[pgchg #02] đ» after spotify, what's next?
plus a reading list to understand the economics of streaming
Happy Tuesday, yâall. Hope youâre staying safe and healthy wherever you may be in the world. If you can, please take a moment to share us with a friend:
Last weekâs Spotify Wrapped rollout inspired a lot of⊠feelings from all corners of the music community. I wanted to share some of mine, in hopes that my words can inspire us to think about ways we can pursue a more sustainable streaming economy that works for musicians. At the end of this piece, youâll find a list of links that may help you gain a better understanding of the complicated web that is Spotifyâs relationship with musicians.
Letâs get into it.
Where Did Spotify Go Wrong?
I started Program Change in-part around the premise of a Spotify playlist. The idea was to create a playlist where smaller artists (think <1,000 monthly listeners) could be paired with slightly larger artists (think <100,000 monthly listeners) in an attempt to game the algorithm and draw attention to artists who donât have the same time, resources, and marketing budgets as the bigger players in the music industry. I wanted to give value to smaller artists who I felt got swallowed in the vast sea of options available via DSPs [Digital Streaming Platforms], in hopes that whatever boost in streaming numbers I could bring them would help grow their audience and give them some incentive to keep pursuing their passions.
This thinkingâwhile extremely flawedâwas rooted in a lot of conversations I was having at the time with fellow musicians and music industry professionals about why streaming was actually good for independent artistsâor, at least, certain kinds of independent artists. While streaming had long proven to be a terrible financial bet for artists who release albums once every few years, they were actually looking like a decent opportunity for artists who could consistently release material to climb playlist placements and amass north of 100,000 monthly listeners.
The strategy for which Spotify CEO Daniel Ek was (rightfully) maligned was actually a well-known roadmap for many independent artists by 2018, as illustrated in this terrific article by Gino Sorcinelli for his blog, Micro-Chop:
Volume matters. Donât sacrifice quality for quantity and donât make yourself miserable, but in the current music market, itâs difficult to put out one instrumental album every two years and stay relevant. Try to release with some degree of frequency and consistency, even if youâre just dropping singles and EPs. I see many talented producers posting beats on SoundCloud regularly but not uploading them on paid streaming platforms. Upload them on both.
-Gino Sorcinelli, âThe Step by Step Producerâs Bible: How To Build a Loyal Following and Use Streaming To Your Advantageâ, Micro-Chop 2018
Before starting the playlist, I wasnât naive enough to believe that every artist could exploit Spotifyâs perpetual need for new content as a way to make a living off of the platform. However, I was hearing positive feedback from musicians who were able to use the platform as a source of passive income while leveraging their streaming numbers to help them book gigs and sync placementsâthe real money-makers in the music industry. No one was getting rich off of Spotify, but I was hearing stories of ambient and âlo-fi hip-hopâ producers paying their rent off of their streaming income. Distrokid (and the like) had made it possible for artists to eliminate the revenue-cut that would normally be taken by a label and/or distributor, which meant that DSPs were putting money directly in the hands of artists in ways that were much more difficult in the pre-streaming era.
One of the biggest eye-openers for me was hearing STLNDRMS talk with Producergrind Podcast in 2018 about how discovering his Distrokid payouts was the ultimate inspiration for him to dive into music as his full-time career [timestamp 6:10]:
Damn, so why all the Spotify hate from independent artists?
Given what Iâve written so far, you may think that the invective hurled toward Spotify by the music community this past week (and for much of 2020) has been the result of simple misunderstanding. âBut there are artists benefiting from Spotify!â âThe streaming model may not work for all artists, but it has helped a lot of artists who otherwise wouldnât be able to reach a wide audience!â
As tempting as it can be to shift responsibility from powerful corporations to individuals because individuals are an easier target, the fact is that Spotify has consistently worked to undermine its relationship with musicians by doing everything in its power to pay them less. And with the pandemic decimating nearly all other reliable sources of income for musicians, Spotify has assumed no responsibility to financially support the people who make their platform worthwhile.
I could go on about Spotifyâs aggressive lobbying against increases in artist royalties or their very public shift toward courting podcasters over musicians, but I feel like this was best explained in a video by professional musician Benn Jordan (the Flashbulb). At around the 7:53 mark, Jordan explains how his Spotify royalty rate dropped from ~$0.008/stream in 2015 to $0.003/stream in 2019. That constitutes a 62.5% pay cut, meaning Jordan went from earning a middle-class income from his Spotify royalties to making as much as a parking-lot attendant [timestamp 7:53]:
SoâŠMr. Ek, as someone with over 20 albums on your network, an average of 160,000 individual listeners per month, over 7 million streams per year, how the fuck am I supposed to crank out my output to what you deem âenough to make a livingâ when youâve decreased my pay by over 60% in the last five years?
