The music industry is changing
Damon Krukowski:
Which gets to the heart of the problem. When I started making records, the model of economic exchange was exceedingly simple: make something, price it for more than it costs to manufacture, and sell it if you can. It was industrial capitalism, on a 7” scale. The model now seems closer to financial speculation. Pandora and Spotify are not selling goods; they are selling access, a piece of the action. Sign on, and we’ll all benefit. (I’m struck by the way that even crowd-sourcing mimics this “investment” model of contemporary capitalism: You buy in to what doesn’t yet exist.)
But here’s the rub: Pandora and Spotify are not earning any income from their services, either. In the first quarter of 2012, Pandora— the same company that paid Galaxie 500 a total of $1.21 for their use of “Tugboat”— reported a net loss of more than $20 million dollars. As for Spotify, their latest annual report revealed a loss in 2011 of $56 million.
I’ve quoted here what is to me most interesting of Krukowski’s observations but the whole piece is a great read especially if you’re not familiar with how and how much Pandora and Spotify pay out to artists.