Let’s talk about the math of paying musicians more for their music streams, even if some of those streams are just people sampling their music who would never actually purchase anything from them.
It's with an uncritical eye that anyone could look at Spotify's revenue and think that they should just pay more and that would solve everything.
First of all, only 15% of Spotify's artist base made over $1000 in streams in 2020 - (and streams count whether people listened and hated it or played via algorithmic playlist that the listener had no control over. ) So let’s say that 15% is the number of musicians on their platform with actual fan bases. It’s not an exact analogy, but it works for this discussion.
That dollar amount seems paltry until you add in the context that that 15% was over 187,000 artists. Now, $1000 is just the minimum amount paid out to be a part of this top 15%. But to keep it simple, let’s say they gave 187000 artists $1000. That’s 187 million dollars. Some of these artists have streams in the billions. 13000 of those made over 50k. They are paying out a LOT of money spread out among a lot of artists.
In 2020, Spotify brought in 8 billion dollars in revenue - NOT profit. As a matter of fact, Spotify has never published an operating profit. In 2020, it posted a 581 million euro loss. But just for fun, let’s say you you took every dime of their revenue - and they didn't pay their CEO, or a single employee, electricity bill, server cost, marketing - (and on and on) and split that money between the artists with enough streams to make 1000 bucks - that would only be $4200 bucks per artist. Now split that between the publisher and the songwriter and the band members and the manager, etc, and that is hardly enough for anyone to live off of.
According to Business Insider, Spotify pays rights-holders between $0.003 and $0.005 per stream on average. Approximately 70 percent of the total revenue earned per stream goes to the artist, while the rest is absorbed by the platform itself. So in order to double what Spotify pays artists, they would have to raise their revenue to at least 13 billion dollars.
I also see people say that if they took away the crazy salaries of their top executives, you could use that money to pay musicians. The salaries of many higher ups at Spotify may seem outrageous, I get it - but if you paid Spotify’s top 11 executives nothing at all, it would literally have no effect on the amounts paid to musicians. It would be like taking away someone’s extravagant dinner to solve the hunger problem of a major city.
The ONLY way to raise the monetary amount that musicians make from streaming is to raise streaming prices SIGNIFICANTLY for consumers.
But it’s hard for any streaming company to do that since they all offer basically the same product. If Spotify raised their subscriber fee to 19.99 a month, people would just switch to Apple or Tidal, if those 2 services also raised their rates, people would switch to Youtube. If they ALL raised their rates, a new service would just come in and undercut them all. You should never underestimate the average person’s total disregard for if someone is getting paid enough for the product they are purchasing. They just want the product at the cheapest price available.
And let’s say that you could get an across the board payment hike on streaming services, well now you’ve started to price some people out. And you’re probably definitely going to damage the discovery aspect of streaming services. If Spotify had to pay a significant amount to artists whose songs their algorithms and editorial playlists served to their customers, that would be like them paying to promote the music themselves.
But the HUGE problem, that I’ve never seen anyone address, is that as time goes on, the economics of streaming only get worse. There are still 60k songs being uploaded daily - which means there is even more music to listen to and more musicians who want a cut of the pie. The song pool is further diluted. Which means the amount of money that can be garnered from streaming can only diminish no matter how much you charge customers to access it. The only way to make the math work is to limit the amount of music on Spotify while still significantly increasing their user base.
So why do I continue to work with musicians when I think that the market is oversaturated and selling music can’t lead to a full-time living for the majority of musicians?
Because I don’t think the modern day music business is solely about music. I think it’s about the people behind the music. It’s a total package game. You’ve got to be a good musician, a good performer, a good storyteller, a good marketer, and basically be good at having people buy into YOU. Sometimes it’s hard to gauge exactly what the thing is that makes a person drawn to someone, but if you do it right, they’ll be your lifelong fan and they’ll buy whatever you're selling. Just go take a look at Taylor Swift’s merch store.
The musician is the brand and the music is just one of the products. People will buy stuff from musicians that have value - whether it's tickets to a show or live stream, t-shirts, specialty products, one on ones, VIP packages, music lessons, deluxe editions, demos, books, etc etc. Musicians are only limited by their own creativity when it comes to selling products.
Personally, I think making money is easy. Just like learning an instrument, it may take time and effort to become adept at it, but the steps are pretty simple. Build your audience through building connections with them, get to know your audience, provide products for your audience that have value.
All you have to do to be successful as a musician is know who you are, what you stand for, have a story to tell and SERVE your audience rather than have them serve you. Hell, you don’t even have to be a good musician. There are plenty of bad ones out there making money.
Musicians get upset because they JUST want to play music and not have to do the business part. But business owners are the ones who make the money. Making music and making money are two very distinct talents. You can be a musician and not sell your music. There’s no shame in that. But if you want to make money from your music, you’re going to have to have an entrepreneurial outlook. This means you’re going to have to learn and perform tasks that make your business profitable. Sure, I’d love to just do the fun parts of my job, but I own a business, so I have to do tons of stuff above and beyond just publicity.
The reason why you’ll never hear me complain about these conditions is because I know that working in the music business is a privilege. I work in an industry that’s only goal is pleasure. New music is not needed. “Paid Musician” is not a job that society needs. As mentioned before, we have plenty of music to last any individual a lifetime. Plus, people will alway make and play music, even if they outlawed anyone ever making a dime from it again.
In conclusion, I believe streaming has been vastly beneficial. I don’t believe that it is keeping anyone from making a fair living, there are other far more likely factors that have affected the economics of musicians, the most important one being the over abundance of them. I think that it is naive for musicians to hold Spotify accountable for not paying them money that doesn’t exist for streams from listeners that they probably would not have without streaming. I think that all of this energy bashing Spotify was wasted when it could have been used to find a solution. Maybe there’s a tiered subscription plan option, or after you stream a song so many times you own it, or after your song hits a certain amount of streams, you no longer get paid for it and the money goes to less popular artists who need the money more, or maybe, and I can hear some of you groaning, NFTs and Web3 streaming will solve a lot of these problems.
I saw quite a few people on Twitter cheering that Spotify lost2 billion dollars this week due to the Neil Young controversy. I don’t understand that. Spotify is not a person. It’s a publicly traded company, so it was really just people with individual investments and people with retirement funds that lost money. And with NO solution being offered by the naysayers, it was all for nothing.
I’m not some corporate apologist, free market worshipping, Ayn Rand fan. I just like to look at the full picture of situations and acknowledge that there are hardly ever any easy answers. Nothing I saw this week came close to actually solving any problems, because that takes time and effort, something that few people want to actually do.
If you want to disagree with me on my position, that’s fine, I’d love to hear your fact-based plan on how to keep all of the benefits that Spotify provides and make it a viable income stream. But be ready to show your work.
P.S. well this blew up! Sign up for my weekly newsletter on Sweetheart Pub .com.
P.S.S. For all the people telling me I dont know what I'm talking about, I've been working in the music biz for 25 years - as a music supervisor, writer, talent buyer, publicist, and in social media. I've written for major newspapers, worked at cable music channels, live concert events, at a record label, at a legendary recording studio, and have helped DOZENS of artists self-release albums.
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