-Benn Jordan, âShould We Hate Spotify?â [An Objective View From A Professional Musician], Youtube 2020
It can be tempting to believe that Spotify will change course by virtue of collective bargaining from musicians, that we can somehow convince Spotify that a $0.01 minimum-royalty will be necessary for it to continue to exist as a business. While I fully support collective bargaining by labor against exploitative capitalists, I know that as long as Spotify isnât breaking any laws, theyâre going to feel as incentivized to pay artists a 1-cent royalty as Uber felt incentivized to classify drivers as employees.
I buried the lede here, but the truth is that Spotify never really âwent wrongâ, at least not from their perspective. Spotify is not an institution dedicated to supporting musicians who produce quality art. Spotify is a publicly-traded tech company with shareholders who want the promise of a massive return on their investments. Paying relatively higher rates early-on was part of a larger plan to get enough musicians on the platform so they could grow their number of monthly active users, thus satisfying the needs of their advertising partners and growing their subscription revenue. Once their number of monthly active users was locked into an acceptable growth rate, the plan was always going to be reduce artist payouts. If artists feel like they need to be on Spotify in order to have their music heard, Spotify no longer has any incentive to pay artists any more than a carefully calculated minimum to make sure they donât abandon the platform completely.
With 91% of the company's revenue coming from subscriptions, music is practically a cost-center for Spotify. The game is no longer to court music-makers, but to court subscribers, because as long as Spotify maintains its relevance as a music discovery platform, artists will continue to distribute their music there regardless of the payout.
Well damn dawg thatâs kinda depressing. So, what do we do?
What does equitable, economically sustainable streaming look like?
One idea that I keep coming back to is the concept of âstreaming bundlesââthink Hulu+HBO-type-beats, but with independent music distributors known for well-curated selections. I would gladly pay a monthly fee to listen to the catalogs of Alpha Pup or Ninja Tune if 1) I knew that the artists I listen to are paid directly from my subscription and 2) the content was exclusive to those services and available on all of my devices, anywhere. Such a model could re-incentivize labels to invest in artist development and promotion, with new artists bringing new listeners and adding value to existing listenersâ subscriptions.
There are also some new companies who are exploring other ideas to develop a more equitable streaming economy. Iâll be covering those companies in an upcoming edition of the newsletter, so stay tuned.
That being said, Iâm listening to Spotify while writing this article. I still find its user playlists and âradioâ features to be uniquely useful for passive music discovery, and have found some of my favorite music of the past year by letting its algorithm work its numbers. I donât tend to find a lot of new smaller artists (for that, Bandcamp and social media are still my primary outlets in pandemic-times), but I find Spotify can work as a tool for quick exposure to the âgreatest hitsâ of a new genre I may be exploring.
This is article is meant less as an indictment of Spotifyâs product, but rather of its intentions. Whatever the future of digital music, one thing is as true now as it has been since the very inception of the music industry: corporations will not help musicians make money. Artists need to abandon the hope that massive companies with investor-backing will proselytize the economic value of the arts to the masses. It will be up to us to build sustainable economies for musicians, whether thatâs in the form of profit-sharing co-ops or direct patronage. But the capitalists will not save us. Weâre going to have to do it ourselves đ
Reading/Watching/Listening List for This Article
How Spotify Makes Money, by Matthew Johnston
What Music Streaming Services Pay Per Stream (And Why It Actually Doesnât Matter), by Dmitry Pastukhov
Spotify has 300 million users. It wants more of them to listen to podcasts, by Devin Nadi, interview by Peter Kafka
No, sharing your Spotify year-end artist stats is not a good idea â hereâs why not, by Peter Kirn
Inside the Playlist Factory, by Reggie Ugwu
The Step by Step Producerâs Bible: How To Build a Loyal Following and Use Streaming To Your Advantage, by Gino Sorcinelli
STLNDRMS Talks Making LoFi Beats, Spotify Income, History of LoFi + More, from Producergrind Podcast
Should We Hate Spotify? [An Objective View From A Professional Musician], by Benn Jordan
Justice at Spotify, Union of Musicians
What Do You Think?
I want to hear from you. Are you an artist who continues to have an overwhelmingly positive experience with Spotify or other DSPs? Do you use Audius, Resonate, Ampled, or another alternative service for putting out your music? If so, drop a comment, DM me on Instagram, or shoot me an email at daniel@pgchg.com.
Also, if you have music to submit for our playlist, I would love to hear it. Several artists have told me that it has helped introduce their music to significantly more people, so it definitely still works for some.
Til then, much love from Los Angeles âđŸđ