Here To Stay? Spotify Speaks on Streaming and Dance Music

“I’ve always found the dance community to be among the most engaging,” says Mark Williamson, director of the Artist Services team for Spotify in Europe. DJBroadcast reached out to Williamson prior to Amsterdam Dance Event (ADE) conference this year, where Spotify had a significant presence, to talk about the dance music industry’s relationship with the platform.

Williamson says the dance sector is particularly well positioned to take advantage of the platform’s possibilities; by its very nature, dance music has been an early adopter of new technology, with a huge assortment of innovative and tech-savvy artists and labels having already shown their canniness for adopting new distribution models in the digital era.

“In a lot ways, dance music has traditionally been really poorly monetized, certainly following the growth of the Internet,” he says. “A lot of the streams prior to Spotify were coming from services that were either poorly monetized, or not monetized at all; online radio and piracy for instance. A lot of dance music has been focusing largely on generating revenue through DJing, and that’s where Spotify has been really beneficial, as it’s introduced this more legit way of generating royalties from streams. So I think that’s meant that dance music has been quicker to embrace Spotify than other sectors.”

"...The only way we’ll change minds is by paying out large amounts of money..."

Nonetheless, in a similar fashion to what we have witnessed across the wider industry, there have been many loud voices decrying the unfairness of payouts from services like Spotify; the most prominent example being UK dance brand Ministry of Sound, who withheld its catalogue from streaming platforms for years. However, after an “amicable’ out-of-court settlement was reached early this year, Ministry eventually brought its back catalogue to Spotify for the first time. Williamson says it's a great “hole to be plugging” in Spotify’s selection, and says it’s indicative of the wider industry gradually being convinced of streaming’s potential.

“It’s a process,” he told DJBroadcast. “We’ve created this new way to listen to music, which also needed an entirely new way of paying for it. Like iTunes before us, like vinyl, like cassette… all these things took a little while to get used to. We’re getting into a better position now, mainly because we’ve done a better job of explaining how it all works. This is a model where the more it grows, the more money we will pay out in royalties. The amount of money Spotify has paid in royalties has grown incredibly year on year. Last year alone we paid out $500 million, and that will be significantly more again this year. And ultimately, the only way we’ll change minds is by paying out large amounts of money, and by paying people for their art.”

The early adoptersWhile Ministry of Sound was initially slow to come to the table, Williamson points to Dutch players Spinnin’ and Armada as examples of dance brands who embraced streaming from the beginning. Both offer elaborately curated radio-style streaming services on Spotify.

“We’ve been working with Armada in particular for years, and long before it was clear Spotify was going to be as large as it is. They saw it coming, and the invested really hard, and what that means is they’ve built a presence on the service in ways other labels haven’t. So it’s great they’ve got a reward for that effort, and what that means is more streams, more abilities to break their artists, and distribution through playlists that have hundreds of thousands of followers.”

Armada co-founder Armin van Buuren has leveraged the platform arguably more extensively than any other high-profile DJ in dance music. Recently cracking the 1million follower mark, every week his 2-hour A State of Trance is licensed and streamed in its entirety, with a huge back catalogue of the shows now available for listeners to stream whenever they choose.

"...Creating that connection between the live experiences, and bringing it to people who can’t make it to the superclubs..."

“The A State of Trance radio show has incredible engagement, it’s probably one of the biggest and most engaged playlists on Spotify. There’s a lot of DJs who’ve demonstrated their talent for building engaging playlists. The space is primed for it, but they’re also leading the way with it”.

While the process of streaming a weekly radio show on Spotify poses significant challenges in terms of licensing and resources, Williamson points out that there are less intensive options also available. DJs can create a more straightforward playlist for their show that includes the tracks that have already been licensed; the ‘hot off the press’ remixes can be added later when they’re available, and audio snippets from the show can also be added for that extra touch.

Williamson says this represents the start for how we’re going to be seeing DJs leverage the platform in the future. He believes the next big developments will come from recreating live performances for fans around the world; while recording and streaming DJ sets will pose similar challenges in terms of licensing the unreleased tracks that tend to feature heavily in DJ sets, there’s again a more simple option available already in terms of regular playlists.

“I think there’s a real opportunity going forward for DJs and producers to engage with their fans on Spotify, creating that connection between the live experiences, and bringing it to people who can’t make it to the superclubs in Ibiza or Vegas. You can play a show at Pacha on a Friday night, and minutes later you can have a playlist in the hands of a fan in Poland. It’s another way you can get beyond your last studio record and connect with your fans more regularly.”

Will the independents benefit?The success of organizations like Armada might suggest that it’s the larger distributors who possess a sizable back catalogue that have the most to gain. However, Williamson says there are substantial gains to be made across the board.

"I think one of the key misrepresentations is you need catalogue to benefit from streaming. In a way it’s no different to the old world; the more you have to sell, the more money you can make, and this applies in all situations. However, in the old world you had 5,000 records in a store, while on Spotify you’re not limited to shelf space. What this does is create a more meritocratic system, where if your music has fans, it will cut through. I think there’s a benefit for artists on their first self-released album, as they can reach people on the other side of the world.”

Naturally, this is a luxury that’s equally afforded to the distributors with deep catalogues. However, Williamson talks of creating a “level playing field”, where the depth of catalogue is irrelevant.

