Downvote: Spotify’s Assault on Artists
July 21st, 2011–Aspen, CO, USA
Daniel Ek, CEO and Co-founder of Spotify, is interviewed by Andy Serwer of Fortune Magazine at Fortune Brainstorm TECH at the Aspen Institute Campus.
Photograph by Stuart Isett/Fortune Brainstorm TECH via Wikipedia Commons
The internet has changed the way we consume stuff forever. That is not a controversial point to make; I think everyone can agree on that point. Now, as a corollary to that, not all the ways we consume stuff are good/moral/ethical. On the topic of news, there is a segment of the population that strives to find something that is untouched by the grubby hands of ideology, while others prefer to visit their echo chambers.
Social media offers one stop shopping for all various forms of media, and even then, these various platforms want to sell you a product which is layered upon selling you other products consistent with your interests. I think I have mentioned it several times before, Infinite Jest was eons ahead of its time, and I often wonder what David Foster Wallace (DFW) would think about where we are today w/r/t social media and the internet as a whole. It is unfortunate that he demapped himself.
I am guilty of frequenting social media sites and using them, and even though I write here specifically on the topic of enjoying music in an analog format, I still own digital files. So I am not a complete and total Luddite; I like to think of myself as a modern man with Luddite tendencies.
There is one thing, however, that I cannot stand and actively wish to destroy–and that is Spotify and other music streaming services. I know you people love the ease of use, the vast library of compressed audio files, how it “suggests” music for you, and how it bombards you with ads for whatever it is you were talking about or feeling recently.1 It should also be noted that Spotify has been caught “suggesting” artists to people based on how much a record label pays them to “suggest.” Criminal enterprise, man. Like Facebook, Spotify is not trying to sell you, the consumer, what they purport to be in the business of; they are trying to sell advertising space.
For those of you that are unfamiliar, or don’t give a flying fajita because you can play that one Duran Duran song on your mobile device wherever you are, Spotify operates on the most unsustainable economic model in probably the known universe. You see, usually artists make a fixed amount of money from digital and physical purchases. Per unit sold. Under Spotify, and other streaming services, artist earn a “market share” based on the number of streams an artist is able to accrue. As of now, they have sussed it out to around $0.00348 cents per stream. Source. The artists usually don’t even see that paltry amount as most of it goes right to the record labels.
I know there will be pedants and smarmy bootlickers in the comments who will argue that Spotify’s compensation and revenue-sharing system is good, actually. Please take your bootlicking elsewhere. I know we are conditioned to think billionaires are somehow good in this hell of a society, but no amount of praise will make you a billionaire, nor will it catch the attention of a billionaire.
Which brings me to Spotify’s CEO, Daniel Ek. The other day Star Child gave some kind of interview somewhere, the details of where are wildly unimportant, but what is important is how tone deaf and effete his comments were. You see, ever since Spotify’s launch in 2008 there has been a very vocal outcry w/r/t their compensation model for artists. Ek, who personally is worth somewhere around $4 Billion, claims that this is a false narrative, and that artists have told him privately that they are happy with the compensation model.2
Spotify is not the problem, according to Ek; it is the artists. So he doubles down on his stupid and says that artists can no longer go 3 or 4 years without a release. They have to continuously be engaged with their fans and continuously create music;3they must work harder and sacrifice quality for quantity.
Ok, so that is pretty dark. Of course, you have millions, of people that use Spotify every day due to its ease of use, the majority of which don’t care that the whole business model is outright exploitation. Now Ek is arguing that these artists must be exploited further. For his own gain! Barely a blip on the radar for most. I remember reading years ago that Drake remains relevant by frequently teasing and releasing singles as opposed to full albums. I don’t think I can name one quality song by Drake, especially when compared to some of his contemporaries in that particular genre.
