by Tim McMahan, Lazy-i.com

This will be remembered as the year music went to the cloud, with Amazon, Google, Spotify and most recently, iTunes Match presumably changing the landscape in terms of how we listen to new music.

With that in mind, last Friday Wired posted this story with the headline: “200+ Labels Withdraw Their Music From Spotify: Are Its Fortunes Unravelling?” In it, Wired reported that music distributor STHoldings, which represents more than 200 labels, was withdrawing its entire catalog from Spotify, Napster, Simfy and Rdio.

Sayeth STHoldings in the article, “As a distributor we have to do what is best for our labels. The majority of which do not want their music on such services because of the poor revenues and the detrimental affect on sales. Add to that the feeling that their music loses its specialness by its exploitation as a low value/free commodity.”

The Wired article pointed to this item in Digital Music News with the headline “Study: Spotify Is Detrimental to Music Purchasing…” that quotes a study from NPD Group and NARM (National Association of Recording Merchandisers) that seems to state that a percentage of consumers were satisfied with merely having access to music, and not owning it. Translated, they listen to their music on Spotify and then don’t buy it.

I saw this exact situation played out right in front of my eyes a month or so ago when Big Harp played at Slowdown. A guy who was a friend of a friend said after Big Harp played, “I love their music. I should probably buy a copy of their CD, but I already have it on Spotify.” I, of course, preceded to call the guy a cheap bastard and tried to guilt him into going to the merch table, to no avail.

Spotify responded to STHoldings in the Wired article by saying artists are receiving “substantial” revenues from Spotify. “Spotify is now the second single largest source of digital music revenue for labels in Europe (IFPI, April 2011) and we’ve driven more than $150 million of revenue to rights holders (ie whoever owns the music, be it artists, publishers or labels) since our launch three years ago.”

It should be noted that I didn’t recognize any of the labels that STHoldings represents (read the list here). Just how significant is their withdrawal beyond being a touch point for articles like this one? Who knows…

But let me add this to the mix: Since I began using Spotify (a couple months ago?) it’s been most effective in steering me away from making (what I assume are) bad purchases — i.e., I can now conveniently listen to just about any record that Pitchfork has given a rating of 8 or higher and decide for myself if it’s worth buying or not.

The ultimate downside to all this: I’m now less likely to give a record the second or third “listen” that I would have given it had I purchased it (or received a promo copy). In other words, music no longer is given a chance to “grow on you.” Some of the best records can take weeks and months of listens to sink in. With Spotify and the other services, artists are given one shot to impress the listener before they move onto something else, never to return.

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Read Tim McMahan’s blog daily at Lazy-i.com — an online music magazine that includes feature interviews, reviews and news. The focus is on the national indie music scene with a special emphasis on the best original bands in the Omaha area. Copyright © 2011 Tim McMahan. All rights reserved.

Column 334: Every new record at your fingertips? Meet Spotify

by Tim McMahan, Lazy-i.com

As I write this I’m sitting in a lodge in Breckenridge, Colorado, with no Internet access and I’m listening to the latest by Death Cab for Cutie using red-hot music streaming service Spotify.

Spotify is the latest import from the Sweden that is promising to revolutionize how we listen to new music. It became available in the United States a couple weeks ago after thriving in Europe since 2008. Now with 10 million “subscribers,” the service lets you stream music via the web from a selection of 15 million songs, including most new indie releases, all for free (20-hour limit per month with advertising). For a mere $4.99 a month you can get unlimited access with no ads; and for $9.99 per month you get all the above plus access on your cell phone and “off line” (how I’m listening to Death Cab right now).

Sure, there have always been other on-demand music services that offer similar content — Grooveshark, Rdio, Slacker, good ol’ Rhapsody — but none offer as many songs along with an iPhone app. Spotify’s promise of being able to listen to any song at any time was too enticing to pass up, so I bought a premium subscriptions, downloaded the app and got started.

