Last October I wrote about Spotify's paying model and its effect on classical labels, when ECM and Naxos reportedly threatened to leave Spotify. Eventually Naxos stayed, but ECM was mostly gone from Spotify UK.
Little seems to be improved regarding the paying model itself, despite that the paying subscribers more than doubled in the past 10 months. I've just heard a new complainant about Spotify, from the founder of the excellent independent classical/jazz label Mode:
"On a typical CD sold through a distributor (yes, still the bulk of our sales are wholesale), we may make a profit of $3-4 a unit. Already that is not much considering the total sales of a typical niche CD. Sales through iTunes or similar service can yield a similar profit. But this all gets turned on its head with the Spotify model. For example, in June 2011, Mode had a total of 11,335 streams through Spotify; our income was a whopping $36.98! A big individual seller that month, by composer Luciano Berio, was streamed 1,326 times through Spotify; our income $4.18. So, we earn about 1/3 of a penny per stream. And these meager amounts should be split with the artists and composers." full article here.
I think this low payment is partly due to Spotify's strange paying model that only counts the number of streams, but not total playing time. If you spend an hour to listen through this 24-track album Deltron 3030, and this hour-long, one-track Mode album Oltracuidansa respectively, then according to the payment figure above, the hip-hop label makes 8 pennies from Spotify, and Mode makes 1/3 penny. OK maybe they don't count tracks shorter than 30-second, as there's no popularity marks for those track, then it's 7.33p vs. 0.33p. Ridiculous is not too strong a word here.
I've got a feeling that Spotify don't want to acknowledge the existence of albums, they seem to believe that everyone listens to 4-minute pop tracks, in mixed-up playlists. In the European version, Spotify offer MP3 purchases, and users can only buy tracks (No separate price for albums). So a 20-track hip-hop album costs £20, and that one-track, hour-long Mode album costs £1. If you still buy MP3s, why don't you grab all those long tracks on Spotify? Here's a playlist for classical tracks longer that 45 minutes, to help Spotify Free users to get rid of the ads (for a while).
That being said, I am still a believer in the Spotify model.
1, As Spotify's official response said, Spotify "monetises an audience the large majority of whom were downloading illegally". More than 85% Spotify users don't even want to pay $5 per month for unlimited access to 15 million tracks, I don't think most of them will start to buy CDs or MP3s if their music was pulled out from Spotify.
2, As Mike's comment and this thread on a classical forum show, Spotify makes it much easier for fans to sample CDs before they buy, and makes it possible to hear a CD that they never will buy without hearing it. I think most loyal fans of Mode will continue to buy CDs, and casual fans now have the chance to listen through Jack Quartet's Xenakis, and might even buy the CD if they like it a lot. 30 seconds previews on Amazon can only tell the listeners little about a contemporary classical piece that they never heard of.
And most importantly, technology never goes backward. I simply cannot imagine that five years from now people would still be buying MP3 files instead of accessing them from the cloud anywhere anytime. So I hope Spotify can work out a better way to work with classical and other niche labels.
In the meantime, if you want to support Mode Records by listening to their music on Spotify, I found 10 CDs from their catalog which consist of many short tracks that will maximize the effect. Here's the Spotify playlist: Support Mode Records (340 tracks, total time: 15 hours) Listen through this or download it to offline, to support this great label which brought us recordings of Cage, Feldman, and Wolff that few others do. Thank you.