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Why Do So Many Musicians Hate Spotify?

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Is Spotify bad?

Is Spotify bad?

Spotify Controversy and Criticism

I used to be a Spotify Premium user before I switched to Google Play Music (now Youtube Music). Even though I was paying $10 a month for the service, the controversy surrounding it made me feel guilty. NPR had this headline back in 2013:

"The Good Listener: Does Using Spotify Make You A Bad Person?"

The New Yorker had this headline, also in 2013:

"If You Care About Music, Should You Ditch Spotify?

While there are plenty of streaming services, Spotify seems to be everyone's whipping boy. So why has this particular streaming service been singled out for so much criticism?

Spotify Was First Major Streaming Service

Spotify was the first big player on the scene, so everyone's fears and anxieties about streaming fell on them. Spotify was created at a troubled time for the music industry. About 90% of digital music downloads were pirated copies rather than sales. In 2010, CNN wrote about "Music's lost decade: Sales cut in half."

"Total revenue from U.S. music sales and licensing plunged to $6.3 billion in 2009, according to Forrester Research. In 1999, that revenue figure topped $14.6 billion."

When Spotify launched in late 2008, it came at a time when there was panic in the music industry over digital piracy and rapidly declining sales of CDs. For many people, streaming was considered to be something akin to piracy even though it was perfectly legal. It made you a bad person in the same way that music piracy made you a bad person, even if you were forking over $10 a month.

Low Payouts

Spotify also got bashed for it's low payouts per stream. Every month, Spotify takes in a certain amount of money. They divvy up 70% of the money received among all the artists who have been streamed that month.

The amount can vary from artist to artist depending on the kind of deal they have with the service. Spotify claims they pay out between $0.006 and $0.0084 per stream but some indie artists have said they made less than that.

The system in place puts indie labels and artists at a disadvantage. Major record labels own stock in Spotify and can profit from that. Spotify also pays to license the music of major label artists, something they don't do for indies.

Major Labels Weaponize Advantages

One reason the major labels can get by with a lower payout per stream is because they also get paid from the licensing. The indie labels and acts end up with a lower payout rate but without the benefit of licensing on top of it.

In possible bad news for smaller acts, playlist payola is being used by major labels to promote their acts. Warner Music Group CEO Stephen Cooper admitted that labels pay to get artists into streaming playlists:

"Playlisting is one of the big reasons why artists need record labels today."

Payola as Wedge Issue

While Spotify and other streaming services do discover and promote acts without being directly paid for it, indie acts are at a disadvantage compared to major label acts. Billboard journalist Glenn Peoples reported that, "Popular playlists can and have been bought."

So, there's good news and bad news for smaller acts when it comes to Spotify. Just like in the days before streaming, the music industry had winners and losers, and some in between. That hasn't changed and probably won't change.

Catey Shaw is an indie musician benefiting from Spotify because she owns her masters and publishing.

Catey Shaw is an indie musician benefiting from Spotify because she owns her masters and publishing.

Streaming vs Record Labels

Singer-songwriter Catey Shaw feels that the real problem isn't streaming, it's record labels:

"That [the way profit is distributed] has more to do with the people releasing the song and less to do with who's streaming it. Who owns the master? Who owns the publishing? I'm in a great position because the money isn't being split too many ways. My label is me and one other person. So when the money comes in, it goes straight to us."

Of course, this doesn't mean every indie artist is happy. Cellist and composer Zoe Keating has twice released data on how much she earns from Spotify. Most recently that was $1500 for 1.5 million streams.

Many indie artists are ambivalent about Spotify because the exposure can far outweigh the low payouts.

Many indie artists are ambivalent about Spotify because the exposure can far outweigh the low payouts.

Major Artists vs Indie Artists

There is an irony at play here. As Newsweek pointed out in their 2015 article, "What Do Indie Musicians Really Think About Music Streaming?" it's actually big name artists like Thom Yorke and Taylor Swift who have been most vocal against Spotify.

"Indie artists are more conflicted and less empowered. They're ambivalent about the revenue but like the exposure and can't imagine cutting themselves off from it."

Newsweek quotes indie rapper and producer MC Lars:

"Fifty percent of my monthly digital income is literally from Spotify. People complain about streaming, but the thing is, if you own your own masters, it's beneficial financially because you get a little bit each time someone listens to you ... so many fans on the Warped Tour say they heard of me from Spotify."