“I feel, really, that the ones that aren’t doing well in streaming are predominantly people who want to release music the way it used to be released.”-Daniel Ek
Oh but it gets worse. Ek then uses Taylor Swift4 as an example, a successful one, under his proposal. Taylor Swift, artistry aside, has endless resources and I would say a few light years of a head start on the bulk of artists that stream their music on Spotify. That sweet indie band you just discovered via Spotify has 26,657 streams, and you think they are awesome. Did you buy their record? Have you attended any of their concerts?5
I think a lot of people will pound their chest and answer in the affirmative to those questions, but I highly doubt it is true. Even if it were, you’re more than likely still streaming their music–and in the aggregate that still doesn’t get them paid what they deserve. One of the arguments people make when I tell them that streaming is dumb and bad is, “But, but it helps me discover new artists!” That’s all fine and good if you want an algorithm deciding what you should be listening to.
One can still discover music organically; it just takes a little bit of effort.
One of my biggest issues with streaming music, other than the quality, is that you cannot guarantee those songs or artists will be on that platform forever. You can’t even guarantee that you’ll have access to the internet or mobile data. Even with digital files purchased on iTunes, you’re merely paying for a license to play the song, that’s it. You don’t own it. you own the rights to play it on your device.
Unfortunately, we have been conditioned to crave the instant gratification and are used to the convenience of having virtually anything available to us at the click of a mouse. I cannot stress this enough: An internet-based service that is selling you something is never your friend. Especially when it is selling you convenience, someone is suffering the consequences. In Spotify’s case, it’s out in the open, it’s the blatant exploitation of all musicians, even very popular ones. It will not stop until either a fairer compensation model created, or it is boycotted into oblivion by artists or fans.
I think everyone should be wary of advertisements that pretend to be art, or art forms that sell advertisements. Especially in the guise of an application that supposedly makes your life easier. It merely creates a facade of benevolence and eventually we become numb to something that only truly benefits a very select few. DFW understood this point, and he wrote about it at length in both his fiction and nonfiction. Thematically, Infinite Jest itself is not only about addiction and/or depression, but what and how society consumed and was affected by entertainment.
As I always allude to, or outright say, own your music. If you must sully your ears with digital tracks and streaming, then pick a platform with a more sustainable and fair model of compensation for artists, such as Bandcamp.
How is this new? Artist being screwed by their record labels, by streaming services, by “what was the popular free music download site back in the day”? Arrogant tech leaders? Artists have been screwed since as long as they existed. Seen it all before.
I don’t use spotify. I don’t need music on my phone and won’t pay for the data consumption, but I do use another streaming service. It’s set to play “similar” music to my existing playlists and I’ve found much new music I like that I have purchased on Itunes. I have dozens of cds I bought years ago I put on Itunes along with the new stuff I bought–it’s probably 50/50. Since I don’t use my ipod except at home or in the car, non physical files are better for me-I’m not an audiophile.
The fundamental issue is that the consumer doesn’t care They get their nearly free music and are happy. I don’t go to concernts anymore because I hate the crowds and the music is played louder than I like, and I don’t want to pay 300 dollars for a lawn “seat” to hear the Cure on a steamy evening. Your mileage may vary.Report
My ears are so blown out from my Navy days that I can’t do concerts anymore. Even live music at festival/fair/etc. sounds like noise to me with vague undertones of a song I might know.
I do tend to buy songs I hear that I like, just because I’d rather be able to listen to a song when I want to, rather than relying on a streaming service. And the compensation model for streaming services has always been shite, so I’m loathe to give them any economic support.Report
If you take an intro economics class, you’ll learn that under certain conditions welfare is optimized when price is equal to marginal cost (the cost of making one additional unit). The reasoning for this is fairly straightforward: If price is above marginal cost, then there are mutually beneficial transactions that could be happening that aren’t. If price is below marginal cost, then making an additional unit costs more than it’s worth, and value is being destroyed. P = MC is the sweet spot.
This logic breaks down when fixed costs are high. Music is almost all fixed costs. It costs a lot to write, produce, and record the first copy of a song, but virtually nothing to make a digital copy. In a competitive market, price would be driven down to or near marginal cost. Great for consumers in the short term, but it means there’s no money in making new music. So we have IP law. Now if you write a song, you get a legal monopoly on making copies of that song, and you can set the price above marginal cost.