“If you have a record someone might like, we want to help you get that record to them. The rates we pay out don’t vary based on catalogue, and I think that’s a positive situation. We need to help smaller catalogues get promoted, and when they find an audience, we need to pay them for that.”

“...One of the things we’re proud of is that you have that choice..."

To leverage the platform effectively, Williamson says the first fundamental step is to verify an artist’s page. This enables them to connect with fans and followers on Spotify, to share music and playlists with them, and have them receive notifications when new records are made available. He also points to spotifyartists.com as a launching pad for information on best practice.

As a prime example, Williamson mentions web players that can be embedded to encourage fans to sample music via Spotify, as opposed to a generic player. While it’s an action that requires a commitment from the artist to the platform, the appeal is that these plays are now actually generating revenue for the artist. Williamson also emphasises the potential for sharability within Spotify.

“Really, if you look at some of these dance music labels who have such tremendous influence, many got their start by uploading their music on services like YouTube. Dance music gets shared very rapidly, and there was no good way to share those files. Now you can just simply right-click them within Spotify, and then send a link in an email or share it on Facebook. This is one of the things I’m encouraging artists to do, particularly within the dance music world.”

For those artists, labels and distributors who don’t think they have anything to gain by being involved with Spotify, Williamson emphasises the importance of the ‘opt-out’ option.

“One of the things we’re proud of is that you have that choice. You have to ‘opt-in’ with Spotify, you have to actually license us your music, rather than ask us to take it down. I think within that it’s implicit, it’s your decision as to what is commercially best for you.”

Nevertheless, Williamson says the labels who’ve declined to approve their catalogues on Spotify are the kind of outfits he’d like to speak with; to look at their catalogue and opportunities, to figure out what kind of revenues they can expect and see what they might be missing out on.

“Many independent labels in particular will probably be playing ‘Whack-A-Mole’ with their music every day. It’ll be uploaded on video sites, on audio streaming sites, and it’ll certainly be pirated. We’re moving towards a world where the scale of streaming is at a point where if you’re not on these services, you’re missing out on huge amount opportunities to reach people.”

Spotify and ADE 2014: a pitch to the industryThe flashy marketing presence that Spotify invested into ADE this year meant their green logo could be spotted everywhere. It’s an indication of how committed the company is to winning over the industry, and it mirrors initiatives like the several artist-only forums it hosted across the US earlier in the month, held in partnership with the Featured Artists Coalition. Music blogger and lawyer Chris Castle told CMU Daily there were some particularly fiery exchanges.

"It involved many raised voices and frustrating arguments between those who drank the Kool-Aid and those who did not. It's important to understand that when someone is watching their livelihood slip away, telling them they just have to have faith in people whose own livelihood has more to do with venture capital and IPOs than selling music is not a good look."

However, others were reportedly more positive about the sessions, which involved Spotify reps and pro-steaming artists explaining the business, revenue-share and licensing models. It’s all part of a bigger PR push that’s currently underway from Spotify. There is a sense the industry has little choice but to go along with the future that streaming presents. Be that as it may, Spotify is committed to winning them over. Williamson was on hand to present at ADE.

“Of course, at ADE we’re all music lovers, and we’re all the kind of people who might spend hundreds of euros on music in the space of a month, let alone a year,” he said in his presentation on Friday of the conference. “And it’s quite difficult for us to get our heads around the concept of all the music in the world being available for only $120 euros a year. How could this possibly be good value for the industry?”

“...The key to understanding is that a vast majority of people are not music enthusiasts...."

In tackling this sticky question, Williamson contrasted the annual spend of a Spotify Premium subscriber with an average music consumer. He cited research from music consultancy NPD Group, which showed that only 45% North America’s 190 million Internet users purchase music of any form at all, and with the average annual spend being only $55.45. In contrast, a Spotify Premium user delivers more than twice that with the afore-mentioned amount of $120 a year.

“The key to understanding is that a vast majority of people are not music enthusiasts. They listen to the radio, they buy the occasional CD, or maybe they pirate. When we get them into Spotify, they become far more valuable. We get them into a legal service, and we give you the chance to engage with them.”

The success of Spotify across Scandinavia has been widely reported, with streaming now making more money for the music industry in Sweden than physical and download sales combined, with an equivalent drop in music piracy also witnessed. Williamson returned to this in his ADE presentation, though he also presented another key argument; in spite of the perception that streaming is driving down consumer spending on physical and downloads, these same trends are actually still being seen in countries like Canada, which are still effectively streaming-free zones.

“The market for physical and digital is still heavily in decline, in spite of the lack of streaming services. No Pandora, no Spotify, no iTunes Radio. The decline is universal, and customer behavior is changing. People are buying more apps, they’re watching more videos, they’re doing more things on their phone. They’re just not spending as much money on music anymore.”

“If that decline is happening in a country and they don’t have a replacement revenue stream in place to effectively monetize that and replace value quickly, in the way that Spotify does, then you are going to see the overall market falling and falling. We need to look at the countries that have adopted streaming, we’re we’ve to see a real positive change across the industry.”

The message is clear. For artists, labels and distributors alike, Spotify is indeed here to stay.