How Spotify sucked the money out of music
For musicians, the current landscape of music has become pretty dire. While Aotearoa-based musicians have always had to contend with small local audiences and parasitic major labels, the situation has only gotten worse since the streaming revolution of the 2010s. The number and range of venues has fallen significantly, with many either close to shutting or already gone. It’s a similar story with other essential facets of a healthy scene like independent labels, music journalism platforms, record stores and radio stations.
Of course, music scenes ebb and flow as styles come and go, but the systemic devaluation of music through the rise of streaming has played a major role in this downturn. Musicians earn substantially less through their releases—with income sources like physical media and radioplay being completely gutted, and streaming offering increasingly smaller royalties. The ease of accessing music online has done wonders for its discovery and appreciation, but streaming has attempted to turn that discovery into an algorithmic torrent of endless background consumption.
The collapse of major labels in the early 2000s, along with the proliferation of peer-to-peer file sharing programs like Napster, opened the door for Spotify in the mid-noughts to offer itself as an alternative. Instead of the pay-per-song model of iTunes, users pay a flat subscription to access the same library. With significant investment from private capital, Spotify was able to get major labels like Sony and Universal on board, and cement itself as a vampiric middleman between musicians and audiences. Those same labels now hold about 7% of Spotify’s stock, and negotiate exclusive royalty rates for their artists. Consequently, it’s why major label tracks make up a vast majority of the biggest official Spotify playlists.
For the vast majority of musicians, streaming is not at all a viable source of income. It’s possible in theory, but you’re effectively losing money on paying for the privilege to be inside the ecosystem. To get onto streaming services, you can’t go directly to services and submit your music. Instead, you have to pay a third-party company to “distribute” your music, with most requiring ongoing subscriptions lest they delete your career overnight. One of the most ubiquitous of these distributors, DistroKid, is partially owned by Spotify, making this entire process the first stage of a mean green pyramid scheme.
This arrangement has locked music into a walled garden, with artists being paid shrinking pittances while bound to the machinations of opaque algorithms, forced to stay in the system to be seen by audiences. Musicians are now unable to even entertain the idea of sustaining themselves off music, unless they’re able to reach wild levels of success. Even then, it’s still a paltry level of reimbursement. To make minimum wage for 40 hours worth of labour through Spotify, you’d have to get 230,000 streams; you’d be able to make the same amount by selling about 30 vinyl records.
For the amount that Spotify relies on artists and their creative labour to function, it’s staggering how little of that actually gets reinvested back. Payments to artists on the platform have only been shrinking since the company achieved market dominance. Like Uber and other “disruptor” startups, Spotify’s business model is unprofitable in the long-term, but because they were able to destroy the competition, they squeeze artists for all that they’re worth.
However, after the previous decade’s boom cycle being blown on tech startups and monkey JPGs, we’re now entering the capitalist economy’s bust phase. Rising interest rates will no longer allow investors to kick the proverbial can down the road. At some point, Spotify will have to reckon with the inherent unsustainability of the current system, and the fact that they offer artists very little to incentivise them to stay. In the near future, it’s not impossible to see artists doing to Spotify what people did to MySpace.
But before we get there, what can we do now? I don’t think you need to burn your Spotify subscription, but you can support artists in other ways. Go out to live shows, get music you like from somewhere like Bandcamp, buy some merch (or a physical release if you’re a “they’re called records, not vinyls” kind of person). Actively seek out music, and share what you love with other people. When the walled garden does eventually collapse, maybe we can end up with an arrangement that properly values the labour of artists.