Tuesday, November 24, 2009

Lady GaGa's $169 Spotify Payment - The Music 3.0 Relevance

There were many articles and posts circulating the Web yesterday regarding the fact that Lady GaGa only received $169 in payments from the online streaming music service Spotify for 1 million plays for her song "Poker Face" (check out Hypebot for the story). Today Spotify fires back that they paid much more than that but are unable to provide the exact figure due to a privacy restriction.

First of all, I understand why Lady G's people are making a big deal of this. It's their job to make her all the money they can (especially while she's hot), and of course, the more she makes, the more they make. For an artist like her, it's in no one's interest, not her management, not the record label, not her publisher, to settle for a small amount like this. After all, a tentpole artist for a major label works under a different set of rules than everyone else.

But the Music 3.0 perspective wouldn't be about the $169, it would be, "Wow, 1 million plays!" In Music 3.0 (we'll call it M30 - em three ohh - because it flows better), the music is simply the carrot that entices the consumer to buy the other, more profitable goods that an artist has. In other words, Lady GaGa will make more money on touring and swag then she ever would on only the sales of her music, regardless of whether it's 2009 or 1989. On top of that, the popularity of her music makes other big money ventures like movies, possible for her.

In M30, music is the calling card. It's a commodity with fewer and fewer hard costs involved (yes, I know there are some and what they are - that's for another discussion). Your intention is to give it away in order to find an audience. Once you've developed your "Tribe" (as marketing guru Seth Godin calls your superfans), they'll happily pay more and more for rarer and rarer merchandise like box sets, exclusive backstage passes, or after-show party invites (to name just a few). The more the music gets out, the more likely the artist is to sell the items that really make her money.

Keep in mind that from the beginning of recorded music time, this was always the case. Even during the heyday of record sales in the 70's 80's and 90's, most major artists made the vast majority of their incomes and fortunes on the road, not from record sales (they did make major money on publishing if they were the writers - something we'll cover in future posts). In M30, the idea is to get your music out there any way possible, and free online is the same as free on the radio, which was once the driving factor in record sales and artist popularity. If you give it away, more people will be exposed to your music. If you make a little money on music sales, consider it a bonus.

Next post, we'll cover the publishing aspect of Lady GaGa's $169 from Spotify, where you'll find a completely different perspective from that point of view.

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