Labor

Spotify Exploits Musicians: What is an Artist to Do?

"On their own, independent artists have very little power."

Internet music startup Spotify on Tuesday added a free radio service for iPhone or iPad users in the United States in a direct assault on locally loved Pandora.

Many artists consider the music streaming service Spotify an exploitative enterprise. Earlier this year, Bjork announced that her new album would not be available on the service. She explained, "To work on something for two or three years and then just, oh, here it is for free. It’s not about the money, it’s about respect, you know? Respect for the craft and the amount of work you put into it."

I caught up with music journalist Chris Ruen, author of the book Freeloadingto discuss Bjork's comments and the economic struggles of independent artists during our current era. 

Michael Arria: Let's rehash the economics of Spotify. How do the numbers actually break down for the artists?

Chris Ruen: David Candles, the journalist and designer behind Information Is Beautiful, just updated his 2010 infographic showing how much artists get paid from various digital services with new 2015 numbers. I’m going to use his numbers for point of comparison. These rates can vary, of course.

An unsigned artist that sells a single track on iTunes receives 69 cents and Candles determines they’d need a volume of 1,826 monthly to make minimum wage. Not too bad!

For its part, Spotify pays an unsigned artist seven-tenths of a penny per stream, requiring about 192,000 streams per month for an artist to reach minimum wage. Beats, Google Play and Tidal all pay out significantly more per stream than Spotify, Rhapsody and Deezer, but you still need significant volume to make any money. And remember that those are numbers for unsigned artists.

A signed artist on Spotify gets just a 10th of a cent per stream versus 11 full cents for an iTunes track download: that’s 1.1 million streams versus 11,000 track sales to reach minimum wage. The cut that a record label takes makes the economics of streaming that much more difficult, but remember that labels are also paying artists advances on royalties and providing them marketing services and other support. The artist is choosing the label. But, we end up with the horror stories, like Aloe Blacc making less than $4,000 from Spotify for co-writing Spotify’s most streamed song ever “Wake Me Up!” Or Rosanne Cash earning $104 from 574,000 Spotify streams over 18 months.

When I look at all the payouts from digital services, my big takeaway is that digital sales is a model that actually works! Doesn’t mean the price points can’t change, but if I were an artist or label I’d be careful not to be complicit in killing off that model too quickly. The cliché of digital economics is that you move from analogue dollars to digital pennies. Here, we’re actually talking fractions of pennies.

Another clichéd response to this is “Well, we’re in a transitional period.” Yes we are, but that’s no excuse to look the other way while the middle-class of artists continues to be decimated, as it has for over a decade now. If the industry isn’t working for artists, then is it working at all? What we “transition” into will be determined by the actions and attitudes of artists, labels and fans today in response. Silicon Valley has this traditional bait-and-switch rhetoric that tells the creator to just be patient and stand in passive wonder at all their new “opportunities to innovate,” meanwhile economic value is being extracted from their work left and right. In fairness to Spotify, this mostly happens via YouTube and all the businesses that profit off of ad-based piracy.

MA: In her comments, Bjork mentioned Netflix as a potential model for music sharing. She said, "You go first to the cinema and after a while it will come on ­Netflix. Maybe that’s the way to go with streaming. It’s first physical and then maybe you can stream it later." 

CR: I think she is stating the obvious as far as what “fair streaming” could look like. But normalizing this kind of windowing in music will require a groundswell of artists making the same choice as Bjork to publicly hold off on streaming, as much in the spirit of solidarity as in their long-term business interests.

Imagine if the paradigm for movies was, “Okay you have to have a cheaply priced streaming service that has everything available including new releases…” You’d have to be stupid to expect that to be financially sustainable for filmmakers.

But with music, artists have been so thoroughly brainwashed into believing they have no choice but to give it all away and it's telling that Spotify actively perpetuates this narrative. I have nothing against streaming services in principle, but when Spotify tells artists they have to license because otherwise people will just pirate it, they become a truly slimy anti-artist company. It’s one step away from blackmail.

