[jere]

>We're set to soon see growth of physical sales eclipse the contraction of physical sales completely. Which means the graph, if expanded a bit, might look like this: It goes up a little bit!

I don't understand. To me, the change in physical sales appears to be asymptotically approaching 0. Why assume it suddenly goes positive and then use that guess to make Spotify look deceptive?

>Spotify is playing a little fast and loose here, though. A Spotify Premium user isn't the average music fan. Only 25% of Spotify's active user base pays for the Premium service. .. A fairer comparison might have been the average U.S. citizen against the average Spotify user, since both include people not really paying for music.

No, they're not. They're comparing paying Spotify customers to US paying listeners. If you think comparing nonpaying to nonpaying is reasonable, paying to paying should be reasonable too.

>In a year, Spotify makes about $14.67 per advertising-supported user [2], but those folks if considered just typical Americans would spend $25 on average [3]. That's just over $10 per year lost for each cannibalized person.

Why assume those people aren't buying music also?

[aston]

The projection graph does assume flat physical sales. But it's a stacked chart.

Paying to paying is not completely unreasonable, but imagine an airline using the average fares of its Airline Club members (who are often flying first class) vs the fares of average Americans. It's easy to inflate the number when the group of people you're talking about are rich and predisposed to being more engaged.

edit to your edit: It's not clear to me why you would be willing to listen to Spotify for free, but then buy music on the side. Anecdotally, I've never met anyone who does that consistently. I'd be interested to hear contradicting anecdotes though.

[jere]

Ok, gotcha. Eyeballing the graph it looks like physical alone is rising and also you seemed to be implying physical would start to grow.

I've bought so few physical music products over my life that I assume my buying habits are completely different than the average person... but I have no idea. One case you might consider is gifts. On an impulse, I bought several Christmas music CDs last year and I also happen to use ad supported Spotify.

[earbitscom]

Yeah, there is also a bit of this at play when Spotify talks about what they pay artists. They say they pay an average of 70% of revenues, but they don't explain that major labels get way better rates per stream, not just because of the volume of streams. It would be akin to Wal Mart boasting an average $22 per hour salary for all workers because their CEO makes $100M a year while all others make minimum wage.

[wmf]

That doesn't really square with Spotify's own explanation where equal market share should get equal payout: http://www.spotifyartists.com/spotify-explained/#royalties-i...

[earbitscom]

In that first graph is says X 4 (Artist's Royalty Rate). So it is based on market share, and some rate, which they would have simply said is Y had it been the same for everyone.

[thedufer]

In college I knew some people who bought music on iTunes and then bought the same music in vinyls. I wouldn't expect an iTunes->Spotify switch to change their vinyl habit.