In an industry as prone to change as the music industry, it is never surprising when new listening outlets pop up, and it is even less surprising when those outlets become the cause of great debate. When Taylor Swift made the decision to pull her entire music catalogue from the Spotify database, the long fought battle over the advantages and disadvantages of music streaming services was pushed into the pop culture spotlight. While this argument is not a new one (majors artists like Coldplay and the Black Keys have been keeping music off Spotify since 2012), it is a debate that we –particularly those of us who use streaming services such as Spotify– should be aware of.
Now, you may be wondering what the debate over Spotify’s services could possibly be and the answer is actually quite simple. The main concern artists have voiced over streaming services is that their royalty returns do not provide fair compensation for the art that is being distributed. While this may seem like a materialistic grievance, it is important to recognize that making music is often a full time job for those who choose to pursue it and that the common royalty paid to a recording artist is usually equal to or less than 14% (that is less than $2.00 per every $10.00 album sold). It is also important to remember that on average, Spotify only pays about $0.006 — $0.0083 per stream. That is, if Spotify paid artists for every stream on a given track. But alas, the world is not perfect, and the royalty division of Spotify profits is not either.
You see, Spotify distributes royalties on a piece-of-the-pie basis, essentially meaning that the amount an artist makes is determined by the total number of streams an artist has against the total number of streams the service has had for that given month. This value is multiplied by that artist’s royalty rate, 70% rate to master and publishing rights owners, and the Spotify monthly revenue. To put it in simpler terms, the artist’s payout is directly correlated to how their monthly streaming total holds up against the rest of the artists in the database.
The next step to understanding this debate is to understand how the use of Spotify impacts artists. The main issue is that while the royalty distribution system is beneficial to major record labels and artists, it serves a lesser purpose for indie labels and new artists. Major labels with huge catalogues of successful artists will eat up more of the available revenue and leave less for smaller independent labels. New and indie artists have a difficult time making significant royalties because they are paid by percentage rather than per stream. This domination of royalty revenue promotes monopolization in an industry that is supposed to promote individuality and creative expression. In addition, some believe streaming services to be detrimental to record sales. Artists will withhold albums (i.e. Coldplay, The Black Keys, Adele) from Spotify to encourage fans to purchase the music rather than streaming it for free.
While some may argue that this debate is an excuse for industry moguls to continue lining their pockets, the core values of promoting fair compensation for music go deeper than that. Musicians are like any other artists; they put time and effort into creating artwork and deserve to be paid for their work, effort, and product. You wouldn’t walk into an art exhibit and expect to get a Picasso for free just like you wouldn’t walk into a record store and expect to get a vinyl edition of “Dark Side of the Moon” without paying for it. So, why should streaming services expect artists to provide music for our listening pleasure without providing proper compensation? The answer is easy– they shouldn’t.