Is Spotify’s Business Model Fair for Musicians?

July 22, 2021
Written By:
Written By:
July 22, 2021

TNC readers, what’s good!

This time around, we won’t be discussing the newest collections or coolest new NFT’s. Instead, we’ll be looking into something quite controversial in the music industry, with the hope it will make your precious little brains have a little thinking session.

Long gone are the days where music was consumed by purchasing songs, or albums, physically or on digital shops such as iTunes. Everything has gone digital, and streaming services like Spotify, Tidal & Apple Music have taken over. Of course, for bigger artists that should not be a problem. Hell, they probably earn even more than they did before. But those smaller artists, the ones that we love, the ones that we want to support, especially here at TNC… What about them?

Today, we’ll be focusing on Spotify. For those who’ve been living under a rock for the past decade or so, Spotify is a subscription-model service that provides access to millions of tracks, albums and podcasts from creators all over the world. But what about it is critiqued?

Well for starters, they pay terribly. Due to this, there have been multiple artists that decided to boycott the service, like Taylor Swift for example, and even the great Jay-Z. Why? The streaming service pays about $0.00437 per play, which calculated would mean you need 336,842 plays each month to make the US minimum wage of $1472. That is quite a bit of plays if you ask me.

Source: The Medizine

Recently, a group of independent musicians who’d endured a year without live-performance income commenced a series of protests called “Justice at Spotify” at the music streaming platform’s offices around the world. The argument many use against these streaming platforms, and Spotify in particular, is the cannibalisation of the full-price sales of music. This consists out of physical CD’s and online downloads, but with many fans simply choosing to stream music, rather than purchase, they do not earn as much as they otherwise might.

But luckily Spotify has gotten some pressure to increase royalties, after Apple Music increased theirs to about a penny per stream, which would be 1 cent, which doubles Spotify’s royalties. In order to stay in line with its competitors, Amazon Music and Tidal, who also give out royalties around the same amount, increasing theirs might be essential. By doing so, they would also send a clear, graspable message to its subscribers that they value the artists on their platform which essentially serve as a foundation for their platform.

Source: LA Times

The problem with this is that according to Mark Mulligan, managing director and streaming analyst at Midia, is that streaming only works for record labels. As a publisher, you’ve got a huge amount of different songs from multiple artists. For them the numbers add up and eventually earn big chunks of cash, but if you as a an independent artist only have 20-30 songs, you’ll be earning significantly less. Scaling is the only way to properly benefit.

And this is something that many fans don’t understand because when you see a seemingly impressive amount of streams like 1 million on an artist’s Spotify, you might think they earn a lot of money with that. But in reality, it’s only a few thousand dollars. This is then split between label, publisher, and artist, and in the end, you’ll be able to buy yourself a nice new guitar with that money and that’s about it.

So, now it’s up to you, readers. How do you feel about these streaming platforms and in particular Spotify? Is it fair? Do you even use them? There’s some food for thought for you.

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