Just as Internet economics have slyly manipulated a lot of us into giving up our privacy rights, artists have been manipulated into giving up their own right to choose when and how their work should be available. On the bright side, there’s no good reason why the next 15 years must resemble the last 15. Things can change.

Netflix has a ton of good stuff that I enjoy, but it also has a lot of “straight-to-video” crap that I will never watch. So I wonder, how would that look, relatively speaking, for a streaming music site? A lot of older “classic” music that there’s marginal demand for, a few high quality albums that aren’t too old, some highly desirable exclusives, and a lot of stuff that practically no one will listen to. Perhaps such a thing could work in the future for music but I believe that copyright policy will need to change considerably in the direction of credible enforcement first. Reaching the potential of Internet distribution going forward will result from making licensed content reasonably convenient for the consumer while making unlicensed content reasonably inconvenient.

MA: There was a big deal made about Taylor Swift yanking her album from Spotify, but what would that process look like for an independent artist? Why don't more indie artists do it?

CR: Because they’re afraid that they’ll just become irrelevant, get zero from their work on account of piracy versus Spotify’s slightly-more-than-zero payout, and they are no doubt getting advice from their labels and managers to license and not make enemies with these companies that could end up controlling the industry in the not-too-distant future. It’s more in the interest of the record label for that artist to license with Spotify because they are counting on those aggregated payments.

On their own, independent artists have very little power. But, if they felt they could trust x amount of their fans to buy their record on iTunes rather than freeload it, many more artists of all stripes would do exactly what Taylor Swift did and soon it would look like an idiotic move to automatically stream a new album, unless you were getting a nice payout to do an exclusive.

MA: Have there been any attempts to make this more fair for artists? Does a Thom Yorke, or Bjork, diss mean anything in the scheme of things?

CR: There has been some talk about establishing Fair Trade-type standards for how labels administer digital payments and I hope those efforts move forward. Moving away from the free tier model is an important step. It’s encouraging that some major labels are starting to publicly criticize the free streaming model. Ultimately you’re talking about who has the power in negotiations and what they will choose to do with that power. With Tidal and its exclusive model, Jay-Z is putting forth a new idea on how things can work, but will it be successful? Does he truly have artists’ backs when he as owner of the service ultimately profits more when artists are paid less? You can look at the ownership stakes that all those huge artists have in Tidal as a sign that it will be a more fair model, or you can see it as a power grab by the one-percent of artists. I hope they develop standards that benefit the next generation of artists. We’ll see.

I wonder, what might it mean for a digital service to be determined as “pro-artist” and can a line be drawn in the sand for artists so that they know what services to do business with and what services to avoid or criticize? All this inchoate digital anxiety from artists could be channeled in a really constructive way.

I see the streaming controversy as a symptom of something deeper. The ecosystem streaming exists within is toxic because there is too little pressure from artists, labels, licensed services like Spotify and music fans to do more about mass piracy. The pro-copyright enforcement perspective needs to be normalized, much like the carbon tax for addressing climate change. We have to invest a little something now, before things get out of control, in order to create a better world for ourselves in the future. Fair markets that give the public desired outcomes require sensible regulation, and the lack of digital copyright enforcement is a threat to our creative ecosystem—it infects the entire environment, its diversity and health, to the detriment of humanity, all of us.

My suggestion is that artists at every level, if they want any of this to change positively, need to become comfortable calling for effective copyright enforcement measures and fold that into their critiques of streaming. Stop acting like “copyright” or “piracy” are scary four-letter words. If some fans aren’t ready to hear it, well, I think it's just part of the educational process. When enough fans of art hear from enough artists they respect that copyright enforcement is essential for the creation and spread of the art they love, perspectives will shift. Could happen very quickly given the right conditions.

