In a current Hypebot interview, a Spotify govt urged the business to cease specializing in per-stream royalty charges and as an alternative flip consideration towards “fan engagement.” This isn’t a brand new argument—it’s simply the identical outdated con up to date for the streaming financial system: Don’t fear about your paycheck, simply be pleased persons are listening.
However when Spotify tells artists and songwriters to disregard the one metric that impacts their earnings—the per-stream fee—that’s not a enterprise perception. That’s business propaganda. And worse, it’s propaganda designed to justify a decade of worth extraction from the very creators who constructed Spotify into a worldwide behemoth.
The argument is dressed up in numbers:
“Now, again to ‘per-stream fee’. Some argue {that a} larger fee means a greater deal for artists. However that’s deceptive. The mathematics is easy: [total payouts] / [total streams] = ‘per-stream fee’. What makes the per-stream fee look decrease? You guessed it: extra streams. That’s precisely what’s occurring on Spotify. As a result of it’s essentially the most partaking service, the calculated per-stream fee is decrease.”
That is pure sleight of hand. Spotify leaves out the half the place the “whole payouts” are artificially constrained by a decade-long refusal to boost subscription costs. Spotify’s technique was easy: maintain client costs low to maximise person development and inventory valuation—artist compensation be damned. The per-stream fee isn’t low as a result of Spotify is profitable. It’s low as a result of Spotify made it low, on goal. It’s exhausting to know which is extra insulting–that they make they argument but once more, or that the anticipate us to consider it but once more.
In the meantime, Spotify’s executives and shareholders revenue from a booming inventory value, pushed by the very engagement and music that creators generate. Artists, nevertheless, get no piece of that fairness. Daniel Ek didn’t turn into a billionaire by sharing income. He turned a billionaire by capturing it—whereas maintaining per-stream charges artificially depressed.
And now artists are advised not to take a look at how a lot they’re paid, however to deal with “engagement”—as if that can pay hire, purchase groceries, or safe well being care. It’s the identical drained pitch musicians have heard for many years: Don’t fear about getting paid, simply benefit from the publicity. However publicity doesn’t pay royalties. Neither does engagement. Solely cash does.
Worse, Spotify is just not solely spinning its personal practices—it’s reshaping regulatory outcomes. I would like solely level to the insanely unjust state of affairs that unfolded within the final Copyright Royalty Board (CRB) Phonorecords IV continuing. Songwriters had been granted a cost-of-living adjustment for bodily mechanicals by the report corporations, however had been denied the very same adjustment for streaming mechanicals. Why? As a result of Spotify and the opposite companies turned unfastened a battalion of 26 attorneys on songwriters—collectively billing round $100,000 an hour—and satisfied the CRB that streaming by some means didn’t advantage the identical inflation adjustment. Their argument? Trickle-down economics. They claimed a rising tide lifts all boats, however forgot to say that songwriters don’t even get a ship. They’re floating within the wake of tech billionaires with no life vest and no leverage.
Readers will keep in mind we’ve been down this path many, many occasions, together with my current put up on Spotify’s earnings: If we’re going to speak about “pies,” then let’s speak about all of the pie. That features investor fairness, inventory buybacks, and IPO inventory choices. Like MTV, Myspace, YouTube, TikTok, Fb, and so on. (the checklist is lengthy and distinguished), Spotify constructed its platform on the backs of creators—however it solely shares the smallest slice of that whole pie with them. Consider the worth that has been extracted by unrelated media corporations from creators over the past twenty years? It’s an astonishing quantity. That worth has been siphoned off right into a monetary shell recreation designed to learn executives and shareholders, not songwriters and artists.
Spotify must cease enjoying the clown. Fan engagement is just not an alternative choice to compensation. Regardless of how a lot they twist it, we’re not going to purchase into the Stockholm syndrome. Twisting the information doesn’t excuse monetary exploitation. If they’re telling working musicians and songwriters to not deal with what they’re paid, they’re simply one other monopolist working the most recent model of the identical outdated okie doke.
