It's Your Money I'm After Baby
Spotify have announced plans to stop paying artists they consider aren't worth paying. What does that mean for the value of music?
Spotify recently announced its strategic plans for 2024, and the headline is that, as many had been predicting, they plan to stop paying out for any track that doesn’t record a minimum 1,000 streams per annum. Spotify claim that this is to enable them to pay more to artists whose tracks are performing better, i.e. that the pot of money allocated to artists will remain the same, but it will be distributed differently. As someone whose work is focused entirely on the grassroots sector, I see a lot of problems with that; some legal, some practical and some simply moral and ethical - yes, it is possible to imagine that even the music industry should consider moral and ethical dimensions of decisions sometimes.
A lot of words in support of this measure, in terms of its fiscal outcomes, have been expended by a lot of people who have a genuinely better understanding of the economics of recorded music than I do. I’ll do my best to summarise those words with this simple explanation: The argument runs that significant proportions of a lot of the music that Spotify have decided not to pay for doesn’t generate anything like the required income that would make it a valuable creative exercise for the artist producing it. Some of it, the argument continues, isn’t even real, it’s produced by AI or some other mechanised part of the dark web. The millions of recordings now excluded from payments were receiving payments so low and meaningless that not paying them doesn’t make any material difference to the ability of the artists producing them to make a living, and robots certainly don’t need the money. As you cannot possible live off the £3 you might get for 999 streams, not receiving it won’t make any difference to your ability to make a living. Another artist getting it, which is what Spotify say they are going to do with the money, might make a difference to their ability to be a musician, so it’s better if the available money is distributed favouring those with more streams, artists in the bracket of maybe having a streaming based career, even if it disenfranchises, and demonetises, artists below the 1,000 stream level, who, runs this argument, don’t need the money. Or are robots.
Now, I’m tempted to say this argument is bollocks, but the truth is that it does have a solid reasoning behind it. Even if, for a variety of other reasons, other tests we should apply, it is actually bollocks. I don’t think anyone putting it forward is foolish, I just don’t agree that they have, so far, adequately thought through the consequences. My view is that they haven’t properly considered the precedents it establishes, nor do I think they’ve really considered who the major winners are from this policy.
Problem 1: The new Spotify distribution is not a march towards equality for financial viable artists, a rising tide of royalty payments that lifts all boats that have a realistic chance of floating. The major winner is Taylor Swift. Each one of Taylor’s streams, just like everybody else’s will now attract a higher royalty per stream, including distributing to Taylor Swift royalties which Spotify know, as a data established fact, have been earned by the work of other artists. An artists with 2000 streams of a track will barely notice the uplift in royalties received, an increase that will amount to, at best, pence, or more likely fractions of a penny. Meanwhile each one of Taylor’s 29 billion streams in 2023 will earn that same tiny fraction of a penny more… but there are 29,100,000,000 of them. Maths, as usual, is your friend. If each stream is going to get an extra 0.1p (it won’t, but let’s imagine for the sake of argument and simple maths that it did), the artist with 2000 streams would get an extra £2. An artist with 20,000 streams gets an extra £20. Even an artist with 2 million streams would only get an extra £2000. Taylor would get an extra £29 million. I’m not arguing she’s not worth it, I’m questioning whether that sounds like progress towards a user centric model that rewards artists for the value of their work. I’m not saying Spotify should become a Marxist collective paying each artist equally, but I think the moral case for paying Taylor an extra £29 million by not paying some artists at all is, honestly, quite hard to make. Even if some of those creations were churned out by a souped up robot vacuum cleaner. Ms Swift seems really quite clued up on how things work. Has anyone actually asked her if she wants to take £29 million of other artists’ money for work she hasn’t done?
Problem 2: Copyright law is a series of legal precedents. Actually, pretty much all law is that; it starts somewhere and mutates to accommodate the actual things that practically happened. UK Copyright Law on music usage is pretty clear. When you create a piece of music the intellectual copyright belongs to you. People can buy rights from you to exploit it, or pay you for the use of it, but it’s yours. UK Copyright Law was used by all the major labels to take down Napster, because the concept that music has no value and can be listened to for free plainly sits outside of the framework of Copyright Law. Spotify, presumably with the consent of the same major labels which rightly objected to Napster stealing their music, have just announced a new interpretation of that law, which is that a piece of music only has a value if a certain number of people listen to it. Below that number of listens, Spotify say, Copyright Law doesn’t exist and they can let people listen to it for free without being obliged to pay the creator for it. This is such a remarkable precedent that, even if you can justify it, or agree with it, or support it, I have a whole host of questions about why we would let the arbiters of the value of Copyright value be a Digital Streaming Platform. Problem number 2, and believe me this problem creates about nine other problems, should start from here: Have the Copyright Creators agreed to this valuation of their work? You can just take copyrighted work and say ‘it’s alright, that doesn’t have any value - my shareholders agree with me’. Where is the agreement from the copyright holders that their work has no value?
