March 17, 2010

Lady Gaga’s $167 pay check

Listening to Daniel Ek from Spotify today @ SXSW’s closing keynote was interesting. Not so much interesting for what he said, but more for what he didn’t say and what the Twitter back chat was saying instead.

For the CEO of an immensely popular and *successful* tech start-up, Ek didn’t look 100% happy. In fact, he looked 99% worried. Even when the crowd whooped and clapped at the new Spotify product demo, and chat of new wonder-features, Ek and his bald head still frowned his Nordic frown.

And the underlying reason for this frown seems to be the Spotify business model, and its key dependency on music labels and publishers. Spotify have done a pretty good and swift job of partnering the European music industry, however they’re having a much tougher task convincing the US industry to sign on the dotted line.

And I think the shrewder tougher talking US musos may be on to something, as whilst Spotify’s founder was ducking questions from the SXSW crowd about the details of revenue share, there was a strong amount of Twitter backchat about the real extent of Spotify’s revenue opportunities. The most interesting of which came from @castig who pointed out that Lady Gaga had been paid only $167 for 1 million plays of her tunes.

The Lady Gaga stat begs the question of is it really that beneficial for music labels to back Spotify. And if music labels pull out then no matter how great Spotify’s app technology is, then Spotify will crumble – which is maybe explains why Ek looked so worried . . .