Zoe Keating on Spotify, Apple and Independents (and lettuce)

by David D.

Zoe Keating is an avant cellist whose work has been previously featured on MMT.  At yesterday’s F8 Conference, Spotify Founder & CEO Daniel Ek said that he wanted to “develop a system that fairly compensates artists”.  Given the recent controversy over artist payments from Spotify, I thought “artists” was an interesting choice of words.  I asked Zoe for a response, here it is.

Artists who express opinions on subjects like politics or the music industry should expect to get a lot of negative feedback (“Shut up and make music!”).  I realize I’ve waded into waters that I’d be better off avoiding and I nervously await my impending doom.

Hypebot posted an article,  ”How Much Does a Band Earn From Each Music Platform“, which received enough comments that Spotify responded, “Spotify Responds to Artist Payments Controversy“. This in turn spawned another article, “Spotify Offers Additional Response to Independent Label Defections“.

A debate ensued in the comments and subsequently, a chap named Jay Frank wrote,  ”It’s not Spotify’s Fault That You Make So Little Money“.

For some reason I’ve found the entire subject compelling enough that I’ve foolishly squandered the precious hour of my one-year old’s naptime to write this. To me, the discussion is about a general philosophy of the world, but since it started with Spotify, here is my criticism.

It a killer app. Well designed. I like it as a listening platform. But what I think is totally wrong: Spotify pays different monies to different labels. As everyone is under NDA it its impossible to find out what those deals are but the word on the street is that majors receive profits from Spotify’s advertising revenue and indies do not. The end result is that a major artist makes more per play than an indie artist. Spotify doesn’t talk about this but The Guardian sums it up well.

That’s it. That’s my complaint: fairness.

If Spotify would level the playing field and make the distribution equal to all artists. I would lay off (and I am sure that my constant complaints are a total priority for them!). Now, if Spotify was to make those royalties algorithm-based, they’d have my full nerd support. For example if, thanks to their related algorithm,  people listen to small artist X after listening to large artist Y, then I could see that a particular play, not all of them, of artist Y could be ‘heavier’. However, if people end up at artist Y by searching for them directly, the play weight should reflect that. Data, do it with data!

But just to pay tracks from major labels more because they are major labels, that is so OLD. Where is the revolution in that?

Daniel Ek, Spotify’s CEO, posted a response to a question on Quora “How does Spotify split its contribution to artists?

First, Spotify does not split anything directly with artists. Instead we have different layers of rights that Spotify has deals with. Those are record labels, publishers and collecting societies. Artists/Composers in their turn have deals with the above mentioned parties. The deals artists have with labels/publishers tend to differ quite a bit and therefore it’s impossible for me to say what an artist actually gets in the end.

Spotify has three buckets of revenue. We get revenue from advertising, subscriptions and paid downloads. All of them are very different as a subscription is €10, a song is roughly €1 and advertising is a pool of revenue based on ads per month. We share the vast majority of all revenue we get in to all the right-holders.

Our part in the end is not that different from how the Apple app store works, where Apple sells apps and get a small percentage. What makes it slightly complex is that we have many more layers of rights in many different countries.

It’s important also to mention that what Spotify is trying to do is to increase the amount of people who are consuming legal music. Our view is that there’s so many people enjoying music out there, every single day, but the massive portion of them are currently not paying anything. We are trying to bring them back to paying for music again.

~ Daniel Ek, Founder and CEO of Spotify

In the first paragraph. What Mr. Ek says is: artists have different deals with their labels, distributors and publishers.  Um, yeah! The question was not well asked, but I do think he cleverly avoided the gist. Next, he states “We share the vast majority of all revenue we get in to all the right-holders.“ Translation: some right-holders do not get shares of all the revenue….but what we share with everyone, I’m not telling if those percentages are equal.

In the third paragraph, Mr. Ek goes on to talk about how the Apple store works. It seems to me that he missed one of the key things about iTunes: All labels get the same deal from Apple. I’ll repeat that. Whatever an artist’s deal is with their label is….ALL LABELS….indies, majors, DIYers, boutique, whatever….get the SAME deal from Apple. In other words, its fair. Its a meritocracy. Whatever you think about Apple, this was and still is a revolutionary idea. In this meritocracy it is still up to the the indie or DIY artist do to take advantage of all that fairness, and they still might fail….but at least the system isn’t rigged before they even get started. As for the alternative to piracy bit, I’m going to make a bold statement and say that  independent and niche artists have never been worried about piracy.

