Spotify: a PR success, a service the world has grown to love and a potential game-changer for the music industry – but also a service which most of us have decided not to pay for. Instead, the majority of revenue remains reliant on advertising, users largely accepting an advert being played every half an hour as a small price to pay for having legal access to a myriad of music.
Yet over the weekend it emerged quite how insignifigant a money spinner this currently is for even the most popular artists. Lady Gaga’s ‘Poker Face’ is one of the most popular tracks on Spotify, being played over a million times, yet a report claims that she has earned only $167 (about £100) from this. In view of the fact that many of the big music labels are given equity in Spotify in return for their artist’s material, this could understandbly lead to some anger – Swedish artist Magnus Uggla being a case in point.
Whether it is really relevant to measure the success of Spotify in this way remains to be seen as it is still a service in it’s infancy. Much like Twitter, it is phenomenally successful in terms of usability but is still finding its feet in terms of making money. As it continues to attract users it’s appeal to advertisers will grow and so to will the financial returns. How this filters down to the individual artist is then probably more of an issue with the labels than with Spotify.
If at this stage you instead view Spotify as a brand building tool to drive fans to the places which do make an artist money, it all becomes a bit more acceptable. After listening to a track on Spotify, many will pay to download the album, go to a gig or watch the video on YouTube – the latter being highlighted by Lady Gaga herself as one of the most lucrative touchpoints. The video for her latest single ‘Bad Romance‘ is a case study in product placement. The incredibly slick electro pop production includes products from Phillipe Stark, Nemiroff, HP, Nintendo and Burberry among others. Whilst there is always a danger that product placement in a video will translate to it becoming a glorified advert, each product has a logical role and is subtle enough to ensure credibility remains. For Lady Gaga (or her management) this means a big wad of a cash. By inviting the brands into her video It also means she can capitalise on her value as a brand endorsement whilst still playing by her rules. For the brands in question it means an instant association with a cool, headline grabbing personality. It also brings (at the time of writing) almost 17 million views and the knowledge that this video and brand exposure will stay online indefinitely. A win win situation.
DISCLAIMER: HP is an Edelman Tech client. @LukeMackay also has a Burberry coat, though no one pays him to wear it. More’s the pity.