Taylor Swift is too smart for Spotify

According to reports, Taylor Swift is doing something really dumb, and we don't mean dating members of One Direction. The pop sensation's decision to pull her albums from Spotify means she's missing out on thousands of dollars in royalties, and she's been depicted as a kind of singing King Canute trying to turn back the waves of musical progress.

Those reports are wrong.

If, like me, you've spent hours this week trying to get Taylor Swift tickets for your kids, you'll know that Swift and her management are fantastically good at making money. Between the fan club presale, the venue presale, the American Express presale, the Ticketmaster Platinum presale, the sponsor presale and the VIP ticket packages, it's never been easier to spend a frighteningly large sum of money on going to a gig.

Swift and her people are very smart. Streaming 1989 on Spotify wouldn't be. Here's why.

Like most things in the world, you can explain the problem with the help of the excellent 80s popsters The Human League. Their (Keep Feeling) Fascination was on the radio the other day, and I realised that I didn't own that particular slice of perfect pop - so I headed to iTunes to buy the band's best-of.

And then I remembered I had a Spotify account, so I streamed it from that instead. That decision still generates money for the band, but it's a fraction of what they'd get from a sale.

If you're an in-demand new artist with an in-demand new record, streaming isn't the best way to make money.

It's all part of the plan

Comparing streaming royalties to actual album sales is a tough business - I'll leave that to the excellent Ian Betteridge, who's posted a great analysis of some seriously bad reporting here. But the short version is this: artists such as Taylor Swift make a big pile of cash from album sales and a tiny amount from streaming, and if people can stream the record on Spotify most of them won't buy the albums.

If you were a megastar trying to maximise revenue, you'd do something like this: you'd pull your albums from the most popular music streaming service (but not YouTube, because you're not stupid) and keep them off until CD and download sales started to die. When that happened, you'd change your mind about streaming and generate an income from the people who won't buy your records but who still want to listen to them.

Fighting the future