Inequitable or inevitable?
At 229 million monthly users, Spotify is the most popular streaming service in the world right now, making it impossible for artists not to release their music on the platform. In October of 2020, a union of musicians launched the ‘Justice at Spotify’ campaign. They are demanding that the streaming company stop ‘underpaying’, ‘misleading’ and ‘exploiting’ artists for financial gain. Currently, musicians are paid about $.00038 a stream. That’s 263 streams for the average artist to earn $1.
From the https://www.unionofmusicians.org/justice-at-spotify-demands website:
“Spotify currently pays artists using a “pro-rata” model, in which all revenue is pooled, then distributed to artists according to a complex scheme. The pro-rata model means that as artists on the top of the pyramid accumulate a greater percentage of streams, all other artists receive increasingly tiny payments. This model puts artists in competition with each other. We demand the adoption of a “user centric” model which pays artists directly according to the number of streams they receive.”
Justice at Spotify is demanding that the platform pay them 1 cent per stream, which seems like an extremely humble request, but given that Spotify has run at a loss each fiscal year since its launch in 2008, it appears that the Swedish company can not afford to change their business model.
A secondary aim of the campaign is to create transparency around Spotify’s current deals with the three major labels, Sony, Warner and Universal, which own the vast majority of music on the platform. Over fifty thousand pieces of recorded music are released on Spotify every day, but only the top 10% - music from the major labels - take home about 90% of the streaming revenue generated on Spotify. Here’s another staggering statistic: In 2019, the three major labels were estimated to be earning $19 million a day off Spotify streams — taking up to 80 percent of an artist’s streaming earnings for themselves.
It’s inequitable to say the least. Unionizing does seem like the most logical option, however, since the campaign launched in October 2020, we have heard little to nothing about Spotify trying to make accommodations for smaller artists. Artists are screaming into the void, only to be ignored by the platform. Another option could be boycotting Spotify, but with its popularity, that seems highly unlikely. Nevertheless, Spotify is a fantastic platform for listeners. It’s algorithmic playlists and curations are user generated, and provide a unique experience of the app from user to user. Also, its integration of digital art is extremely innovative, allowing artists to express themselves not only sonically but also visually. Clearly, the platform is here to stay for artists and listeners alike.
Here’s some food for thought: maybe the major labels are at fault rather than Spotify. With Sony, Universal, and Warner offering the platform such lucrative contracts to push their artists onto listeners, why would Spotify spend more money on indie artists that don’t generate streams? It’s only logical that Spotify would maximize their financial gain, especially given their history of economic loss since their launch.
The whole structure of the music industry was flipped upside down when streaming came into play - with sales of physical copies and digital downloads steeply declining, the labels had to pivot their strategy in order to stay afloat. At the end of the day, it’s simple economics: maximizing gains while minimizing losses by all means possible, even if it comes at the expense of indie artists. It’s a cynical outlook, but a realistic one. Until the major labels diminish in their power, we can’t expect a change anytime soon.