Are Spotify and Apple Music Sustainable? The Streaming Royalties Debate

Last week, Spotify CEO Daniel Ek spoke with Music Ally after giving a financial presentation on the state of his company. During the interview, Ek refuted claims that the company doesn’t pay adequate royalties to its indie artists, and defended the business model of Spotify and other big, similar streaming services.

“There is a narrative fallacy here,” Ek explains about streaming royalties. “Combined with the fact that, obviously, some artists that used to do well in the past may not do well in this future landscape, where you can’t record music once every three to four years and think that’s going to be enough.”

Ek’s argument becomes fundamentally flawed here. Anyone who has ever so much as picked up a musical instrument would easily understand how much of an investment of time it is to truly master the technical aspects of the instrument, let alone how to define one’s sound and style within the parameters of the instrument. Even artists who already have the necessary skills and ideas to make music on a variety of instruments still need to conceptually plan an album, develop a number of melodies and harmonies (and rhythms depending on how much of the production the artist is overseeing), record their music and mix and master the hours of recordings. And even if an artist goes through all these steps, the end result is not always as desired, and sometimes artists are forced to return to the drawing board.

Simply put, the creative process takes time. As a musician, it has often taken me hours upon hours of practice in order for me to master a simple 16-bar solo that lasts less than a minute. Ek’s idea that artists should focus on efficiency and more timely releases would directly diminish the value of the product that artists are putting out, as the time taken by artists to create their music is critical for artists engaging in the creative process.

Kendrick Lamar is a stellar example of how time in between projects leads to further creative output. Lamar released his second studio album, Good Kid M.A.A.D. City, in 2012, and didn’t release his third studio album, To Pimp A Butterfly, until 2015, three years later. The album not only continued to display the personal growth of Lamar as an individual, but also saw Lamar taking immaculate strides musically, adopting an experimentally jazz-driven approach to the album which was unlike anything heard before. Two years later, Lamar released his fourth studio album DAMN., which earned Lamar a Pulitzer Prize, making Lamar the first rapper to ever win the award. Three years later, fans are waiting to see what Lamar does next, and I can personally guarantee that the wait will be well worth it.

Would Lamar have had the same success if he had rushed the releases of his projects? Commercially, there is little to dispute that the answer would be yes. Mainstream rap artists have used the streaming model to their advantage to pump out high volumes of their work that has yielded streaming success. Major pop stars like Drake and Taylor Swift continue to achieve streaming success despite their frequent releases, and Ek sited Swift’s new album Folklore as an example of streaming success due to the frequency of releases.

This reveals a second flaw in Ek’s argument. The fact that Ek has to point to a major pop star like Swift, an artist who has arguably been the most popular pop star in the country for the past decade, to prove that frequent releases should be adopted is nothing short of absurd. How are indie artists that are trying to make a name for themselves supposed to compete with the likes of Swift and other artists who already have devoted fan bases comprised of millions of people? It is near impossible for indie artists to break out and achieve the type of popularity that Swift has, which is the only real way that artists would be able to use the frequency strategy Ek speaks of to profit off of streams.

For those wondering how much artists make off of streaming (information Spotify has never publicly revealed), the average royalty an artist is paid per stream comes out to about less than half of one cent. LESS THAN HALF OF ONE CENT. $0.004. No matter how you spell it out, it is a truly unequal distribution of pay.

For artists like Swift who average more than 45 million listeners per month, the payout still comes out to $180,000 per month, a more than viable income for anyone to receive per month. But what about the artists that are only raking up 4 million listeners per month? What about 400,000 or 40,000? Stanley, a Minneapolis based indie rock band, averages just under 28,000 listeners a month. This yields $112 for the band per month, and assuming the band splits the money between the band evenly six ways, each band member makes $18.67 per month.

Stanley is just one of hundreds, if not thousands of indie artists and bands trying to make a name in the music industry. To do so, they must make music that is unique and stands out while appealing to a broad audience, a task much easier said than done. How do artists and bands make such revolutionary music that can also remain universal? While I don’t have the answer to this question, there is one thing I am sure of: artists that take the time to hone their creative process and figure out what they want to do and how to do it tend to be the artists that make the best music.

This leads to the final flaw of Ek’s argument; in the interview, Ek states, “I feel, really, that the ones that aren’t doing well in streaming are predominantly people who want to release music the way it used to be released.” I can’t know for sure what Ek was referring to when he states “the way [music] used to be released,” but in the context of his comments and the interview as a whole, it seems that Ek is referencing music from the past that took greater time and care to create, as opposed to the rushed music of today that sees high streaming volume.

If Ek is indeed making that distinction, then he is openly siding with a worse product that brings him more profit, as he advocates for artists using a frequent release strategy to cut their creative process and increase their profits. What right does a non-artist have telling artists how to do their job? Would Ek have told Pink Floyd to take less time between projects during their amazing run in the 1970’s? (The Dark Side of the Moon – 1975; Wish You Were Here – 1975; Animals – 1977; The Wall – 1979) Would he have told Prince to take less than two years to make Purple Rain? Would he tell Kendrick Lamar that he made a mistake by not releasing a new album two years ago?

Indie musicians and bands simply cannot make enough money from music streaming as the royalty structure exists today. Popular artists can take advantage of the system, but by doing so risk taking a hit to the quality of their product. Artists that take multiple years in between projects usually achieve musical and personal growth, as they develop their talent to further understand how to project their music to reach the maximum amount of people. While popular artists have the luxury of time, indie artists do not, as Ek would be the first to let the artists know that time is not on their side.

It is unclear whether the next decade will bring some advancement in the way we consume our music. It is increasingly clear that the structure of Spotify and Apple Music looks out for artists at the top, and not the much larger population of artists trying to make a name for themselves. It is also increasingly clear that Ek would rather see his profits increase rather than the quality of music that artists upload to his platform.

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