That solves the fixed cost problem. But it creates a new problem. If I’m willing to pay only $5 to listen to an album, but the copyright holder has decided that $10 is the profit-maximizing cost, then I don’t get to listen to the album, and the copyright holder doesn’t get my $5.
Subscription services are actually a really good solution to this problem. Consumers get to listen to whatever we want to after paying a fixed monthly cost to cover the artists’ fixed costs. After paying a fixed monthly fee, my cost to listen to a new song or album is roughly equal to marginal cost, i.e. 0. But the fixed costs can still be covered by the monthly fee.
In theory, at least. Maybe the monthly fee isn’t enough to actually cover the fixed costs of producing music. I wouldn’t mind paying $15-20/month instead of $10, with the extra money going to producers (in fact I already am because I subscribe to two services). I think the average music consumer bought fewer than one album per month in the old days, and digital distribution is a lot cheaper than physical distribution, so that should be more than enough to replace album revenues.
It’s important to note that subscription streaming didn’t kill albums; piracy did. Subscription streaming services didn’t really get started until around 2010, by which time music industry revenues had fallen to $8 billion from a high of $21.5 billion in 2000 (both figures in 2017 dollars). Subscription services are bringing revenues up again, from $7 billion in 2015 to $11 billion last year.
I’m also skeptical of the idea that streaming is uniquely bad for content producers. I’m not 100% confident of this, but some quick Google research suggests that Spotify pays out a bit over 50% of its revenue to labels and artists, who got a bit less than half of the revenue from retail album sales. So they’re getting a slightly larger share of a somewhat smaller pie. Payouts to artists are down because total revenues are down, not because streaming service are taking a much bigger cut than the retail distribution chains did. By the way, Spotify has never made a profit.
How much did content producers get per play under the retail album system? $15 per album, about 40% going to producers, so $6 per album. If the average consumer listened to an album 20 times, and an album has 15 tracks, that’s 300 plays per album, or about 2 cents per play. That’s more than 0.35 cents, but I would guess that that’s misleading due to the high number of plays from users of streaming services. A lot of people will just stream music all day, which was less common with CDs due to the need to change CDs, or to carry them with you when going out.
I found some stats which claim that Spotify users in the US play music for an average of 2:20 per day. At four minutes per song, that’s 35 songs per day, or a bit over 1,000 per month. At $5/user per month (50% cut of a monthly $10 fee), that’s 0.5 cents, which roughly corresponds to the 0.35-cent figure you gave. If you account for student discount, free samples, cheaper subscriptions in other regions, that seems close enough.
I think the “you don’t own it” angle is overblown. I know I don’t own it. I’m paying $10/month to listen to any album I want, because that allows me to listen to a much wider variety of music than I would be able to buy outright for $10/month. I know exactly what I’m getting, and it’s a better value for me than the old model. I have over a thousand CDs. That cost me about $15,000, or 125 years’ of streaming subscriptions. If the streaming service I’m using now shuts down tomorrow, I lose nothing. I can just subscribe to another service. But even if the whole industry gets killed for some reason, I will still have gotten exactly what I paid for, which is N months of listening to whatever I want to, whenever I want to.
I know what I’m paying for, I’m getting it, and I’m happy with it. Really, I’m not getting cheated.
Also, you know when someone calls someone else a “cuck,” it tells you very little about the person being so described, and quite a bit about the person using the word, none of it good? “Bootlicker” is the left-wing equivalent. It’s really not a good look.Report
“we have been conditioned to crave the instant gratification”
Buddy, Spotify is The Radio, and radio broadcasts have been a thing for more than a hundred years now, and you don’t own those either. If you want to say “hey it’s kinda bad that there are so few ways to get media in a way that don’t require phone-home DRM to use, because that phone-home DRM isn’t something the consumer negotiates or controls”, you’re not wrong, but you really lower yourself by making this be a morality play about the frivolities of the American consumer.
“Under Spotify, and other streaming services, artist earn a “market share” based on the number streams an artist is able to accrue. As of now, they have sussed it out to around $0.00348 cents per stream.”
Gosh, that sure is a small number!
