"The reality is the Earth is a Ferengi trading outpost. We all have to earn a living to survive."

Sam Rosenthal has been in the music business for nearly thirty years both as an artist with his band Black Tape For A Blue Girl but also in running his own darkwave label, the internationally renowned Projekt Records.
Recently Rosenthal announced that he had pulled his label from all digital streaming services such as Spotify, Grooveshark and Rdio. But what happened after he announced his move was unprecedented as Spotify went on the attack in an attempt to discredit his decision. Dominion caught up with Rosenthal to get to the bottom of his conclusions and pick his brains on the future of digital distribution in the independent scene.

"As a fan, the idea of having every song ever recorded at my fingertips, on demand, is really exciting. ‘Wow, I'd love to listen to a track off David Bowie's 'Diamond Dogs'. Right now!' I understand the excitement about that kind of service." Explains Rosenthal "However, as a music creator, I see that Spotify is not a model that provides a viable payment to the artist. If a day comes where everyone is listening via streams - and nobody is buying physical CDs or digital downloads - then there's not going to be any money going around the system. And that would mean no money for the creators, so we can pay part of our rent, eat and maybe buy some new gear.
"On Star Trek, the computer has everything, on demand. Very cool. Yet somebody is feeding the crew, buying their uniforms, giving them shore leave and paying for the fuel. That's sort of a socialist system that works in fantasy. The reality is the Earth is a Ferengi trading outpost. We all have to earn a living to survive. So we have to look at this realistically, rather than as if we live in Utopia."

Sam's frustration is understandable when you look at the numbers he was receiving from the service compared to other digital outlets for Projekt records.

"Spotify paid our digital distributor $.0013 per stream. Using that number (which is before their fee, and Projekt's fee) in order to earn $1000, 769,230 streams are needed. I don't know any indie bands at my level who get that kind of play. And I don't know anyone who can live on $1000 a month, anyway!
"At Projekt, I split digital income 50/50 with the band. Which means they get about 30¢ a download at iTunes. This is 231 times as much as they receive from a stream at Spotify. Since we don't sell physical singles, there isn't the same easy comparison. However, a Projekt band earns more royalty from a Digital album sale than a physical album sale. This makes sense, because a physical album has manufacturing costs attached to it."

Projekt isn't the only independent label to come to the same conclusion based on these kind of numbers. Prosthetic Records and Century Media have both recently pulled their content from such sites. With Century Media saying: "There needs to be awareness though, that how you will consume your music has direct consequences for the artists, who we are all trying to support."
This is a trend that Rosenthal senses will continue despite some labels seeing worthwhile returns.

"Some friends at labels have told me I am completely wrong, that they are earning $300 or $500 a month from streaming, or whatever the number is. Perhaps that's because they have larger bands with more ‘hit single' appeal... But I look at that number, in compared to what Projekt earns from digital downloads, and it's such a small portion of the whole. Less than 1% of Projekt's total income. I am fine with my decision."

"Music is just the chum, for Spotify to take in the ad money. They're just a few steps above illegal downloads, as far as I am concerned."

Though Spotify were not satisfied with his decision and on the 30th of September attempted to shoot down Rosenthal's reasoning in a statement of their own (HERE).

"I thought their response was utter nonsense. They said nothing to address my main point, which is that I want to live in a world where artists are fairly compensated for their creation. A world where we respect artists, and what they contribute to our lives and our enjoyment of life. Spotify's model does not provide a fair payment to the artists who create the music." Rosenthal continues "I think they have a flawed business model. Giving away music (and hoping ads generate income) is never going to compensate artists and label properly. They are making their money on the backs of the artists. Really, what do they care about fair compensation? Music is just the chum, for Spotify to take in the ad money. They're just a few steps above illegal downloads, as far as I am concerned."
But what would it take for Rosenthal to return to the streaming model?
"If they were suddenly paying a fair number, sure, I would return. However, I don't think that fair compensation can work in their model. I believe that most users are not paying anything for Spotify. FREE seems to be a lot of people's favourite price point. That doesn't solve the problem of how to pay artists something equitable."



One of the points that is constantly brought up in the argument of that the independent business model is moving toward a trade-off between artists gaining more exposure in place of revenue. A notion that doesn't wash with Rosenthal who THIS article's comments in support of his position.

"That is the meme that is being shoved down our throats. That we should take ‘Free' or ‘Almost Free' because it gives us ‘Exposure'. My argument is that if exposure equals increased sales, then shouldn't sales be UP in the music business? Shouldn't all the illegal torrents and illegal downloads on Rapidshare lead to MORE album sales? Because there is plenty of exposure going on out there! The answer is that it has not led to more sales. It has led to more people wanting more things for free."

A fair point, though there are some bands (such as ANKST, Goteki and Deied/Aeon Sable) are championing the free music model, whether it is by giving away portions of, or entire digital copies for free and selling limited edition physical albums the most notable user of this strategy being Nine Inch Nails (Though most bands can't expect to automatically sell-out arenas every night on a world tour). Where does this movement sit with a label owner such as Rosenthal?

"I would not be able to run a record label, if my bands wanted to give ALL their music away. I have bills for manufacturing CDs and paying my employees. I have rent. I like to eat. (laughs). The thing is, it is fine when a band decides, ‘Hey, I want to give this song away for exposure‘. We do that on Amazon all the time. It is different when a business entity decides that they are going to give my music away for free. That doesn't serve my needs.
"I have my own band, Black Tape For A Blue Girl. I love when people hear my music. I create music to communicate. However, I don't see the logic in letting people consume my music, with nothing coming back to me financially. I don't expect to get my shoes repaired for free. Or to get into a movie for free. To be given coffee by the local cafe. Or to steal internet off my neighbour's hot spot. Why should I - as an artist - be expected to give my work away for free?"

"There are too many unworkable business models out there. They expect us to say ‘yes' to everything, because they sell us on the idea that we are so desperate for exposure. I'm not buying it."

As an entrepreneur and veteran of the independent music scene, Rosenthal has seen many changes in the industry and in the current climate what advice can he offer other independent artists and labels looking to make a living in the industry?

"I avoid all streaming services. The fact that Rhapsody pays 1¢ a stream is admirable, in this climate. Yet, that still is not a great payout for the artist." Rosenthal continues "iTunes & Amazon give a fair payment. We get 60% of what a customer pay there, more or less.
"Use the [services] that pay money. Don't use the ones that use your creations solely to line their pockets. There are too many unworkable business models out there. They expect us to say ‘yes' to everything, because they sell us on the idea that we are so desperate for exposure. I'm not buying it.
"Would I go on tour and play for free each night, or for $.0013 per song per person in the audience? No. Artists cannot afford to take time off from their real job to do that. Where's the reward in that, financially and spiritually?"

For the latest news and releases from Projekt Records you can visit their official website HERE.