Anyway, to bring this back to Mr Frank’s article, you’d think that fairness would be a totally reasonable thing for an independent artist to ask for, but apparently not. His gist is that indies should stop complaining about their tiny royalties and be happy to be there. That their music might be listened to is payment enough. He does make some pretty convincing arguments for independent artists to leave Spotify en masse, because really what is the point if they are neither listened to or paid properly when they are? Although he says if an artist leaves, they run the risk of total annihilation.

People want to be entertained by music, not have to hunt things down. It has to be easy, which is why Spotify has gained so much traction. If you manage to get an average music fan’s attention on your band for 2 seconds and they look on Spotify and it’s not there, do you know what they do? They move on to another song. And you’ve lost your chance of gaining a fan. And the royalty. The number of people who would then spend time searching for alternative listening methods is miniscule.

The only constant in this business is change, so I seriously doubt that Spotify is or will be the only music discovery app that people use. More importantly though, I think Mr. Frank ignores one of the major trends of the last decade: the rise of niche. The choices are not just Gaga-esque populartiy vs obscurity. While the press has focused on the demise of the traditional music industry, niche artists have quietly flourished. Using the internet to directly reach their respective audiences, niche artists make decent livings like they never could before. Not as glamourous perhaps, but small, efficient, and certainly more attainable.

The niche economy gets poo poo-ed by executives, but I don’t call the ability to feed, clothe and house my family 100% on my music income, insignificant (but its true, there might not be huge profits here for your shareholders).

If an artist is self-releasing and using a variable payment system to sell music (i.e. Bandcamp, Kickstarter, Vibedeck etc) in conjunction with flat-fee digital distribution (i.e. TuneCore), they don’t need to sell 100k copies of an album, 10k will do quite nicely (I say albums, because that’s what I sell more of, but it doesn’t matter. Make your music in whatever format your art is best expressed, be it a carefully composed album of songs, one song at a time, a 2 minute video, or a 45-minute symphony on vinyl).

How does streaming fit in here? In the niche model, music does not need to be readily and freely available everywhere. Niche artists have a valuable product that they should never be ashamed to charge for. What they need to do is polish their craft, put some music out for free, and be persistent in getting the story of direct listener support out there.  Although the music and the craft is key, I’d argue that in today’s world its more important for the artist’s story to be ubiquitous than for their music to be. The message that niche artists need listener support in order to create music will lead to sales, subscriptions, backing, etc.

Instead of music, I’m going to end on the exciting subject of lettuce. If you don’t mind your lettuce being nothing more than a crispy form of water, its much cheaper and convenient to buy it at the supermarket chain. However, I like my lettuce to be flavorful and I want to support my local farmers, so I buy lettuce at the micro farmers’ market every Friday. If I am really craving lettuce on Wednesday, I have to tough it out until Friday, but the payoff is truly delicious lettuce (I’m not kidding. I never got excited about salad before) and I know that all of my money is going to a farm two miles away (some idealistic young-folk I call the ‘Suspender People’ because they dress like amish hipsters and plow with horses). While I’m at the farmer’s market, I also get to chat and catch up with my neighbours….its a very satisfying experience all round.

I don’t know if my analogy totally works, but I’ll tell you that I don’t buy lettuce at the supermarket for many of the same reasons that I don’t buy mainstream pop music from major label artists.

Comments Closed

{ 10 comments }

JB September 23, 2011 at 9:48 am

And in the end indie artists still make more money from Spotify than any other streaming service due to Spotify having more than two million subscribers. It’s also important to note that the payments from Spotify have increased greatly over time and will most likely continue to do so.

Two years ago it was the big labels complaining and now it’s a small part of the indie labels doing the same. You should give this some time and just accept that Spotify (and other streaming services) are here to stay and could be a substantial part of your income in the future.

By leaving Spotify indie labels are just pissing their fans off. Why should they buy something from an artist or a label that just treats them badly?

