Niche label Blue Music Group, which specializes in Scandinavian jazz and classical artists, announced yesterday that it has withdrawn its catalog from Spotify‘s on-demand streaming service. The announcement, and its wording, make an interesting illustration of the tricky decision facing content owners during a time of industry disruption.
While traditional music sales (CDs and downloads) are plummeting in all year-over-year comparisons (for samples, see IFPI here, RIAA here, and Nielsen here), supplanted by streaming popularity, Blue Music Group is placing a bet on the fading era of buying albums and tracks rather than accessing global catalogs.
“We rely on people buying our downloads from Apple iTunes, Amazon or Bandcamp,” said Mika Pohjola in the label’s announcement.
If there is an undertone of bitterness in that statement, it might be because Pohjola is also a BMG artist. He refers to Spotify’s “pitiful rates.” The announcement does not mention other on-demand streaming platforms — such as Rhapsody, where, as of today, Pohjola’s music and his label are easily found and played.
Spotify is often used as a proxy for all streaming music, which is unfair when language such as “pitiful” and “unfair” are deployed against it. But the interesting part of Blue Music Group’s statement is the outright commitment to the dimming paradigm of album sales and music ownership. That might be a sensible bet for a niche label that has a devoted audience of traditional consumers. “We rely on people buying our downloads from Apple iTunes, Amazon or Bandcamp,” he said.
Extending that theme with some snark, Pohjola continued, “These vendors […] understand musicians need to get paid.” Of course, Spotify’s on-demand service pays labels according to negotiated licensing rates, so any implication of an underhanded business model is inaccurate. But it is true that the model might not be an advisable distribution option for some labels. “Most [BMG] artists suffer from Spotify eating up their download sales,” Pohjola remarked.
It’s worth noting that when the iTunes Music download store started in 2003, it was both threatening and hopeful to the industry, just as streaming is today. iTunes diverted consumer attention from unauthorized music-sharing on Napster and other platforms, which was a ray of hope to a desperate music industry. But it also ripped apart the lucrative CD album product, creating a market for downloaded singles that fractioned sales revenue. Labels were panicky about that, and fought Steve Jobs on that point before eventually relenting.
Disruption periods, during which new models establish and gain scale, create difficult decisions for stakeholders. There is a shifting equation of protecting existing assets and creating new assets whose currency will gain value in the future. Blue Music Group is doubling down on its existing consumer path, which leads straight from traditional marketing to downloads. In doing so, it is making its music inaudible in one of the biggest streaming markets (we did not find a label presence in YouTube, either), losing placement in user playlists and social sharing.