I suspect that Spotify will end up becoming a tool of the record majors as a way to squeeze the Indie artist once again, while simultaneously sticking it to their own artists. This will be accomplished by negotiating higher royalty payments with Spotify in order to retain large labels within their catalog, with the detriment that Indie artists will be stuck retaining the small pittance of performance royalties that they would get from any online radio station.

The main difference between an online radio station such as Pandora, is that with Pandora you cannot pick which specific tracks you want to listen to, while with Spotify you can. Pandora introduces potential customers to new music, while Spotify leeches off of potential customers by letting them listen to your song whenever they choose.

There are some benefits to Spotify, in that there are plenty of people who now make use of Spotify instead of pirating music. In these cases the Indie artist will come out ahead, however it will not outweigh the detriment of customers who would have purchased an album, but instead just listen as they can on Spotify.

In the long term, I view that streaming/subscription services will end up being a very large part of the music industry. The upshot of this is that our revenue streams from actual recordings will be much reduced. This presents specific opportunities for artists who are willing to capitalize on this new shift in the music paradigm.

It’s been said that live performances will be one of the main ways that artists will make their income, combined with merchandise, and that is going to be increasingly important in the upcoming years, as low-paying streaming services become the norm, rather than the exception. Bands that are able to have exceptional stage presence and theatrics will be able to tap into that one revenue stream. Props, impressive lighting and/or pyrotechnics, and making sure that there is a diversity in the performance between songs is important. You want someone to see a youtube video of someone recording your live show and say, “I MUST see them live!”

Another revenue stream is the traditional merchandise table, such as hoodies, t-shirts, etc, which most bands are already familiar with, but will become more important. These items can be more readily sold by making sure you’re at the “autograph booth” which you then autograph the CDs and other merchandise after it’s been purchased at the merch booth. The ideal arrangement would be to funnel fans past the merch booth PRIOR to the autographing booth. Tie into the fact that people want to be recognized for supporting you, and you’ve got a solid revenue stream.

One merchandising revenue stream that should not be ignored, however, is the “old-school” music fan, and their propensity to buy unique or limited edition items or bundles. A theoretical example of this is the limited edition box set of the album, which includes the t-shirt of the fan’s choice, stickers, patches, certificate of authenticity, autographed photos of the band members, and a VIP pass that can be used once when combined with a standard ticket purchase.

Eventually the pendulum will likely swing back on services such as Spotify, when major labels and indie labels push back enough to make the music streaming services financially beneficial to artists, but until that point in time comes, live shows, standard merch, and enhanced merch will be the keys towards most artists to make their revenue.

~Durandal of MOI
http://www.cdbaby.com/cd/ministryofingsoc