikTok wants to enter direct competition with YouTube.

For musicians the advantage is clear: they will soon be able to upload entire music videos, behind-the-scenes or making-of clips  and play their entire song in them and not just a snippet of it.

Are longer videos wanted at all?

The question that arises, of course, is whether the creators’ need to produce longer videos is there at all? And if so, do users want this?

TikTok is taking some risk, as they could scare away many users who love TikTok for the short, quick posts and don’t want long videos. According to a study conducted by TikTok, nearly half of users found videos longer than a minute stressful.

A bigger piece of the advertising pie

Why they take this risk anyway is clear: longer videos offer much more opportunity for advertising. They are betting that some of YouTube’s advertising budget will migrate to them.

TikTok is probably also concerned with diversification and their positioning in the market. Right now they are the hottest social media app out there, but even they know that trend won’t last forever. MySpace was replaced by Facebook and at some point Facebook wasn’t the hot shit anymore and apps like Snapchat and especially Instagram outpaced it. Today, Instagram no longer has that momentum, but everyone is talking about TikTok. And at some point, the next app will come along and turn everything upside down again.

The rivalry between YouTube and TikTok will be exciting to watch. YouTube currently has around 2 billion monthly users, roughly twice as many as TikTok, which broke the one billion barrier last year. Advertising revenues are significantly further apart: YouTube’s advertising revenue was 28 billion dollars in 2021, while TikTok’s advertising revenue was 4 billion dollars last year.

From now on, the trial of strength will not only take place in short videos, where YouTube has invested heavily in its competitor product Shorts, which now generates 15 billion views a day, but also in longer videos, where YouTube has been the undisputed top dog for years.

The ability to create longer videos will be rolled out to all TikTok users worldwide in the coming weeks.

Planning the release of your single

What you'll learn in this post:
  • What you should complete before the release
  • What must not be forgotten on release day

In one of our more detailed posts, we have expounded on how a release plan should look like for an album. Of course, we’re well aware that we live in the age of singles where a lot of artists rarely release an album and instead come out with a new track every 4-6 weeks. There isn’t always a big marketing apparatus, merchandise, tour, or even a physical release attached to the release either. For this reason, we’ve put together a checklist for your next single release right here in this post.

Some points from the album release plan obviously apply for singles, as well, and you should consider them well in advance:

  • Setting a budget (how much can I invest in advertisement, is there enough left for a music video, etc.)
  • Asking yourself: Where do I mix and master the track?
  • Asking yourself: Are there samples that need to be cleared first?
  • Registering the song at the copyright collectives, so no revenues are lost
  • Creating graphic illustrations for the cover, Canvas, and advertising material

Before the release

  • Submitting the release to your distributor well in time: to check off the following points off your list stress-free, we recommend uploading the song as early as possible (a month before going public or even earlier). That way, you can be sure that it will show up in your followers’ release radar.
  • Using the YouTube monetization to make money when others use your music in their videos. Add TikTok, Instagram, and Facebook to monetize your song on these platforms, as well.
  • Using iGroove’s option of making a snippet of your track available on TikTok prior to the release if you want to promote it ahead of time
  • As soon as the track is submitted, pitching it to Spotify and Amazon or using our pitching service to introduce the track to six different DSPs
  • The moment your release arrives at the shops, iGroove can set up Pre-Saves on Spotify and Deezer.
  • These Pre-Saves will show up on the link site, with which you can promote the release ahead of time.
  • As soon as the release is uploaded to your distributor, you can upload it on other platforms not covered by the distributor, as well (e.g., Bandcamp).
  • To have more time on the release day, you can put together your ad campaigns (e.g., on Instagram or via Google Ads) ahead of time and use the already created link site as the target.
  • Since you already have the Pre-Save link, you can call your fans’ attention to the upcoming single using your mailing list.
  • You can also contact all the curators and blogs/media outlets that request the music be sent to them prior to the release day

On release day

  • Inform your fanbase through your social media accounts and using another newsletter
  • If you have not done so already, amp up your ad campaigns
  • Contact the remaining curators and blogs
  • Update your profiles on the DSPs, including the Artist Pick, your own playlists, and ideally also your bio and pictures
  • Upload the lyrics to your tracks on MusixMatch

Even though the checklist is much shorter than the one for an album release, there are still quite a few things to consider, and solid planning is absolutely essential. For many of these points, iGroove will be by your side to give you the support you need so that together, we can make the most out of your single release.