And yeah, there is this online subculture that sees artists’ rights being undermined as somehow necessary to progress and they tend to be loud and obnoxious within the safe confines of the screen. They may draw attention, but they are a marginal and misguided lot. I understand people wanting shit for free—don’t we all!? What I find truly strange are the intellectuals and Silicon Valley-funded nonprofits that argue our capacities of free expression will be so much grander if we would just disempower artists and strip them of their rights. I know the well-meaning place that perspective emerges from for people like John Perry Barlow of the Electronic Frontier Foundation, I just think their early-'90s visions of how the Internet would turn out are already antiquated. But ideology takes control and then these issues become reduced to an us-versus-them war, and too much emotion and ego is invested for people to adjust their ideas. For the tech companies, they just don’t want increased regulations or reductions in the amount of data available for them to mine and attach advertising to.

I believe culture opens up and moves forward when you have a diverse class of artists, authors, journalists, etc. that are creatively independent and influential, and both qualities rely upon secure funding. 

The disses from the artists you mention definitely make a difference, so long as they keep coming. I think Spotify is betting that they will wear down artists over time and amass enough power so that artists will eventually just shut up. After seeing how the piracy debates have played out thus far, I’d probably assume the same thing if I were in their shoes. Any artist with an audience, no matter how small, has a chance to influence perception on these issues and shift the narrative. It seems that these stories of artists speaking out trend online disproportionately and I don’t know of any cases where an artist has actually been damaged by speaking their mind on this stuff.

I wonder whether artist managers are culpable for a lot of the timidity from artists to speak out over the years, telling them to play it safe. Takes a lot for an artist to go against their manager’s advice, but giving in to the climate of fear places artists in a terribly weak position over time. I think artists should do what artists do best—take risks and tell the truth.

MA: When Yorke criticized Spotify, he said, "What happens next is the important part.What do you think happens next?

CR: Sure, of course what happens next is important. But the past is important as well because it shaped the attitudes that have brought us to this point. I’m sure he meant well at the time, but Yorke gave a lot of people an implicit excuse to not pay artists for their work in the past when he called the label system a “sinking ship” and generally portrayed its downfall as a positive thing. You know, copyright starts with the artist. It’s an artists’ legal right and they can extend it to whomever they see fit, including a label, or to no one at all and give their work away for free.

So, an attack on labels is also an attack on the artists that have partnered with them. If giving your money to record labels makes you feel gross and icky for some reason, fine, we’re all owed our particular enthusiasms. That’s a great reason to pay the artist direct on Bandcamp or something similar, but it’s a totally incoherent reason to pay zero for the music when you know its otherwise available. A record label that “underpays” an artist is way, way better for art than a fan that purposefully denies them payment entirely, which is what so many music “fans” have embraced. My befuddlement with that choice is what got me writing on the topic in the first place. What is the explanation for people participating in the destruction of the thing they love?

I don’t know what happens next. The trend lines aren’t good for artists, that’s for sure. At some point, there won’t be as much competition between streaming services as there is today, so there is a temporary opportunity for artists to leverage that competition in a positive way. I’ve tried to think of what artists can do collectively to make things more sustainable, so here’s my three-step idea for artists.

First, upon the first “window” of an album or song release, put it up for digital sale and license it as an exclusive only to whichever paid subscription service is offering the best rate, and publicize this approach so that other artists can follow and the streaming service can reap the rewards of “artist friendly” publicity. The cannibalization of sales from streaming at the music’s point of highest demand is minimized and a virtuous cycle may be set into motion where it is in a streaming service’s long-term business interest to offer higher and higher rates. This also ought to push the streaming companies themselves to join in the fight against unlicensed distribution (piracy, etc.) because their survival will rely on consumers agreeing to pay for subscriptions.

Second, as demand for an album reduces over time, license to the other paid streaming services, but retain the right to pull your music again in the future if a stroke of good luck or publicity should put your work in higher demand. Play the market, improvise and experiment as you would with your art, but understand that upholding that choice to distribute your work as you see fit is the existential imperative. Anyone telling you “you must comply” has either been brainwashed or is attempting to do the brainwashing. Don’t let the digital zombies claim you as their next corpse! The more that artists can approach the moment with a sense of solidarity the better. The bigger an artist is the greater their luxury, and perhaps responsibility, to make decisions that will benefit the up-and-comers, the next generation.

