Spotify’s corporate battles and their impact on musicians

Credit: Spotify

Spotify’s CEO, Daniel Ek, recently talked about streaming becoming “a more fair and equal music industry than it’s ever been” on an episode of Freakonomics, a popular podcast. With that said though, the outlook for many artists continues to be grim.

The case is especially challenging to break down because Spotify and other streaming giants have one thing on their side: discoverability. One of the main reasons that I continue to use Spotify myself is because no other tool is as useful for finding new artists, which as a DJ and avid music listener, I love.

Here’s the problem though, it’s a catch 22 for the musicians. They can’t boycott Spotify, because it will become so much harder for them to be discovered. If they add their music to it, they won’t get paid much at all, and there is less need for someone to buy the album.

There is a further spanner in the works when we factor in the ongoing battle among the streaming giants.

In March 2019, Spotify, as well as Google, Amazon Music, and Pandora appealed a court decision to increase the amount of royalties paid to artists.

Spotify defended this in a blog post, saying that:

The CRB’s decision makes it very difficult for music services to offer “bundles” of music and non-music offerings.

“This will hurt consumers who will lose access to them.

“These bundles are key to attracting first-time music subscribers so we can keep growing the revenue pie for everyone.”

These appeals, are controversial for many in the industry. Apple is the only big company that has spoken out against these appeals.

In a press release which covered both the appeal and gripes over Spotify’s use of the App Store, Apple said:

After using the App Store for years to dramatically grow their business, Spotify seeks to keep all the benefits of the App Store ecosystem — including the substantial revenue that they draw from the App Store’s customers — without making any contributions to that marketplace.

At the same time, they distribute the music you love while making ever-smaller contributions to the artists, musicians and songwriters who create it — even going so far as to take these creators to court.

Underneath the rhetoric, Spotify’s aim is to make more money off others’ work.

And it’s not just the App Store that they’re trying to squeeze — it’s also artists, musicians and songwriters.

While all this is a corporate battle over who’s PR team can write the best piece to keep consumers onside, I’m inclined to agree with Apple over the whole debate.

The industry, in many ways, is trying to flip the “bottom up” approach it has, but there is no right way to profit at the top without hurting the creators at the bottom.

Without investing in the people who make their consumable products – the music itself, the streaming giants won’t last beyond the next significant development in music distribution.

Some may argue that Big Streaming (if I may call it that) has made a move from the music being the product, to the content delivery platform, the algorithms, and the unlimited scope of discovery being the product.

They are probably right. That is why a Spotify stream now pays out $0.006 to $0.0084. In much the same way that many corporate behemoths profit not by huge markup of the consumer end, but by ensuring their costs are marked down, Streaming giants have come in in the decades of piracy and ensured that music remains a worthless raw material for their low-cost product.