Spotify, with its 320 million subscribers and CEO worth $5.3-billion, pays artists $0.0038 per stream, and payola is said to be routine.
The Justice at Spotify campaign by the organization UMAW (Union of Musicians and Allied Workers) has brought further attention to the streaming juggernaut’s subpar royalty payouts, demanding that the per-stream rate be bumped up to a minimum of one cent.
Although Spotify operates on revenue shares for each stream rather than a fixed rate, its current payout rate is around $0.0038 per stream — just below four-tenths of a cent. However, this exact number varies depending on several variables, such as whether or not the listener is a paid subscriber, or which country the song is played in. A cent per stream would nearly triple the current payout rate.
UMAW is a coalition of American musicians and other types of music workers, such as roadies and producers. The organization formed earlier this year in response to the financial hit musicians have taken — and increased reliance on streams for income in lieu of touring—during the ongoing COVID-19 pandemic. The campaign is advocating for a bigger share of streaming funds to go toward the artist, and for a much more equal streaming landscape for musicians, rights holders, and record labels alike.
Meanwhile, the Swedish company continues to gain monetary value, their revenue and Spotify CEO Daniel Ek currently has a net worth of $5.3-billion USD (nearly $6.8-billion CAD). Ek came under fire earlier this year for suggesting artists unhappy with their compensation aren’t making music frequently enough. Spotify have also sparked recent backlash for offering artists and record labels more potential streams by influencing the recommendations of users in exchange for a “promotional recording royalty rate” — a practice critics consider as being payola.
As of Dec. 28, the petition has been signed by more than 26,500 artists. These include Guy Picciotto (Fugazi), Empress Of, Amber Coffman (ex-Dirty Projectors), Jay Som, WHY? and Ted Leo. Spotify have yet to respond to the campaign.
Although the movement initially aimed to put pressure on Congress to help musicians and freelancers receive increased financial support during the pandemic, it has since snowballed into focusing on three primary goals: Pay Us, Be Transparent and Stop Fighting Artists.
More specifically, they are asking Spotify to compensate artists via a user-centric payment model, reveal and end payola methods, end backroom deals with labels and make those contracts public, have all parties (eg. musicians, engineers, labourers) be credited for their work on recordings, and end lawsuits against artists.
UMAW also claims that musicians have been “underpaid, misled, and otherwise exploited” by Spotify and their current business model, have seen no increases to the payout rate, and that “only musicians already on top with extensive resources can succeed on the platform.” Clearly, this flies in the face of the company’s mission of “giving a million creative artists the opportunity to live off their art and billions of fans the opportunity to enjoy and be inspired by it.”
The controversy over lacklustre compensation is especially pertinent when the pandemic has ground live music to a halt, and artists miss out on money they’d otherwise get from touring. Such a sentiment was well summed up recently (in a deleted tweet) by Stars’ Amy Millan:
“Don’t you think it’s a bit bananas that STARS had 10 MILLION Spotify streams this year but we saw nothing for it and still needed CERB because our only source of income which is touring was taken away? That’s some intense capitalist theft right there. Ooooof.“—Amy Millan (@amymillan)
With Montreal being a popular spot for musicians to live and focus on their art, how would earning a cent per stream affect local artists still trying to establish themselves? For Montreal musician Paul Kasner — who records, writes, produces and performs as Venus Furs — it’s a step in the right direction, but still not enough to make a significant impact for him.
“It would be huge for artists who are getting huge volumes of streams,” he says. “For a lot of smaller artists like myself, three times of hardly anything is still hardly anything. It’s almost more symbolically nice for someone at my level.”
Kasner, who released his self-titled debut album back in July, praises Spotify for their algorithm and engineers, and thinks they can find a way to build a model where the artist receives a heftier cut.
“They’re already saying [to artists], ‘You’re going to be paid this much money per stream,’” he says. “I’m sure they can find some sort of way to go, ‘You had this many out of this many streams, so it’s this percentage of this amount of money that came in.’ That would seem like a much more reasonable model — and even at that, it would have to be something that makes sense as a reasonable split.”
Spotify is the world’s biggest music streaming service. The platform currently boasts 320 million subscribers, 144 million of whom pay monthly for Spotify Premium. This is more than double the subscriber base of competitor Apple Music, who have only about 72 million.
Although raising the payout rate per stream to one cent would certainly be a fairer deal, making it a reality is a bit more complicated than that. That said, there’s certainly no reason to think Spotify can’t refrain from suing their artists or be more transparent about their financial activity, and they most definitely have room to raise their payout per stream by at least a smaller amount when services like Apple Music offer artists a rate around $0.00675.
