Maria Schneider's whales

Once you find enough whales, you can leave Spotify or YouTube if you want.

Maria Schneider's whales

Maria Schneider, a composer and bandleader who has won Grammys, said on the All That's Jazz podcast:

[I]n the streaming world, everybody's payment is tied first of all to a pot of money.

That means that everybody is priced the same. It doesn't matter if you make especially niche music item with a tiny audience, or you're a superstar.

Try spending a quarter of a million on a record in jazz and streaming it, and see if you make more than $10 back on it.

If I can set my own price, and I'm making $20 or $25 average on each person, it doesn't take that many people, then, to reach $200,000.

You won't find Schneider's music on Spotify, YouTube, or other platforms she doesn't need. Her career rebukes the industry 'plagues' she discussed in 2017, and it's hard to argue with her success.

The business model behind her is about "making $20 or $25 average on each person".

Schneider understands the whale: the person who enjoys your work more than everyone else, and pays more for it than anyone else.

For more about whales, check out this post by Eric Feng ("many many" repetition is his!):

[A] company’s best customers are many many times more valuable than their average customer.

If you can find a business model that allows you to take full advantage of that disparity, you unlock economic value for everyone: yourself, your current best customers, and all the rest of your customers who one day could grow into your future best customers.

If you're a young middle-class artist, your first whale might be a family member. Their unconditional support and cash flow allows you to "unlock" more opportunity and introduce yourself to more listeners.

When you can turn new listeners into whales, you get a resilient career.

But do you have any chance of finding a whale on Spotify?

The online data publication Components addressed this concept in "The Chaos Bazaar", which mostly deals with Bandcamp but includes this:

Spotify's model ignores even the basic principle that 20 percent of buyers usually account for 80 percent of purchases.

Instead, the value of each Spotify user is capped at a monthly subscription price.

Spotify has no whales. In pop music, you want to treat everyone the same. Spotify's cost structure matches pop music, and it doesn't serve high-intent, high-value customers.

Every single one of Schneider's $20 to $25 customers would look like a whale in pop music. They can't make that transaction on Spotify.

For three years, I was in a band that sold CDs for $20 — often as upsells after a $15-20 event ticket.

On top of that, many of these customers also paid for dinner together before (or best of all, on-site at) the gig. They were older people: veteran audience members.

They knew how to be the whale and have fun doing it. Our band reached many people by graciously taking their dollars and stretching them far.

Only with a baseline like that could I venture into younger audiences, who have much less discretionary income.

Once you find enough whales, you can leave Spotify or YouTube if you want. Schneider owns the customer relationship and can take that kind of stance.

You need more than e-commerce to do that: you also need to consistently be the best. Schneider has internalized what it takes after winning seven Grammy Awards.

As Spotify flattens out everyone's willingness-to-pay, she will be a rare artist—someone who can attract whales.

On top of that, an ever-shrinking Average Revenue Per User (ARPU) at Spotify threatens to erode streaming revenues.

When that happens, Schneider and her whales will be okay; she'll have the strongest position she's ever had, and her longtime customers will deserve much of the credit.