This is a guest post by Ben Anderson. See my thoughts at the end of the post.

So, in case you haven’t heard, Spotify is the greatest thing to hit the music market since sliced bread…

…or so they say.

And in case you haven’t heard anything about Spotify, it is the new social service that allows people to create massive, gigantic, music playlists for free ($10 a month if you want unlimited streams after a certain amount of time and if you don’t want to listen to their advertisements). You can watch the founder of the program speak at the last f8 conference, about its integration with Facebook’s new user interface, called “Timeline” (which they are currently getting sued for).

I have used this program, I even signed up for the $10 a month premium account – which gives you mobile access and frees you from advertisements as well as sets no limits on your use of streaming music. I have even written articles here and here proclaiming that Spotify is just so dang cool that I could never see it failing and that everyone should get it, and that basically I love it.

After a lot of thought about the product however – backed up by a lot of use and a lot of research – I have determined that Spotify might be the worst thing that has ever happened to music. Ever.

It claims to monetize an audience by steering them away from pirating. This however cannot be further from the truth. The only people that are feeling the effects of this so-called monetizing, are the people at the top of the food chain – the corporate leaders in the music industry, and everyone else that is employed by the Spotify team (as well as Facebook, where Mark Zuckerberg believes that everyone that uses a Spotify account must sign up for a Facebook – which is something that Sean Parker and Mark Zuckerberg “supposedly” got in a fight for – I say supposedly because well, Sean Parker denies it and well, I believe him – or at least most of what he is saying).

What Spotify Really Does

What Spotify really does however, is make pirating music legal. There is just no way that musicians can expect to make a fair wage when something like the likes of Spotify is out on the market. I was able to listen to albums the DAY they came out, at an infinite amount of times (I did so with Lindsey Buckingham’s new album (pretty cool) as well as Gavin DeGraw’s new album (not as good as his old stuff)) and there is just no way these two artists are getting paid a fair wage for the amount of work that they put into their creations.

It is sort of reminiscent (the example I like to use) of the part in the movie “Showgirls” where Glenn Plummer’s character (James Smith) says to Elizabeth Berkley’s character (Nomi Malone), “You don’t want to be in this kind of show. What you’re doing, at least it’s honest.” In case you aren’t familiar with the movie, Nomi Malone works as a stripper, where as she wants to be in the show “Showgirls” where they pretend it isn’t stripping, but it really is…

…Spotify pretends it isn’t pirating, but it really is. It is an even worse case scenario of pirating, because not only are people getting music without paying people that have the rights of the music, but the people at the top are getting filthy rich off of it.

What Spotify has done has figured out a way to legally pirate music, by creating loopholes (or finding them, it’s the same thing) and thus offered millions of songs up for search and retrieval, without paying artists for millions of song plays, using “the audience that pirates” as their main justification.

Proof is in the Pudding

Currently, there are a few artists that are unwilling to allow their music to be put up on Spotify. These artists include The Beatles, Led Zeppelin, Metallica, AC/DC, and Bob Dylan. They are in a position to do this, because these artists are so big, and so respected, that they probably know that it is more profitable for them not to join Spotify, then it would be otherwise.

Not only that but labels like Century Media have completely removed their content from Spotify (when did music start being called content?). They did this to protect their artists as they stated they did not think that Spotify offered a valid way for them to earn a solid income, and that Spotify was not the “way forward” in the music industry.

This chart of how much artists get paid per album play really shows that Spotify pays the least amount out to artists per album play (an artist gets paid $0.04 every time there album gets played!

This means that an artist, to make $40K in one year, would have to sell his album 1 million times on Spotify!!!!!

If an artist only makes $40K per on 1 million album sales, then you know something is wrong with the system.

Conclusion:

There are many different ways to look at Spotify. Asking musicians how they feel would probably be the best route to take. One fact remains, and that is that Spotify clearly benefits from the fact that people pirate music, while album sales and iTunes sales definitely do not benefit from the fact that people pirate music. In other words, if pirating music didn’t exist, than neither would Spotify.

Author Bio:

This article was written by Ben Anderson. Ben works for a company that provides a white label link building service at www.inetzeal.com. He likes to write articles about SEO, and Internet business start ups in his spare time.

Donna’s Thoughts: I know the whole subject of music, piracy, and DRM has been debated endlessly over the years, and Spotify only brings it up once again. However, I think it’s worth discussing again for a couple of reasons.

First, times have changed a lot in the last few years, since this whole idea of music sharing began. We’ve all seen what can happen when music artists or book authors offer up their products for free, or for very cheap, or they allow users to pay what they want. In some cases, the musicians and authors end up making more money than they did when they took the traditional publishing routes. So, in light of that, I wonder if we can open up new discussions surrounding Spotify and similar music services.

Second, I’d like to see the discussion spread outward to encompass other digital products that we might all be producing. Maybe you create how-to videos. Maybe you create ebooks. Maybe you create amazing photos or draw/paint incredible art. Each of these types of products have a similar trait with music. They can all be easily shared digitally. So what if a service such as Spotify began sharing digital art, including the art you sell? Or a service shared digital how-to videos, and the ones you sell were included in the mix? How would this affect your business?

Since most people aren’t musicians, many love the idea of freely sharing music via services like Spotify, without giving too much thought or concern to whether or not it’s fair to the musicians. So I invite you to imagine similar scenarios that involve your own business, and your own products (if you create any), to see if that alters the discussion surrounding this topic. That’s all I have to say for now. Let the conversation begin in the comments below.