Why Do so Many Musicians Hate Spotify?
I used to be a Spotify Premium user before I switched to Google Play 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 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.
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. 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.
The Trichordist did a comparison of various streaming services. They looked at the percentage of streams from a particular provider and then what that translated to in terms of revenue. Spotify made up 62.97% of streams and 69.57% of revenue.* On the surface, this doesn't look too bad. Spotify is responsible for about 63% of all music streams but 70% of revenue.
It doesn't look so good in comparison to some other providers though. Google Play Music made up 2.36% of streams but 4.03% of revenue. Tidal had 0.1% of streams while providing 0.33% of revenue. Rhapsody (now called Napster) is even more generous accounting for 0.52% of streams but 2.52% of revenue. However Spotify wasn't even close to being the worst. YouTube accounts for 21.7% of streams but only 3.81% of revenue. This may give you some idea of why many artists have issues with Spotify.
Although, 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."
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 information on how much she earns from Spotify. Most recently that was $1500 for 1.5 million streams.
If you want to help independent musicians, you can stream their stuff on higher paying services like Google Play Music, Tidal, and Napster, where they will likely get more per stream. Although the shear size of Spotify's listener base is hard to beat. As I write this, Spotify says it has 100 million users and 50 million subscribers. Those numbers can potentially turn into a lot of streams for artists on the service.
These tweets are an example of why many independent musicians are ambivalent about Spotify
DIY Musician wrote about a Nashville artist named Perrin Lamb who "always had other jobs along the way. He’s doing ok, but it hasn’t been easy" in addition to his music career.
"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."
You can read all about that in the article "How an indie artist earned $56k from one song on Spotify (an interview with Perrin Lamb)."
Apple Music is also growing fast with more than 20 million subscribers. Amazon Music Unlimited has also entered the streaming market although no subscriber numbers are available at this time.
For all the criticism of Spotify, it's possible that it and other streaming services could be 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. The 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.
Comparison of Spotify and Apple Music, the biggest music streaming services
So maybe criticisms of Spotify were premature. Then again, it could be argued that Spotify could do a lot better by indie artists. Their free tier has been very controversial. A paying subscriber generates about 3 times more revenue for Spotify than a free user. The company has for years refused to make new album releases available only to Premium subscribers. And 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.
"So playlisting is one of the big reasons why artists need record labels today."
While Spotify and other streaming services do discover and promote acts without being directly paid for it, indie acts will be 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.
* Apple Music and Amazon Unlimited have entered the streaming market. Apple Music has been growing rapidly, so Spotify's market share will inevitably decline