How does music streaming "Spotify" contribute to the music industry?

ByLourenço Fabrino

The number of sales of physical media such as CDs and records is decreasing year by year, and acquisition of sound sources through the Internet is becoming common. However, there are people who get free pirated versions, so there are fewer royalties to the music industry, and even if you make songs, problems arise that artists do not get money. Meanwhile,Reduce the right price to the music industryThe philosophy of "music streaming service"Spotify"Explains how it contributes to the music industry Website"Spotify ExplainedWe have opened.

How is Spotify contributing to the music business?
http://www.spotifyartists.com/spotify-explained/

During the past several decades, the way of obtaining music such as "buy and go to a record store seeking favorite songs that have flown on the radio" has drastically decreased, "purchasing the sound source heard on YouTube with iTunes download" "Get free pirated version", it is changing from the physical media to the digital media era. However, most of these do not produce much money for artists.


In order to break down dissonance of such a music industry, Spotify is making a paid music service that music fans legally can provide royalties to artists, and the amount paid by the user so far is American general music consumption More than twice the average amount paid by users of the tier per year.


Spotify's plan is "Free(free)","Unlimited($ 4.99 per month, unlimited viewing available from PC) ","Premium($ 9.99 per month, unlimited viewing from all devices) ". First of all, by attracting to Spotify as a free user, it creates far more royalties from former pirated users due to advertisement revenue free of pirated users and monitored platforms, free of charge.


The number of Free users and Premium users increased sharply. Spotify's goal is to "make music fans realize the meaning of" paying compensation to artists "and re-grow the music industry".


In 2013, Spotify earns more than 1 billion dollars (about 100 billion yen), and we pay about 500 million dollars (roughly 51.3 billion yen) as a royalty to artists.


The average amount of advertising revenues of free users and the charge of Premium users is 41 dollars (about 4,200 yen ).


Spotify is currently available in 32 countries around the world, but it has also started to expand into new markets that have not yet been deployed.


Of Spotify 's revenues, distribution to artists is 70% of total revenue. From this distribution percentage, Spotify can also feel the attitude of rebuilding the music industry.


Details of royalties are "Spotify's January income" × "Number of artists 'viewers divided by Spotify overall streaming views" × "Distribution of labels and rights holders 70%" × "Artists' royalties Percentage "=" payment to artists "has been enacted, the breakdown will be changed according to the laws of each country, but since the contract with the label and the royalty are calculated separately, It is a mechanism to receive royalty from both sides.


The royalty for each album actually paid to artists in July 2013 is below. Artist name has been replaced with genre name. Spotify is a mechanism that increases royalties to artists as paying users increase, so even in "Niche Indie Album" of a minor artist who currently receives $ 3,300 (about 330,000 yen) a month, paid users 4000 If exceeding 10,000 people, the royalty will be $ 17,000 (about 1.74 million yen).


The following shows the proportion of royalty for each streaming service and one million playback compared with other streaming services, which shows that Spotify is the mechanism that is returned to artists the most. Currently 24 million Spotify users are still a small service compared to 1 billion YouTube users, 575 million iTunes, the future growth will further increase the return to the music industry.


Spotify is thoroughly aware of the piracy eradication and is designed to be able to return to the music industry legitimately by stopping illegal file sharing by constructing better service than pirated version. It is possible to compete with pirated software by establishing a Free account, and free users can make a very useful change for the music industry by purchasing the Premium account. The younger the age, the more likely it is to use illegal pirated versions, but Spotify has been able to significantly reduce the number of users using pirated copies in five years since it was launched.


A report on country-by-country reports on illegal downloading and piracy caused by paid streaming service including Spotify is also summarized.

Sweden's second half of 2011Music File Share & Download ReportAccording to the report, the use of pirated software decreased by 25% in two years.


In DenmarkResearch results of IFPIAccording to the streaming service is "Pirate killer"48% of users of streaming services had experience of illegal downloading in the past, but 81% of them stopped using it.


In NorwayIPSOS reportAccording to 2008, 1.2 billion songs were illegally copied, but in 2012 it is 210 million songs, a sharp drop to just one fifth.


American by SandvineGlobal Internet Phenomenon Report, North American Internet traffic from accounts of P2P file sharing software has drastically decreased to less than 10% every day, as the reason for this is abundant content of reasonable real time service like Spotify.


BritishOnline piracy reportAccording to the report, three quarters of digital music consumers are using legitimate services.


Spotify's "Holding" in the NetherlandsAdventure in the NetherlandsAccording to the research results that "the population who conducts piracy is decreased".


Rock band against SpotifySales fell after Metallica provided songs to SpotifyStory that,Tom yokes "The new artist can not earn a royal reward in this business model"Although it is said that it pointed out that it pointed out, it certainly is playing a role in the reduction of the pirated version. Although it is Spotify which is not yet well-known in Japan,A web site for Japan is also in the process of being prepared, and the day the service is offered is nearIt is considered.