My first Spotify selection: The new one by Low, C’Mon, on Sub Pop. I’ve been itching to hear it. Unfortunately, when I tried to play it, the only thing I got was a “licensing not available” message. Strike one, Spotify. Instead, I tried the new one by YACHT, and The Antlers, and Cults, Ride’s Nowhere, Jesus & Mary Chain’s Stoned & Dethroned and KISS Alive. All were there. All sounded fantastic. But later, when I tried to listen to Led Zeppelin I or anything by Zeppelin or Pink Floyd, I came up empty. Strike 2, sort of (I already have everything by Zeppelin and Floyd, on vinyl).

There has yet to be a Strike 3. For someone who thrives on new music, Spotify is a dream come true. And for just $9.99 a month, imagine how many bad record purchases I will now avoid. Which brings up the next question: If I don’t need to buy records anymore, won’t labels and artist hate this service?

“Well, I think it’s pretty sweet,” said Robb Nansel, one of the guys who runs Saddle Creek Records. He’s had a trial version of Spotify for a few months.  “I like it. I think there can be some improvements, like how you find music. You have to know exactly what you’re looking for, there aren’t a lot of discovery tools built into it. But just having access to anything whenever you want is pretty great from a user point of view.”

Nansel said Saddle Creek worked its deal with Spotify though Merlin, a trade organization that represents a lot of indie labels around the world. Think of it as a collective bargaining organization that levels the playing field between majors and indies. “They’ve been working with Spotify overseas the last few years,” Nansel said. “They brought a deal with the states that we could take.”

He said Saddle Creek and its artists get a cut of Spotify’s ad revenue based on the number of their songs listened to by service subscribers each month. “At this point, the amount is minimal within the United States,” Nansel said. “But it’s starting to be something worth considering in the U.K., because they’re subscriber base is getting so big. It starts to make even more sense when it has 50 million subscribers.”

While ad revenue is fine, Nansel said the big money comes from paid subscribers. “Spotify wants to take this to a cable television analogy,” he said. “If you can get that mass population to subscribe to this model, than the dollars for labels and artists are superior to what they were in the heyday of CD sales. At least that’s the pitch they give to labels.”

But could Spotify ever get that big? Nansel’s not so sure. “Most people in the U.S. don’t spend $9.99 a month on music,” he said. But who remembers when television was free? “Cable TV has succeeded in that people pay for cable. If you can get those sorts of numbers, the music industry looks a whole lot better, but I don’t know if you can.”

Nansel said Spotify also tries to sell itself as a “discovery tool,” not a replacement for music sales. “I definitely use it that way,” he said. “I’ll check stuff out that I wouldn’t check out otherwise, and if I like something I buy it on vinyl. But I’m older, so maybe it’s not the same logic for someone who’s younger.”

Nansel also wasn’t sure how Spotify could impact Saddle Creek’s future. “We’ll have to wait and see,” he said. “If ad and subscriber revenues are bad, we won’t be talking about Spotify in two years.”

So what does Spotify mean for the future of the ailing compact disc? “I don’t think it’s a huge nail in the coffin, but another baby step along the way,” he said. “I can’t see the compact disc being around in how many years. Vinyl will have a place, a niche. Most people consume (music) digitally and a smaller subset consume physically. More elaborate packaging fits vinyl nicely. The convenience of the CD is what made it attractive.”

Mike Fratt, who runs Homer’s Records, called the idea of CDs going away “more tech hype bullshit. A relentless drum pounding of ‘CDs are going away’ for the last 11 years has resulted in what? CDs still representing half the business.”

On the other hand, Fratt said services like Spotify could be a threat to terrestrial radio, but that’s another story…

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Two more things. First, that Low album did become available about a week after I tried to find it on Spotify. Second, I initially thought I could find a ton of local artists on Spotify, artists that you’d never expect to find on a service like this. Until I realized that Spotify looks into your computer’s music library for search results. Once I figured this out, I realized that local acts were extremely limited in Spotify, if non-existent.

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Tonight is the MAHA Music Festival Showcase at The Slowdown curated by So-So Sailors. The line-up: Digital Leather, Fortnight and Millions Of Boys. The show starts at 9 p.m. and is absolutely free.

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Read Tim McMahan’s blog daily at Lazy-i.com — an online music magazine that includes feature interviews, reviews and news. The focus is on the national indie music scene with a special emphasis on the best original bands in the Omaha area. Copyright © 2011 Tim McMahan. All rights reserved.