Last month, Bandcamp posted a blog that reported a ton of great news for the company and the music industry in general. Last year they grew by 35% with over 6 million fans buying music and $4.3 million dollars going back to artists every month. To put this in perspective Spotify only paid Taylor Swift, arguably one of the most iconic figures in the music industry today, only $500,000 per month (via CNN Money). Meanwhile Swift makes over $12 million dollars gross from album sales per week at the height of her “1989” release. This kind of inequality is an example of why artists’ are frustrated with the new trend in streaming music.
Why would an artist allow their music to be streamed for free when the bulk of their income comes from album and concert sales? The simple answer is exposure. Denise Lu from Mashable writes, “Spotify is an easy way for artists to cast a wide net and make their music available.” (via Mashable) The problem for independent artists, who are not as well-known as Swift, is that they simply cannot make streaming a profitable option. Streaming allows fans to hear a band’s music without supporting them financially. On top of that, consumers are less likely to buy a bands album if they already have access to their music from a streaming service.
Some argue that Vinyl records are making a comeback because of businesses like Bandcamp. It is a disputable point but Javi Velázquez, owner of HiFi Records in Astoria New York, argues that, “Listening to vinyl is easier, because your brain doesn’t have to be filling in the gaps of all the missing “lesser bits” which are discarded in order to achieve compression and produce a square-like sine wave of the original analog signal.” Those who agree with Javi would rather buy a vinyl record from band they like over just downloading their mp3. Bandcamp’s platform provides a market for vinyl between the artists and the consumer. The graph below shows the rise of vinyl with the Bandcamp bump in 2008. Not only are they providing a mechanism for indie bands, they are also reviving a long lost class of music lovers, the audiophile.
This is why Bandcamp is such a highly respected service in the music world. Not only are they granting artists the ability to have complete control over how their music is presented, they are also boosting the vinyl market. Bandcamp makes their money by taking a modest cut of the profits. “Digital album sales on Bandcamp grew 14% in 2015 while dropping 3% industry-wide, track sales grew 11% while dropping 13% industry-wide, vinyl was up 40%, cassettes 49%… even CD sales grew 10% (down 11% industry-wide).” (via Bandcamp Daily) In the war over music distribution, people are voting with their dollar in support of the grass-roots business style Bandcamp is offering. Proof of this claim can be found in the dismal numbers Spotify is reporting in their yearly financial reports.
After a debilitating analysis of Spotify’s business model by Digital Music Media, people are wondering if Spotify will even be around in the next two years. The article states, “Spotify tossed another scary financial figure into the ring this morning, with 2015-year losses topping an astounding $188.7 million on revenues of roughly $2.12 billion. That widens a year-2014 loss of $176.9 million, and brings cumulative losses to $698.1 million since the company started in 2008.” (via Digital Music News) Not only is Spotify having trouble converting free users into paid users, they are swimming in a sea of over $1.56 billion dollars in debt.
If that is not bad enough, employees are getting paid upwards to $150,000 a year and their CEOs’ are becoming millionaires. It is simply bad business to pay out so much to employees when the company is not making any profits. The company is being held up by hopeful investors who are willing to fund the sinking ship. With the failure of Apple Music and the coming demise of Spotify, one is left to wonder what will be there to absorb the market of music streamers. My prediction is, Bandcamp is the future.
At the end of the day, full time artists need money to survive. Bands who are just starting out have the potential to make a difference in the evolution of music but they are usually constrained by their budgets. Streaming is definitely a convenient way to listen to music, but consider the impact you are having on the music industry by choosing to support parasitic businesses like Spotify and Apple Music. Soon enough the decision will be made for you when Spotify becomes just as relevant as Napster is today. The question is, are you willing to be the last one to hop on the Bandcamp express?