The Streaming Predicament
Here is a story my mom has often told: Years ago, my parents (a folk duo) were playing a show. Afterwards, a woman came up to the merch table and told my mom, “I loved your CD so much, I burned copies for all of my friends!” My mom was stunned. She couldn’t think of anything to say. The woman obviously thought she was giving a compliment, but it baffles me to this day that she was so incredibly unaware that by burning copies of my parents’ CD, rather than buying copies to give as gifts, she’d essentially robbed my parents of the money they live on.
I bring this up to illustrate that many music listeners have never been conscious of the fact that music is not a free-floating and freely available substance that comes out of the ether; it is a craft made by professionals who should be compensated for their labor. This problem is not a new one, but it’s been exacerbated with the advent of each new technological innovation — CD burning, then peer-to-peer filesharing (Napster, LimeWire), and now streaming services like Spotify — that legitimized the idea that music should be something that anyone can freely access, rather than something that should be paid for.
Since streaming became the new norm, the way most people consume music, it has decimated the revenue stream of album sales that musicians once relied on. Artists are paid well below half a cent per stream (the rate varies based on a complicated and murky array of factors), meaning that millions of listeners will get you only a few thousand dollars. Recent calculations found that it would take a musician over 300,000 streams per month to earn minimum wage, and twice that much to earn a real living wage. Had even half of these listeners paid 99 cents for a song on iTunes or $15 for a CD, many musicians could be making a comfortable living. Even two cents per stream would mean a comfortable living. But at $0.003 per stream, the result is that many musicians must tour constantly in order to pay the bills, or get another job if they are unable or unwilling to adopt a grueling tour schedule.
Here’s the thing: I love Spotify. I use it every day. I’m using it right now to listen to the album “Ocean Songs” by The Dirty Three, which I’d never listened to before today. I recently asked my Facebook friends to recommend instrumental music that would be good to listen to while writing, and I was immediately able to fire up Spotify and check out almost all of the music that was recommended to me. It’s staggering to realize that we live in an era when we can easily access more recorded music than we could listen to in three lifetimes. As a music fan, it’s like being a kid in a candy shop, but the candy is free. As a musician, it’s an incredibly valuable educational and artistic resource. It’s also a great way for listeners to find my band’s music. I’ve had several people come up to me after shows and say that they found my band through Spotify. I also love Spotify’s personalized algorithmic playlists, curated editorial playlists, and user-generated playlists that can be shared with friends, like the mix CDs I burned constantly throughout middle school. Streaming services are a great way for people to find new music because you don’t have to invest money into trying something new. There’s no risk.
So while I believe that Spotify has exacerbated the undervaluing of artistic work, it’s also a wonderful resource that allows people to be more curious and dedicated music listeners, which is an unqualified good. And to a certain extent, all of this is a moot point, because we can’t go back now. Streaming is the new norm; artists need to have their music on streaming services to compete in the industry, and people aren’t suddenly going start buying CDs again. It’s now unimaginable to most people, myself included, to pay 99 cents every time we want to listen to a song. (Two caveats: Folk music fans still buy CDs. Thanks, folk music fans. And second, the resurgence of vinyl is very encouraging. I love vinyl.) Anyway, I certainly don’t think it’s immoral to use Spotify. As with most things, I am much more concerned with critiquing and changing larger systems than I am with criticizing individual people’s choices under a capitalist system. If you change the system, you change the choices that are easy and available for people to make.
So while I believe that Spotify has exacerbated the undervaluing of artistic work, it’s also a wonderful resource that allows people to be more curious and dedicated music listeners, which is an unqualified good.
So what is the answer here? It’s a thorny one to say the least, but I can identify three major points of attack: raising Spotify’s payout rates, changing its subscription structure, and changing the way streaming is treated in record deals between artists and labels/distributors. According to CNBC, “Like many public internet companies […] Spotify does not turn a profit. However, its revenue is nothing to sneeze at. It had $4.9 billion in 2017, according to its F1 filing, with a growth rate of 46 percent compared to the prior year.” Despite Spotify’s somewhat murky financials, its revenue seems to be steadily growing while its artist payout rates seem to be steadily declining. However, a company that isn’t profitable likely can’t afford to substantially jack up their payout rates without making other significant changes.
It seems that artists make more money per stream when the streams come from paying accounts rather than free ad-supported accounts. Considering how often I use Spotify, I would certainly pay much, much more than the $3.75 per month I pay now (I share a family plan). I think many other devoted listeners would too. I see a number of options here. Streaming services could offer multiple paying plans with different tiers of access and functionality – higher-quality audio, the ability to download and save only a few albums versus unlimited albums, access to personalized playlists, etc. This would allow both casual listeners and serious music fans to pay according to how they use the service. They could also limit the functionality of the free ad-supported plan to be more like Pandora, where you can choose from playlists, but you can’t choose individual songs or albums to listen to. Or, after a certain number of hours, users would have to subscribe to continue listening. This would be similar to the paywall system commonly used by many media outlets, so it’s something consumers are used to. This could raise revenue substantially, allowing for greater payouts.
As for the payouts themselves, there’s been a lot of discourse about “artist-centric” versus “user-centric” payout system. Payouts are currently pro-rated according to artists’ percentages of overall streams, but some argue that it would be fairer to source the payouts according to what users listen to, so if a subscriber paying $10 per month only listened to Lula Wiles, we would get their whole $10. It’s difficult to calculate if this would actually be fairer, though, and this system means that the per-stream rate would vary widely based on how much listening individual users do, which doesn’t really make sense to me.
Not to mention the fact that Lula Wiles wouldn’t actually get $10. What would actually happen is our record label would get whatever was left of the $10 after Spotify’s share, and the band’s share ofthatwould be based on what we negotiated in our record deal. Taylor Swift, a longtime adversary of streaming companies, recently negotiated a clause in her contract stipulating that her label, which owns shares in Spotify, distribute any profits from sales of their shares among allof their artists – not just Swift. (Now that’s what I call clout!) This is a good start, but it seems like kind of a stopgap measure to me. In this day and age, when record labels aren’t a total necessity anymore and small indie labels are proliferating, the terms of record deals vary hugely. Major labels often own the albums they release, whereas indie artists usually retain ownership of their albums and license them to indie record labels, sharing the profits. Physical CDs and vinyl records are manufactured by the label, and artists buy them at a wholesale rate to sell on tour. There is a lot more detail I could go into in explaining how this works, but suffice it to say I believe that artists, not labels, should receive the bulk of the payout from streaming. Industry standards change all the time; if labels want to maintain relevance in a world where self-promotion gets easier every day, they need to recognize that a sustainable career for their artists requires them to make more money from streaming. (If anyone from my record label is reading this, don’t worry, I love you all.)
I am far from the first person to attempt to untangle this thorny issue. It’s a tough one to think about because it’s so multifaceted – even musicians don’t quite understand how it all works. Here’s what I know for sure. First, even though streaming at its best does expose artists to new fans who will buy concert tickets, it has unquestionably hurt artists’ ability to sell their music and thus make a living. Second, music will suffer immeasurably if the only artists making music are either independently wealthy or unable to devote their full energy to their art because they have to pay the bills with a day job. (Most meaningful art has not been made by the ruling class – sorry to say it!) These facts mean that we need to change the streaming system to be more equitable for artists. Right now it’s nothing short of exploitative. Streaming is a double-edged sword, but I believe it can be redirected toward making careers in music livable and encouraging consumers to value music and musicians the way we deserve.