Problem 3: Moving further into the issue of precedent; why 1,000 streams? Why not 2,000 streams? Or 5,000? What’s wrong with 10,000 streams? If we accept that the decision maker on what they have to pay for and when they have to pay for it is Spotify, what is the legal recourse, the legal precedent on which you wish to rely, when Spotify declare that 1,000 streams seems too low and from now on they will only pay for 100,000 streams and above? And don’t say ‘well, they wouldn’t do that’ because they have literally just done it. 1,000 streams is a totally arbitrary figure that Spotify have dreamt up. If you accept it, do not be at all surprised when the conversation in 2025 moves to the view that your own streams are below a new threshold they also just dreamt up. Every artist they don’t have to pay reduces their admin and monitoring burden. It’s highly cost effective for Spotify to declare that the minimum number of streams is 28.9 billion and to send Taylor a very very large cheque.
Problem 4: If artists don’t like it they can always remove their music can’t they? Well, they can, but as the market dominance of Spotify is so all encompassing, a decision to do that risks cutting off your career opportunities before you even got started. It is not actually that unusual for a multi-national corporation to under value the output of its suppliers to the extent that it would seem illogical and impossible for the supplier to continue to produce the service or goods, just ask poultry or dairy farmers. But this is quite a bold new step by a DSP. Spotify know you can’t really not be on their platform, and are pushing at the boundaries of what the creators on which it relies will tolerate. Again, it seems like the representatives of those creators will tolerate providing free product if it falls below a certain level of popularity. Personally this raises all sorts of qualms for me, as I generally tend to listen to massively unpopular music, but it certainly illustrates that the ball, when it comes to streaming, is so firmly in the court of the platform providers as to make negotiations on value meaningless. Reverse the question: If Spotify don’t think a song has value until it has 1,000 streams, why don’t they remove all the music on their platform which doesn’t meet that criteria? That seems a much more logic way forward and certainly avoids any difficult questions about copyright law. Unless… wait a minute. It couldn’t possibly be that Spotify want all this unpopular music in their store, could it?
Problem 5: The creation of a digital economy which enjoys financial advantages over a physical economy on the grounds of entirely different rules on Copyright. Let’s imagine we have booked a band into a local venue to play their own material which is registered with PRS for Music. Copyright law currently says that the songwriters should receive 4% of all the ticket receipts, starting from the first £5 ticket sold. But what about if not enough people turn up as far as we are concerned? If you need a certain level of popularity before you can achieve digital payments, why do you get paid a percentage for every ticket sold? When oh when will PRS for Music accept that the first 100 people through the door should obviously, just like it will on Spotify, attract no royalty? Stop throwing your computer out of the window, that’s never ever happening. No venue operator or promoter and certainly no artist would ever agree to such a daft and plainly illegal idea. We only agree to ideas like that when a digital streaming platform wants it, not when an actual place or person suggests it.
While I was writing this up, it was announced that the French government intend to introduce a levy on DSPs of 1.75%. The money raised will got to support new and emerging French artists and the infrastructure on which they rely. Spotify are absolutely furious about it, and withdrew their support of a couple of festivals in protest. They also, and this didn’t receive quite so much publicity, were part of a collective approach to French government offering to voluntarily pay 14 million euros into that same fund if the mandatory levy was not introduced.
Here’s a suggestion: If there is an amount of money Spotify don’t want to pay to artists and apparently the artists, or their representatives, say they don’t want or need, why don’t they put the whole lot into a fund that can support new and emerging artists with tour, rehearsal and recording costs?
Yes, you guessed it, I’m on about a Pipeline Investment Fund again. Ignoring all the legal precedents, the challenges to copyright law, the ethical and moral dilemmas of sending Taylor as much money as humanly possible because people like her music and she’s actually really really good, in the end the actual question should be this:
When are Spotify UK going to invest in the UK Talent Pipeline?
I only disagree on one point - Spotify absolutely should become a Marxist collective. Then Daniel Ek could retire and spend more time on his unpleasant hobbies of threatening governments and supporting Arsenal.