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Brand new week, more frickin Taylor Swift

By | Published on Monday 10 November 2014

Taylor Swift

The boss of Taylor Swift label Big Machine, Scott Borchetta, confirmed on Friday that it was Spotify’s freemium level that caused the singer to pull her entire catalogue off the streaming platform last week. Allowing people to stream Swift’s music for free on-demand anytime anywhere, with the only inconvenience an ad here or there, was an insult to the fans who paid to buy the albums, whether on CD or download, he added.

After a few days of no comment from Swift and Borchetta after the biggest popstar of the moment pulled out of Spotify entirely early last week, both singer and label chief provided comment in separate interviews on Thursday and Friday.

Swift was less specific about the entire catalogue pull in her interview with Yahoo, speaking mostly about her hesitance in sharing new music on the streaming platforms, saying that she’d given it a go with single ‘Shake It Off’ and that it just didn’t feel right. Though she repeated concerns aired in an earlier Wall Street Journal op-ed about music being available on-demand for free, as well as delivering what might be called the killer blow in this debate.

She told Yahoo: “All I can say is that music is changing so quickly, and the landscape of the music industry itself is changing so quickly, that everything new, like Spotify, all feels to me a bit like a grand experiment. And I’m not willing to contribute my life’s work to an experiment that I don’t feel fairly compensates the writers, producers, artists, and creators of this music”.

Borchetta, meanwhile, in an interview on Nikki Sixx’s radio show, confirmed what had been assumed, that his and Swift’s concerns are about those streaming services that offer fully on-demand functionality for free. So platforms like Beats, with no free option, will still get Swift’s music, as will personalised radio services like Pandora where full albums are not available on-demand (though, in the US at least, Swift has no control over the latter, copyright law obliging artists and rights owners to licence via SoundExchange).

And this, of course, is all for the good of the fans. “We never wanted to embarrass a fan”, said Borchetta. “If this fan went and purchased the record, CD, iTunes, wherever, and then their friends go, ‘Why did you pay for it? It’s free on Spotify’, we’re being completely disrespectful to that superfan who wants to invest”.

He went on: “We determined that her fanbase is so in on her, let’s pull everything off of Spotify, and any other service that doesn’t offer a premium [only] service. Now if you are a premium subscriber to Beats or Rdio or any of the other services [which limit fully on-demand access to premium users only], then you will find her catalogue”.

So there you go. But one week on from the Swifty catalogue pull and Spotify’s since criticised response via a cheesy ‘Come Back, Taylor’ playlist, what is the impact on the streaming service? Well, if it’s only Swift’s catalogue that remains absent, once the chatter dies down the short term impact will likely be limited; after all, some big name heritage artists are already hold-outs in the streaming domain.

Few subscribers will jump based on the absence of one act, the equity-holding major record companies will remain loyal, and hopefully the all important stakeholder as the digital company marches towards its IPO – ie Wall Street – will remain convinced that Spotify is, in fact, the future of music. And therefore pay big when the company floats, ensuring a handsome pay-day for early investors and the majors.

Though what if other big name artists with the contractual power to veto where their music gets played follow Swift’s lead? Says Borchetta: “I’ve had calls from so many other managers and artists. There’s a big fist in the air about this. Spotify is a really good service, they just need to be a better partner and there is a lot of support for this”.

A wider exodus of big name artists from Spotify would cause problems. Of course, unlike with Swift, whose label is equally dubious about the Spotify business model, major label artists would come under pressure from their record companies not to pull. Because, while Spotify is indeed a “grand experiment”, by getting shares in the company the big labels have been assured that they will be rewarded if the experiment works. Artists, however, are not cut into these rewards, and that’s been an increasing bone of contention even pre the Swift Exit.

But even if Spotify’s major label allies do limit any big artist exodus – maybe with some secret deals to pay bonuses to the biggest acts when those shares are cashed in, or guarantees of marketing support from the streaming platform to ensure more plays and therefore more royalties – all of this does frame a debate that is sure to be unleashed post-Spotify IPO when the majors have less need to stay loyal.

Which is the problem of the streaming service’s loss-leading freemium level, a proven way to sign up premium users, but – some artists would argue – at too high a price. As previously noted, the compromise here is to pull the biggest artists out of the freemium level’s catalogue, making access to those acts’ music for premium users only, a move that would probably see the return of Swift’s tunes to Spotify.

Though the challenge is where you draw the line without making the freemium option utterly unattractive, especially as the streaming firms turn their attention to more mainstream consumers for whom Swift et al are important. What is more likely, then, is the Rdio approach of having only a personalised radio option for free users (but with a pretty comprehensive catalogue), with fully on-demand access kicking in once you pay.

It’s actually a sensible approach, but would require Spotify taking something quite considerable away from its existing freemium users. Particularly while top artist content is routinely available via user-upload platforms like YouTube and SoundCloud.

Quite how soon such compromises will have to be negotiated remains to be seen. But Spotify and its major label shareholders will be hoping serious debate can be postponed by at least a year or so, and that in the meantime the Swift Exit will remain confined to just Swift.

Look out for more discussion on the evolution of the streaming market, and the challenges of fitting freemium into the mix, in the next edition of the CMU Digest. You can now subscribe to our premium service in the CMU Shop here.