| >Everyone involved in that activity ultimately understood that they were not participating in economically supporting the artist (or indeed, in any economic transaction at all). I don't believe you can present this decision as independent of piracy and business model. The reason for Spotify's abysmal payouts compared to Apple's has to do with the _business model_. Advertising is an awful way to pay to content when it comes to music especially when you have to placate labels. You are making it seem Spotify just kept the money for themselves, when there simply wasn't that much money to go around. >Rdio and Grooveshark are weird examples to pull in I bring them up (and include Pandora) because they had the functionally the same business model; to appease labels by giving them advertising revenue. It didn't work because the revenue wasn't there. >The primary reason you couldn't have pulled that off in 2008 was economic contraction, not piracy. Spotify was founded in 2006; and launched in the US in 2011 (the same year Limewire shutdown). You could not have launched a successful, subscription only streaming service the year limewire shutdown. Your chart is a great resource - look how tiny the "On Demand Streaming (Ad supported)" revenue bar is; that is the "money pool" most artists are drawing from when they get paid from Spotify. To summarize, Spotify's payouts are historically terrible and will continue to be terrible for as long as they continue to support their free product. The advertising market just isn't there, and all those free users depress the pay per streams that Spotify provides. Spotify's "price expectation" was driven by the fact they likely needed to launch with a free ad supported product or they would have never succeeded in the competition with piracy. Apple now enjoys only having to compete with Spotify, and not with Limewire, and doesn't have to offer a free product. With a much larger revenue pool to draw from, per stream, their numbers naturally look better than Spotifys. The effects of piracy cannot be discounted; even Jobs practically built iTunes and the iPod on the backs of piracy. |