However, Spotify reported a net profit of only $1.8-billion USD out of the $7.3-billion USD they made in revenue this past year, the remainder of which went to either record labels or artists. If the payout rate were to be raised to one cent, this could set the company back billions of dollars per year in extra costs, perhaps enough for the company to fold and/or file for bankruptcy. Not only is the company losing money, they’ve also admitted that payout rates being lowered is “critical to Spotify’s future.”
One significant way for an artist to rack up streams is to be featured on playlists. But this can be difficult to accomplish without being connected to the right people, not to mention playlisting tools like Digster, Filtr and Topsify being owned by major labels. Montreal producer Ethan Barer — who makes beats under the moniker of Tibe and initially established himself on Soundcloud — says it’s important to be acquainted with someone curating playlists, something his peers wasted little time doing.
“When these independent artists were [first] making the switch from Soundcloud to Spotify, people were rushing to make friends with all these curators,” he says. “People that I knew were really on that in trying to secure their future. Maybe it was a good idea because they’re doing well now. But part of me didn’t want to just disingenuously befriend someone in an opportunistic way to later be put on a playlist.”
Luckily for Ethan, five of his songs on the platform have reached stream counts in the six figures; the highest being his 2017 track “Hey,” with more than 475,000 streams to date. How did he get there? By unexpectedly getting playlisted, despite having zero connections to playlist curators or Spotify employees. Though it would never be enough for him to survive on, he still receives bimonthly royalty cheques for the track, which continues to get plays on the platform.
“At some point, I remember having maybe 200 monthly listeners,” he says. “One day I checked my stats and it was at 14,000 monthly listeners. I was like, ‘Okay, something’s different here.’ So I checked, and I was on the playlist.”
Despite the politics involved in getting on playlists, Spotify remains an excellent platform for Montreal-based artists as far as getting exposure beyond their scene. For example, Venus Furs has gained listeners in Moscow, Russia, while Tibe has received numerous Spotify plays in Brazil. This is in stark contrast to the pre-streaming musical landscape, which required artists jumping through hoops to find booking agents and publicists to help launch their careers in foreign markets.
“I’ve gone to [the page of] a Montreal artist, and just for fun, clicked on About, and see the first market being Paris,” says Geneviève Côté, chief Quebec affairs and visual arts officer at SOCAN. “For an artist that hadn’t been in Paris at all — had not tried to develop the French market, was not on that path just yet… They made it to a playlist, and not even a playlist by Spotify France. It was a Starbucks-type playlist on Spotify, but from a business that was really well-followed by Parisians.”
However, Côté says the downside of this is that most people are no longer buying CDs, and that Quebec’s music industry cannot enjoy the same windfall it would’ve received if they still were. Moreover, if all parties involved were Quebec-based, the profits from a CD sale would stay within Quebec. This is no longer a regular source of income in the streaming era.
“Only a small part of that comes trickling down — whether through [music licensing company] Re:Sound, through us, or through other rights organizations,” she adds.“[Streams] do come from all over the world, but not in the equivalent of a $16.99 sale at Archambault or Sam the Record Man.”
So what other options do musicians have for making money off their art during a global pandemic? There are services like Bandcamp and Patreon, where fans can directly support artists financially. There’s also Twitch, the video streaming platform where artists can host live streams of performances and monetize them, either through direct tips from fans, or through providing a link to their merch store.
Live-streamed concerts have become popular during this pandemic, and Bandcamp has even gone so far as to launch their own service for live-streaming performances where 80 to 85% of ticket sales go to the artist. Alternatively, artists can receive grant money, as well as financial support from SOCAN for live-streamed shows. SOCAN also has an emergency fund for those in dire need of money. In the meantime, Côté suggests that artists hang in there for the remainder of the crisis, as vaccines are on their way.
“It would be a shame if everyone who worked in the music gig industry went to something else,” she adds. “Not just musicians, but waiters at the bars of your local venue, technicians, tour managers, managers, bookers. There are a bunch of people who earn their living through live music, and that’s the part [of the industry] hurting the most.”
While the impact of a one cent per stream payout on Spotify might pay more dividends for the Stars and Arcade Fires of Montreal’s music sphere, it isn’t likely to be a significant source of income for lesser-known local artists. That said, artists should — and are — seeing this movement as an opportunity for cultivating change to the streaming ecosystem.
“I hope this doesn’t just stop there, and we go, ‘Okay, we accomplished that,’” Kasner says.“We’re in a position where we’re not really able to negotiate or bargain, which is why this movement is happening.” ■
This article originally appeared in Cult MTL.