Spotify is a Microcosm of Billionaire BS

from Music Business Worldwide

Spotify is small potatoes compared to the US federal government, or even a company like Tesla. But its manipulations of fact and its blatant disregard – hostility, even - for those it claims to serve are of a piece with larger problems we are facing urgently as a society. Billionaires will be billionaires it seems. We need to fight them in every forum, including music.

Last week Spotify launched its annual affront to clarity through statistics, the murky website “Loud & Clear.” Loud & Clear exists to obfuscate – its first incarnation was a direct response to United Musicians and Allied Workers’ “Justice at Spotify” campaign, which launched in October 2020 and widely shared a few simple facts about the platform: it pays average royalties of 1/3 a penny per stream; it engages in payola and other undisclosed manipulations of both consumers and content providers; and it evades regulation with every tool at its disposal, including legal disputes meant to delay rulings already made against it. On 15 March 2021, UMAW members hand-delivered to Spotify offices around the world a set of demands based on these facts, signed by 28,000 musicians and music workers. A few days later, Spotify launched “Loud & Clear” to try and cloud the conversation.

Did it work? In 2020, Spotify was celebrated throughout the music industry as a solution to its problems. Today the three tenets of Justice at Spotify are widely accepted as fact – Spotify doesn’t pay fairly, doesn’t operate fairly, and doesn’t fight fairly. Even its supporters now acknowledge these truths.

Still Spotify, with the power of its platform, annually applauds itself with uncatchy phrases and impenetrable slides. This year’s edition had the high bar of avoiding mention of multiple recent controversies: the demonetization of all tracks with fewer than 1,000 streams a year; the “bundling” of music subscriptions with audio books which reduced Spotify’s legally required payments to music publishers; and the revelations in Liz Pelly’s investigative reporting regarding “ghost artists” and the manipulation of consumers to benefit the platform at the expense of the entire music industry as well as its users. Did Spotify clear any of that up? Not at all.

This year I will leave it to others to engage with the ways Spotify manipulates numbers on its Loud & Clear website. Here is the publication Music Ally, doing its best to untangle some real data from Spotify’s presentation of it:

So, the latest Loud & Clear stats show that 274,000 artists generated more than $1k of Spotify royalties in 2024 – which means that more than 11.7 million uploaders generated less than that.

A long and bleak tail, but Spotify’s view is that the important group is not ‘all uploaders’, but rather the artists who are trying to make a living. Its update notes that at every payout threshold in Loud & Clear (from $1k+ to $10m+) the number of artists has at least tripled since 2017.

That said… If there are 225,000 professional and aspiring artists, Spotify’s data also shows that only 71,200 of them generated more than $10k of royalties on its platform last year – and thus likely $40k from their recorded-music overall.

Yes, you can factor additional revenue sources in like touring and merch, but also bear in mind that these payouts will be shared with rightsholders, and between multiple band or group members for non-solo artists. The data suggests that a lot of artists trying to make a living from their music, well, they’re not.

I’ve been down this road myself before. As we learn daily from Musk et al., combating bullshit can be its own bullshit job. Not that we don’t need truth tellers – on the contrary, we should be rewarding them more than the BS artists. But confronting BS in all its detail is exhausting. Isn’t that what we are feeling at this moment, absorbing the news as it unfolds each day? It becomes a full-time effort to combat disinformation, which can have a paralyzing effect on productive thought and work.

So this time I am limiting myself to critiquing only the language of the first slide in Spotify’s twisted screed. It’s a big enough manipulation of fact to make the rest moot in any case.

Spotify’s number one of its “top 10 takeaways from recent data” on Loud & Clear

None of us have any way to dispute Spotify’s big number announced by Loud & Clear – the platform’s lack of transparency and the lack of regulatory oversight for streaming means its own accounting is the only information any of us have about its cumulative contribution to music royalties. $10 billion in 2024? Why not. It’s a round figure.

But take a close look at the language used to frame this number: Spotify is the “highest-paying retailer globally – paying the music industry.” There’s a lot in those two phrases already to unravel.

First, highest-paying retailer. This seems innocuous but the choice of words is very deliberate. It is also, on the face of it, confusing - because if Spotify is a retailer of music, that is probably news to its consumers. You can’t purchase music from Spotify, even with a paid subscription - regardless of whatever they charge, you can’t take music off the platform, and you can’t save it or hear it elsewhere should you cancel your plan. As for the so-called “ad-supported” (i.e. free) tier of users on Spotify, they certainly can’t be buying music for nothing. How is this retail, and why is Spotify emphasizing the word?

There is one and only one place that Spotify is considered retail, and that is in standard major-label record contracts. Income from sales of music in those contracts is typically divided 85/15 (or thereabouts), with the label keeping the lion’s share. However, income from licenses of music in those same record contracts is traditionally split 50/50 between label and artist. Get it? Defining itself as a retailer, Spotify pays royalties in a manner that allows record labels to pay artists no more than a sliver of earnings from streaming.

Now let’s take the next four words in the “top takeaway” slide: Spotify is paying the music industry. Stop right there! I gotta know right now… What is, “the music industry”?

Simple answer: it’s not artists. Spotify may pay whatever billions it claims to the music industry, but it pays $0 directly to artists. Zero.

Again, Spotify is using legal language here without announcing it as such. First Spotify slips in “retail” (which it is not). Then it cites “the music industry” in a manner that implies all of us involved in music - except it specifically excludes musicians who make the recordings that the platform streams. (Sorry, that the platform sells.)

The music industry, in Spotify’s usage here, is rights holders. Rights holders are record labels. Again, we’re talking contracts. Because Spotify identifies itself as retail, it ducks regulation applied to other uses of recorded music in the digital environment like internet broadcast, or satellite radio, or even “non-interactive” streaming like Pandora. Each of those pays recording artists something directly, by law. Spotify does not. For access to its universe of streaming music, Spotify has only to pay the terms in the private contracts that it has executed with the three major labels and a fixed number of approved distributors (at least one of which, DistroKid, it has also invested in).

Spotify directly pays artists nothing. Get it? $10 billion in 2024 to “the music industry” means zero directly to musicians.

This is just the first slide from “Loud & Clear.” Do we really have to go further? Let’s recap:

For another year, Spotify was the highest-paying retailer globally – paying the music industry over $10 billion in 2024.

Translation: Spotify paid billions to rights holders in 2024, and recording artists received none of that directly, by careful design. If anything, artists received a share of streaming income from their record labels calculated as if it were sales of music - that is, typically 15% of 1/3 a penny per stream (or $0.00045 a stream), less recoupable expenses. Which in practice often means, again, zero. I have friends with millions of streams on Spotify in 2024 and nothing, financially speaking, to show for it.

All this manipulation of language mirrors the manipulation of people – musicians and consumers – undertaken by the platform. It’s that manipulation which makes Spotify’s owners, stockholders and executives rich, while recording musicians hold down multiple jobs to try and earn a living while sustaining their careers.

Is this all sounding a bit familiar…? And it’s just for music, an ostensibly simple and obviously pleasurable part of our lives.

Get out on the barricades, there’s a lot to combat.

Listening to: Halo on the Inside, by Circuit des Yeux

Cooking: Moro beans