I know the business calculations were complicated when she did what she did, but right now Taylor Swift is the beacon for an artist proudly using her agency and defying those in the tech sector who seem determined to infantilize and undermine artists in the 21st century. And fans can support artists who speak out or aggressively window their releases on social media…or even IRL.

Third, publicly demand more effective copyright enforcement. Artists need not venture into all the grizzly details of copyright policy, but rather hold to the principle that if money is being made off of their work, the people who created it deserve a fair cut—and some agency in negotiating that.

Piracy is still a gigantic global problem that hasn’t been meaningfully addressed and the Digital Millennium Copyright Act has a huge loophole in its Safe Harbor provisions, in which takedown notices for specific content are practically meaningless because a site or service can just turn around and feature a new upload of the same music or film that’s already been determined as being unlicensed, and claim ignorance for what is going on. It has incentivized willful blindness on an industrial scale and seriously undercuts artists’ negotiating power.

It also has created a system where only the artists with money can actually afford to repeatedly file takedown notices. Artists should demand to Congress that “Take Down Means Stay Down” and that sites like the Pirate Bay, that serve no significant purpose other than unlicensed distribution, should be as inconvenient to access as possible and cut off from revenues.

What this means in plain, apolitical terms is bringing about a scalable mechanism of “Filtering” specific unlicensed content off commercial sites and services and/or creating a “Blacklist” of criminal distribution sites based overseas—a “Blacklist for the Black Market.”

Another part of the solution could be to take the “Three Strikes” type laws that have been instituted in some countries and, after the user’s Third Strike and with an opportunity to challenge a mistaken accusation, if an Internet user has been found repeatedly torrenting Game of Thrones or whatever, they are given small fines administered through their ISP, like a traffic ticket. I feel like a $50-type fine would deter a hell of a lot and no one could claim that “lives are being ruined” or “we are criminalizing a generation” as was the case with the RIAA lawsuit campaign. Those are some ideas, but if there are better ones out there to achieve the same goals I’d love to hear them.

One last point I’d like to make about being on the fan-side of this equation… We’ve all been reaping benefits from this unlicensed “free music” and “free content” era. No one is pure. I’m not. It takes effort and discipline to say no to free everything when we all know it’s just a Google search away and “everybody’s doing it.” But just because we’ve all participated in this historic attack on artists and their creative power, we can still recognize that today’s policies aren’t taking us in a positive direction. We all may stream an unlicensed sports broadcast or download an album from mp3skull or Pirate Bay from time to time, but we can still keep in mind that those are parasitic, profit-seeking black market distributors that have no legitimate right to exist or have easy access to an audience. May not be philosophically pure, but I think you can occasionally use those sites in the micro and still support their eradication in the macro at the same time, because ultimately they are toxic and undermine the true potential of the Internet.

Don’t think that owners of sports teams, or label heads, or film execs deserve the money? Well, that’s fine. But if you really believe that, the way to show it is by boycotting them--and it would seem the Internet makes boycotts far more possible and effective--not by claiming some self-righteous principle against the investors in that content and then enjoying the fruits of their investment all the same through unlicensed means. Then it’s just an excuse and a weak one at that.

There is a certain elegance contained in the copyright problem, because copyright at its best is a tool for the spread of wisdom, expression and human consciousness. Copyright carves out this space for creative, intuitive work amidst the banal crudeness of the marketplace. And in order to maximize this space for consciousness and expression in the digital age, we must utilize our consciousness and intuition to recognize and then resolve the problem. I suppose that’s true for all problems, but because this one carries the potential for greater and greater consciousness if we solve it, it strikes me as more redemptive. Copyright is a catalyst for creativity and creativity is what defines us as being human. So this is about valuing ourselves in the digital age and, if we do that, intuition tells me the positive results will be contagious.

Michael Arria is an associate editor at AlterNet and AlterNet's labor editorFollow @MichaelArria on Twitter.

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