How does it compare to radio?Report
As it turns out, in Radio the performing artist doesn’t get paid per play unless she is also the songwriter. Songwriters get 50% of the revenue generated from their song’s airplay. Its still not much, but so far today Google has not been kind enough to give firm numbers.Report
Musicians and record labels have a symbiotic relationship. And they both make money through different methods. A band makes money primarily by touring, while the label makes money by selling albums. Two different things. But, and here is the interesting part, they both need each other doing the other’s job to make money. A band needs a way to market that tour; albums on the rack, radio play, streaming, promotion. The label needs a popular product, that people want to hear and experience.
Yes, a band that makes it all DIY can get on some streaming service and get a little bit of coin out of it, but they do much better if someone who actually knows something about marketing is at the helm of that drive. Someone who understands markets can get the music into areas and radio stations and playlists where the people who might like it can hear it and experience it. This in turn gets people out of the house and down to the bars with live music Saturdays, the places that hold a few hundred for shows every night, the small festivals, and finally the arenas. And at each one of those venues they get a bigger check, and the people out for a good time buy more product. And so both entities make a little coin.
The rolling stones didn’t become the juggernaut that they are simply because they put out a four-song EP in ’64 and everyone bought it and went nuts. No, it took years of radio play and touring and flat-out promotion to get them where they are. Spotify is the new radio. Radio that you can just decide to either let it run semi-randomly and find new things or play exactly what you want. Right now I am streaming some early Warpaint because that is the vibe I want in the mornings. Later I might drop some Savages or Mastodon, The Stranglers or Nick Cave, all depending on my mood. And yes, I pay all of ten dollars for this. I had concert tickets for later this year, but I will get by with streaming concerts from other services. And frankly, if you aren’t listening to live music, you are just listening to a recording.
By the way, how many streaming TV services do you subscribe to? Or is it all Blue Rays and broadcast?Report
Do established artists get a bigger chunk of album/streaming revenues? That is, if you’re a nobody, the studio is taking a chance on you, and they don’t have to offer you much. Once you’ve proven that you can sell records, you should be able to negotiate a better deal.
That’s how it seems like it should work in theory, anyway. I don’t know much about the practice.Report
Most contracts are kept pretty secret. So, I don’t really know. But, if you remember the big deal it was when the Beatles, or was it Pink Floyd?, released all of their albums on Spotify? To me, that says there was some special money involved.
But, to your point, most of the stuff on any streaming service is marginal at best. Either music past its sell-by date, and by that I mean its a bad that split up and is no longer making music, such as Galaxy 500 or Mary’s Danish*, or one of the major players in the band is dead, think the Clash or Sublime, and this way much of the music still lives. Even if they only get a tiny amount per song, they still are getting that. And are still in rotation to a certain degree.
*Actually, the Danish are not on any streaming service, as they had one of the shittiest recording contracts. Which is too bad, as they were one of the best west coast bands in the days leading up to Nirvana destroying music.Report
It was the Beatles on iTunes. Jobs announced it at a keynote(!) i think?Report
The Beatles being on iTunes was actually the resolution of a long-running legal beef over trademarking “Apple” as a company name, it didn’t have anything to do with streaming revenue.Report
Makes sense – maybe that was their first digital release point I’m remembering?Report
No, that wasn’t what I was thinking of, as I have zero experience with any Apple product in 20 years. No, it was something on Spotify. Maybe Floyd, maybe the Stones, Metalica, someone like that.Report
Tool’s catelogue was recently made available on streaming services to much celebration. When it happened I believe they (temporarily) unseated Taylor Swift as most streamed artist.Report
It wasn’t Tool I was thinking of, but that is as good an example as any. Every band who is on any streaming service has a contract with that service. No one signed up blind. And, if you are a member of a “premium” band, one of those bands that has a massive draw in any format, then you will have lawyers checking that contract for the best terms. And any streaming service will oblige to this as they know it will bring in more listeners.
I do a version of this with my business, though it is in a vastly different field. There are clients of mine who everyone already knows, everyone already checks out. They don’t really need my services. But, I need them to show people who could use my services that I am carried and used by the larger companies in the field, that I am trusted and worthwhile. So, these bigger companies get a discount to ensure that they are going to be part of the project.
