Business model

Spotify’s Business Model Is Killing Music – OpEd – Eurasia Review

Neil Young’s recent decision to remove his music from Spotify, the world’s largest streaming service, has raised significant questions about how streaming services work.

Young demanded that the company choose between his music or Joe Rogan’s misinformation-laden podcast. Joni Mitchell, India Arie and Crosby, Stills and Nash followed suit and made the same request.

Spotify chose Rogan over all of them.

Why? “What they do always comes down to profit,” says Zack Nestel-Patt, an organizer with the Union of Musicians and Allied Workers (UMAW). And Spotify considers Rogan more profitable than even the entire catalog of legendary musicians.

Spotify’s model isn’t the end of the world for Young, Arie or other major artists who can rely on competitors like Apple Music. But the millions of “struggling working-class musicians at the bottom of the Spotify ecosystem,” as Nestel-Patt describes them, have no such leverage.

The company’s business model, to put it simply, relies on the severely underpaid labor of millions of creators.

Suppose an independent musician spends years putting his heart and soul into his craft. Finally, they score a hit that garners millions of plays on Spotify. You can imagine that translates into a generous payout.

But in reality, Spotify’s paychecks are peanuts. One analyst estimated that band members with families would need more than 24 million Spotify plays a year to barely cross the federal poverty line.

Even those tiny royalties may need to be shared with a record company, collaborators, songwriters, managers, etc. The money most of Nestel-Patt’s musician friends make from Spotify is “so negligible they don’t even take it into account.”

In short, Spotify sells products that creators receive almost no money to produce. It looks like theft. “Imagine any other company working this way,” says Nestel-Patt.

There was a time when musicians made money selling records, cassettes and CDs – sales fueled by the airplay of their songs on the radio. That started to change in the late 1990s when digital platforms started offering music for little or no money, paving the way for Spotify.

This digital transition has forced musicians to rely on live performances and ticket sales to make a living. But in 2020, when a global pandemic brought the world to a standstill, live performances came to an abrupt halt. “It was catastrophic for everyone I know,” recalls Nestel-Patt.

But now the musicians are fighting back. From the ashes of music careers was born UMAW, where artists proclaimed that “music workers are workers, and it’s time we organized and joined the fight.”

The band, which also supports universal healthcare, a Green New Deal, and more, led protests in multiple cities against Spotify in 2021. And tens of thousands of musicians signed a petition as part of the # UMAW’s JusticeAtSpotify.

Their demands were simple: to compensate artists fairly, directly and transparently, and to treat them with dignity.

With Americans spending more and more money on music, there should be more than enough for everyone. But even though industry revenue has reached $43 billion a year, very little goes to musicians. Creators only get around 12%, with corporate intermediaries taking the majority of the profits.

It’s not just the musicians who lose. The music itself suffers.

In a recent Atlantic title, music historian Ted Gioia asked, “Does Old Music Kill New Music?” Record companies, he observes, “are losing interest in new music.” While there are plenty of amazing new musicians out there, he writes, the industry “has lost its ability to discover and nurture their talents.” And Spotify is a big reason why.

“It’s as much a listener’s problem as it is a musician’s problem,” says Nestel-Patt. If Spotify relies on major pop acts or controversial podcasts to generate revenue, then “what happens to classical music?” What happens to Tejano music? What’s Happening to Appalachian Bluegrass Music? »

The ultimate losers here aren’t just those who make music. We all love him.

*Sonali Kolhatkar is the host of “Rise with Sonali”, a TV and radio show on Free Speech TV and Pacifica stations. This comment was made by the Economy for all project at the Independent Media Institute and adapted by OtherWords.org.