Letter To Mode Records: The Spotify Problem

Hi Mode Records,

I read Mr. Brandt's article on New Music Box, as a fan of contemporary classical music and Spotify, I should like to share some opinions of my own.

Firstly, I totally agree that Mode, and other labels, should get paid properly, so they can keep on making music. The current payment from Spotify is indeed depressing.

However, I don't think leaving Spotify or giving up cloud services all together is a good idea.

Business models aside, there's little doubt that cloud services is going to take over content ownership, the process is inevitable and it's accelerating, after Spotify entered the US market. It's not just an opinion of an early adaptor, it is as nature as CD took over LP, or iPod took over Walkman. To be frankly the concept of content ownership sounds rather alien to me now. Why should people store a copy on their computer, and spend their time to move it around on phones and tablets, when they can simply access it from the cloud anywhere anytime? Personally I agree with die-hard CD/Vinyl fans that owning a physical copy makes me value the music more, but most people always choose what's most convenient for them. As a business you can't tell them "you should keep on buying CDs or MP3s", in my opinion it's time to consider how to adjust your business model to cloud services now.

Have you ever wondered why Alex Ross' The Rest Is Noise sold 200,000 copies, maybe more than any single CD of contemporary works he recommended in that book? And why few people of one million subscribers of The New Yorker ran to the nearest record store to buy a Xenakis CD, after they read Ross's brilliant article on Xenakis, which appeared on the magazine last March? I don't know the answer (though obviously one of the reasons is not everyone is as rich as John Taylor of Duran Duran), but I know that fact isn't going to change in the times that both physical and digital sales are declining, and I see a great opportunity lies ahead: there are many people who never heard of the music they've read about.

Subscription-based cloud services like Spotify let the users access to all kinds of music at ease. What if those one million magazine readers could access to works featured in that article, such as Psappha, a highly addictive piece that has great potential to be a crowd-pleaser, in one click (like all Spotify users are able to do now)? At current payment rates, one million plays generate $3,000 from that single track, not to mention the posiible sales bring in by this "sample". Bear in mind that most of those people would never pay to hear Xenakis without cloud services anyway.

And with Spotify, teenage pop music fans nowadays can explore new music as they please.  A couple of minutes within Jonny Greenwood posted about he'd been listening to George Crumb recently, tens of thousands of fans could start to listen to Black Angels right away. Any IDM/Drone fan who is curious about where did this music come from can listen to Xenakis and Stockhausen to hear for themselve.  Before cloud service, let's be honest, most of them source it from Youtube and illegal p2p networks. I'm not saying getting contents for free is good, but that is a fact and even if piracy could be rooted out from internet (no it can't), I'm afriad most of these curious listener would just give up exploring more music.

You see what's really exciting about Spotify and cloud services is they are, relatively speaking, so young, and full of possibilities. Putting a streaming link into iPad version of The New Yorker and monetizing it is just one of the numerous ideas. Even if Mode can survive solely on a few thousand loyal fans, like in the past 26 years, why not give the new opportunity a try?

The 1/3 penny per stream payment rates is definitely not fair, but I'd assume it's growing, because Spotify's paying subscribers has been growing rapidly in the past two years, from 250k to 1.7 million, and within one month more than 140k US users subscribed to their paid service. So Spotify's income, and accordingly the payment to all labels, should continue to grow rapidly in the next few years at least.

In my opinion what you should try is, to unite with other independent classical/jazz labels, maybe even the majors, to negotiate with Spotify, and ask them to change the pay per stream model. The current one is not fair to labels with longer tracks, because if a 50-mintue 12-track pop album and a 4-track, 50 minute classical album both got streamed once, Spotify's payment to the pop label is triple (12:4) of the classical label. Also note that currently this model seems to be adapted by all streaming services, so it may take some time and effort to change.

I know this may sound aggressive but I do think you should also try to promote your contents on Spotify. In the past you focused on meeting the needs of thousands of contemproray classical fans, it's more like maintaining a small community, where everyone speak the same language. Now the whole wild world is opening up, all kinds of people have the same chance to hear your music, if you want to be take advantage of that, you need to come up with some new strategies. Cage Against The Machine? Xeankis Remix contest? Inviting Jonny Greenwood or Bjork to review your new release and post a Spotify link on their Facebook walls? Why not?

At the same time, you can also maintain a regular CD club for fans who just won't listen to music on computers, selling Flac online (ideally as a subscription, like Resonus Classics), or even manufacture some collectable handcrafted CD-R/Vinyl (pre-order only so you can control the cost). I'm not a businessman, but it looks to me that there are many possibilities worth trying, than leaving Spotify now.

Right now only about one third of Mode's catalog is available on Spotify, I don't know if the rest two thirds moved more units than the Spotified ones. If the sales level are the same, would you please consider making more contents available?

I hope you can take my opinions into consideration, before you make your decision.  And I hope this email can be forwarded to Mr. Brandt. Thank you.

Music is the best.

Peace
Ulysses

Postscript: In the end, the essence of the music business is to meet people's demand for music, in a monetized way. Before the cloud, people buy copies. Now that more and more people start to realize they don't need copies anymore, and it's foreseeable that, in a few years, the cloud would be able to stream in lossless quality and offer multimedia information like booklets and musician biographies. Simply put, the cloud will shortly exceed CDs/Digital copies in user experience, in every way. In my opinion the industry needs to come up with a new way of making profits from the cloud, instead of running away from it. Currently Spotify is the cloud service with the most hype, and personally I think it's the most technically advanced one, so it's in a good position to become one of the dominating ways of how people consume music. I hope niche labels can give Spotify more chance, to experiment with the opportunities it offers, instead of cutting it off at this early stage.

And I also hope Spotify can show some goodwill to niche labels with longer tracks, it might not be up to Spotify to change the pay per stream model, which is adapted by all streaming services that I know of. Here's an easy alternative: just count one stream of longer than 10-minute tracks as two streams, longer than 20 as four. It doesn't require Spotify or the users to pay more, but makes the payment model more fair. At least Spotify can let the labels know they are open to negotiation, and sincerely "want to offer Spotify users all of the music in the world", in a sustainable way for both them and the music makers.