If a streaming service only has garbage, the bands who put out one album and no one listened to it, then that service will die, deservedly. But, if they have the things that people will pay to listen to, that they find interesting or new or whatever then they are a going concern. Getting a band like Tool is important in that is shows other bands, and therefor potential subscribers, that Spotify (or whatever service) is the place to be.Report
I am reminded of this insight from Mick Jagger:
Sir Mick seems to be arguing that we’ve regressed to the mean after a blip.
Sounds about right.
I mean, let’s say that you write the perfect song. It’s awesome. It’s got a good beat, you can dance to it, the lyrics are memorable and there are two lines in the song, one that young people will get and old people won’t, and one that old people will get and young people won’t. Middle-aged people will get both lines, instead of being alienated from both.
How do you get this song to people?
Put it on Youtube. Hope it takes off? Market it through Twitter? Hope someone with more than 17 followers retweets it? Get it on Reddit, hope that a mod isn’t in a bad mood that day?
Mick might be on to something. I mean, it sucks… but he might be on to something.Report
By the way, “$0.00348 cents” is hard to interpret. It should be either “$0.00348” or “0.348 cents.”Report
He likes having all the zeroes up front because it makes it seem smaller.Report
I don’t really use streaming at all because I have a large music collection that goes back decades, and has a fraction that simply isn’t available anywhere else. I don’t want any other entity, much less a profit-seeking corporation, to be a gatekeeper between me and the music which I paid for.
(I have nothing against profit-seeking corporations per se, but I really hate the whole “I’m going to become the gatekeeper between you and something so I that I can sell your eyeballs to advertisers” thing. It doesn’t end up serving me well, because it isn’t intended to serve me well, it’s intended to serve advertisers well).
So I care nothing for Spotify and Ek. At the same time, I endorse the idea that musicians, and probably most people creating content, need to have a regular, if not daily, engagement with their audience. I know some musicians who are doing this, and who are being successful with it. I know people who are into filmmaking who are doing it. I know people who are into cooking, high-speed photography, and so on, who do it.
It has never been easy to make a living doing music. Many try and few succeed. Even during the time when there was lots of money sloshing around from vinyl and CD sales. Now is no exception, but all the old ways of doing things have dried up, and we have to be creative. But creative is why you’re a musician, right?Report
I really hate the whole “I’m going to become the gatekeeper between you and something so I that I can sell your eyeballs to advertisers” thing.
I’ve never used Spotify, but my experience has been that paid music streaming services do not have ads. I’ve used Google Music (now YouTube Music), Apple, Zune, and also a couple of Japanese services, and I’ve never seen ads.Report
I suppose an interesting experiment would be for one music service to allow the artists to set a price for their own art… what would the Artists charge?
If the answer is $9.99 for 12 songs with unlimited play… cool, let them see how that works. I’m guessing most net a lot less than those who charge $.0005, $.001 or maybe even $.05 per play. Let Spotify charge artists a set-up fee, maybe monthly operational fees and then take a smaller fractional cut on the actual play. In such a case, Artists might even lose money putting their music on the market and sharing some of the costs… on the plus side… they win big if they sell big. I have no problem with that at all. In fact, I kinda wonder that Artists haven’t formed a consortium to do such a thing.
I’ve reflected that I spend *way* more money to have access to music than I would ever spend for music if I had to buy it, store it, curate it into media. I’m willing to admit that the Artists aren’t getting an appropriate percentage of that spend… but the only answer is to build a service where they take some of the risk of the various costs, own the prices points, and own the success or lack-thereof.
My suspicion is that the main problem isn’t entirely Spotify (though I’ll concede the business model is rigged in their interest) but other Artists. The 25-yr window that Jagger points to is mostly a product of restricted access to production and distribution… I’m not sure that’s something we or artists should pine for; but I’m sure there’s a better way to distribute the risks, costs, and gains than we’re seeing.Report
We already did that experiment. Digital album and single sales predated streaming services by a decade, and they’re still around. Artists and labels are still opting in to the buffet model, presumably because it makes them more money.Report
Yeah, not really what I’m talking about.Report