Last week, Taylor Swift abruptly removed all of her music from Spotify, a significant move considering that Swift's latest album 1989 has been perched at the top of the charts since its release two weeks ago. In explaining the decision, Swift told Yahoo Music that Spotify doesn't adequately compensate artists for their work.
Music is changing so quickly, and the landscape of the music industry itself is changing so quickly, that everything new, like Spotify, all feels to me a bit like a grand experiment. And I'm not willing to contribute my life's work to an experiment that I don't feel fairly compensates the writers, producers, artists, and creators of this music."
Also, a lot of people were suggesting to me that I try putting new music on Spotify with 'Shake It Off,' and so I was open-minded about it. I thought, 'I will try this; I'll see how it feels.' It didn't feel right to me."
In the wake of Swift's decision, Spotify CEO Daniel Ek wrote a lengthy blogpost detailing a number of interesting perspectives about the state of the music industry, the streaming music business, artist compensation, and much more.
With Apple poised to get into the streaming business itself, there are a number of points in Ek's post worth highlighting.
Highlighting the immense growth that Spotify has enjoyed in recent months, Ek notes that Spotify from 2008 to 2013 paid out $1 billion in royalties to labels, publishers, songwriters, and artists. Since then, Spotify doled out another $1 billion in royalties.
Spotify is the single biggest driver of growth in the music industry, the number one source of increasing revenue, and the first or second biggest source of overall music revenue in many places.
Still, there remains an underlying belief that artists are getting shortchanged with streaming. Ek takes on this concern head-on and articulates a number of what he terms "myths" regarding artist compensation.
First of all, let's be clear about what a single stream – or listen – is: it's one person playing one song one time. So people throw around a lot of stream counts that seem big and then tell you they're associated with payouts that sound small. But let's look at what those counts really represent. If a song has been listened to 500 thousand times on Spotify, that's the same as it having been played one time on a U.S. radio station with a moderate sized audience of 500 thousand people. Which would pay the recording artist precisely ... nothing at all. But the equivalent of that one play and its 500 thousand listens on Spotify would pay out between three and four thousand dollars. The Spotify equivalent of ten plays on that radio station – once a day for a week and a half – would be worth thirty to forty thousand dollars.
What's more, Ek notes that for top artists like Taylor Swift, payouts can reach well into the millions. Of course, Swift operates in rarified air where she can accidentally release a track consisting of 8 seconds of white noise and have it reach the top of the charts. In other words, using Swift as an example of how much artists can make doesn't really paint an accurate picture of how much most artists on Spotify are actually making.
Interestingly enough, Swift's team has since responded to Ek's letter, noting that the payment figures bandied about by Ek are inflated, to say the least.
In an interview with Time, Big Label CEO Scott Borchetta says that the record label has received $496,044 for "domestic streams of Swift's music." (A Spotify spokesperson told the magazine that over the last 12 months, Swift made $2 million globally.) Borchetta, however, claims that the payoff from Vevo is higher than what she earns on Spotify.
No matter what side of the fence you fall on, there's no denying that the musical landscape is shifting incredibly fast. Whereas music was once something you purchased by the album, sometimes at $20 a pop, it's now been commoditized to the extent that many consumers expect to get for free via sites like Pandora and YouTube.
To that end, Ek's entire post is well worth a read, if only to check out one side of the debate.
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