Something For Something: Spotify Lets Artists Sell Merchandise

After facing criticism from industry heavyweights like Thom Yorke, as well as dealing with ever-growing competition from music streaming services like Beats Music courtesy of Dr Dre, Jimmy Iovine and Trent Reznor, Spotify announced last Sunday it would allow artists to begin selling merchandise on its website. And, as many have argued, it’s about time the popular streaming destination gave something back to those it’s usually accused of exploiting.

Announcing the changes over the weekend, Spotify representatives declared that all musicians using the site’s streaming service would now be able to display and sell their merchandise as part of their artist profile page and without having to pay any kind of commission to either Spotify or its partner, Topspin Media. As a result of the changes, bands and artists will be able to advertise band-related items such as t-shirts, posters, bundles and other branded merch to those who are searching for and listening to their music. To further show their support in promoting musicians featured on their site, Spotify also announced its partnership with London-based start-up Songkick – a deal which would add the extra feature of ‘suggested’ gigs and major concerts based on what the listener might be searching for.

And it’s all for the greater good of the artists more than anyone, according to the company spokesmen who posted on Spotify’s website that “We’re really excited that Spotify’s 24 million music-loving users can now see merchandise and concerts while listening to their favourite artists, and that we, in turn, can provide additional revenue opportunities for artists of all sizes.” Which is something the company had long been criticised for by both members of the public and influential artists including Radiohead’s Thom Yorke (who actually pulled his solo material from the service last year, stating that “New artists get paid fuck all with this model”). Now, in 2014, Spotify can indeed hit back somewhat and argue that it does support smaller artists thanks to the introduction of the new business model which charges artists no fees to advertise their merchandise and, thereby, actually helps to increase their royalties.

And it’s not like they sit and take it anyway – recently Spotify pointed out the fact that the company pays artists between US$0.006 (0.0036p) and US$0.0084 (0.0051p) each time a song is streamed and that their business model had paid more than US$1 billion (£600 million) in royalties to artists since the site’s launch in 2008. According to Spotify, the company actually claims that half of that total was paid out last year alone.

Fittingly, Spotify’s announcements comes just after the release of a new report by researchers Alvarez and Marsal who suggest that the cost of music streaming presents the biggest obstacle to profitability within the industry. The researchers have claimed that adoptions rates of paid streaming companies like Spotify would increase from 17 percent to 40 percent in the UK if prices went down from £10 per month to £5. And although the price would be decreased, the benefits would ultimately end up being higher because it would lead to an increase of 2.4 million people paying to listen to music, with the potential to generate up to £100 million per year.

And whether you happen to be ‘for’ or ‘against’ streaming services like Spotify is fast becoming irrelevant anyway – the emergence of similar companies like Beats Music, Pandora, Rdio, Bloom.fm, Deezer and Google Play means this form of music consumption is here to stay. And while it appears it’s always the artist who gets shafted when it comes to the fair distribution of finances, at least Spotify has shown some signs of transparency – which is much more than can be said of record companies who seem to profit the most.