Perrin Lamb is an indie musician benefiting from Spotify because he owns his masters and publishing.

Perrin Lamb is an indie musician benefiting from Spotify because he owns his masters and publishing.

What Does "Independent" Even Mean?

In the DIY Musician article, "How an indie artist earned $56k from one song on Spotify," Chris Robley writes about Nashville singer/songwriter Perrin Lamb, the subject of said article. Lamb was a musician who "always had other jobs along the way. He’s doing ok, but it hasn’t been easy."

"Then, in January of 2014, a song of his called “Everyone’s Got Something” was put on the Your Favorite Coffeehouse playlist on Spotify by their editorial team. The song had been out a year and hadn’t really done anything to that point. But, once it found its way onto the playlist… boom. Hundreds of thousands of plays turned into millions."

The DIY Musician article has a section entitled, "How music streaming can benefit independent artists." If you've been reading this far, you can probably anticipate their first two suggestions: Retain ownership of your master recordings and retain 100% ownership of your publishing. It was the key to the success of both Catey Shaw and Perrin Lamb.

Moral of Story: Own Your Masters and Publishing

Masters and publishing are the first two things a major label are going to have you sign away, so the onus is on the artist to say no. The tradeoff is the potential for marketing and general brand awareness—which is also paid by the artist out of future royalties.

Owning your masters and publishing isn't a guarantee of success. It's a guarantee that if you somehow luck into success, the success is yours to keep. That said, streaming service payouts are very much worth discussing and comparing.

Streaming Services Compared

The Trichordist does periodic comparisons of various streaming services. They look at the percentage of streams from a particular provider and what that translates to in terms of revenue.

For example, in the most recent data from 2019, Spotify made up 22.09% of all music streams, but doled out 44.33% of the marketplace's total revenue, easily the #1 service by the gross payout metric.

Apple Music

That seems reasonable until you look at second place Apple Music. They had only 6.36% of the total streaming audience, but paid out nearly 25% of all revenue.

No one is close to Apple in terms of stream-to-revenue value, but Amazon Unlimited, Deezer, Google Play (since discontinued), Pandora, Amazon, and Facebook combined for almost 16% of market revenue despite representing only 5% of all music streams.

YouTube is the Real Problem

For all of the hand-wringing about Spotify, the elephant in the room is YouTube. According to the Trichordist's 2020 report:

"The biggest takeaway by far is that YouTube’s Content ID shows a whopping 51% of all streams generating only 6.4% of revenue. Read that again. This is your value gap. Over 50% of all music streams generate less than 7% of revenue."

For all of the legitimate issues musicians have with Spotify, YouTube is the biggest impediment to financial growth, not just because their payouts are astonishingly low, but because they're slow to crackdown on counterfeit accounts that generate income.

Streaming as Alternative to Labels

It's possible that streaming services are the best thing to happen to artists in a long time. For decades, artists were dependent on record labels for success. And they paid a heavy price for that.

Labels effectively owned the rights to their songs and took most of the revenue from sales of recorded music, live performances, and publishing for themselves. As the Perrin Lamb story indicates, streaming may give more artists the opportunity to find success without the help of a record label.

If you want to help independent musicians, you can stream their stuff on higher-paying services, where they will likely get more per stream. Although the sheer size of Spotify's listener base is hard to beat.

Further Reading

© 2017 LT Wright

Is Spotify good or bad? What do you think?

Zaharia Cicerone on August 19, 2020:

Spotify is definitely the wonder of the 21st century. The nostalgic collectors of vinyl, cassettes, CDs, are already a beautiful part of the history of music that accepts the new star: streaming. The cost of the 'pleasure' of having at your fingertips any album, any song is a minor one. Everyone knows that the road from the simple listener to being a competent audiophile goes through 3 stages: 1. the quantitative stage (you listen to almost any music in the pop area,

swallow anything like an enthusiastic pelican), 2. the stage of formation of audio discernment (discover for example progressive rock or even jazz in its form jazzy commercial ... 3. the qualitative stage when you are already the owner of an audio 'discernment' (discover the Everest of music: classical music, its composers, famous conductors and instrumentalists ...). It is a free act of education that trains quality modern people, an act independent of national education systems, Spotify is a quality 'player' in which you can find niche music (ECM, Scandinavian jazz like RIP Esbjörn Svensson, classic music from Jordi Savall collection, or Bach, Mozart, Beethoven in best interpretations)...