Tom September 23, 2011 at 10:35 am

“JB” seems to miss the point altogether. Why would fans be pissed off for not getting something for free? If so, these people are not fans. Let’s keep our definitions succinct and accurate. So a bunch of half-assed people who demand that music be free are gonna be pissed off; so what? Half-assed people are, by definition, fickle and unreliable source for, well, anything and everything (except for things in bulk, that are dumb, and those that are hyped by a supporting industry, e.g., advertising).

Truth is, enough people in the world are willing to shell out money to buy music, directly or otherwise, and maybe it is time for the rest of the world to reduce its expectations of what it means to “make it in music.” Have you ever attended a Record Store Day event? People wait in lines–for hours–just to get in. And this is a great reminder to those who may have forgotten that this practice of buying and curating music is still alive. Yeah, we’re not talking about multiplatinum sales, but the days of endless lines of cocaine and limos are over. (Plus, it was never that cool and you were a fool to think that this was the end goal of “making it in music” or “succeeding in life.”)

GS September 23, 2011 at 11:03 am

100% agree with Zoe here. The secretive and unbalanced (i.e. unfair) dealings are the crux of the issue here.

JB: Why should they buy something from an artist or a label that just treats them badly?

What? Refusing to eat a $%&# sandwich means an artist is treating fans badly? Careful you don’t trip on your sense of entitlement.

Janis September 23, 2011 at 1:17 pm

“That their music might be listened to is payment enough.”

Which is the argument made by most pirates anyhow. “At least someone’s listening to you!” That guy isn’t thinking.

John Hass September 23, 2011 at 6:27 pm

The scary thing is that streaming is rapidly replacing ownership of any kind, including digital. Look at Netflix right now: the convenience of streaming movies is overwhelmingly dominating not just DVD sales, but even DVD delivery. And DVD delivery even has a vastly superior selection. Why? Convenience and impatience. I wish that more people would, as Zoe puts it, wait a couple days for the good lettuce, but many won’t. And this creates a real boundary between those fortunate enough to be in bed with Spotify and those who are not.

JB, your argument that major labels bring in more plays and deserve more money per stream is nonsense. Yes, Lady Gaga should get more money than my small indie band gets from Spotify, but not PER STREAM. Let’s say I wrote a big hit or had a breakthrough video, and amazingly I had 807 trillion streams on Spotify the same day Gaga had 807 trillion streams. As it stands, she’d get way more money than me when I’m bringing in just as many customers as she is. And my music is cooler anyway.

I love Spotify, because I’m also an impatient person who eats crap lettuce because I want it now. And I wish every single piece of music that I ever heard including friend’s horrible demos were on Spotify so that I had access to everything now, the same way people wish Netflix could stream every movie that they have in DVD format. As a user and musician, it’s amazing and not even unfair payments can ruin it for me, and fixing the unfair payments makes for a musitopia.

Zoe, please keep fighting this fight, not just for yourself, but for people who have even less control over Spotify’s payments than you do. You have name recognition, and many of us smaller artists are rooting for you.

Lastly, I just want to say that it’s likely that this isn’t Spotify’s decision to not pay evenly but a deal that was forced on them by the major labels. I’ve had my eye on Spotify for years and they had an uphill battle launching in the states due to major label reluctance, so it’s not a matter of placing blame, but a matter of righting a wrong regardless of who is at fault.

JB September 24, 2011 at 2:19 am

@Tom: What are you talking about? I’m a subscriber. I pay. Before Spotify came I did not pay for my music. I’m one of 2 million Spotify subscribers.

@GS: You obviously don’t get it, but that’s ok. I guess you believe those few artists/labels that remove YouTube videos and close down fan sites are the best in creating a healthy relationship to their listeners.

To compare Spotify with mp3-sales or CD-sales is just not correct. If so, the indie artists/labels should also leave iTunes since it’s such a horrible deal compared to selling your own CDs directly. But they don’t leave since iTunes is where the fans are.

It’s also interesting that nobody disputes the fact that Spotify pays more than any other streaming service (in actual payouts). Sure, a slightly higher pay per stream looks nice on paper, but it’s worth nothing if you have too few listeners. You can ask any indie label about this and they know if for sure. And that’s the reason why almost all indie labels decide to stay with Spotify.

David D. September 24, 2011 at 11:22 am

JB – I think some of the discussion, while interesting, is veering away from the points Zoe was making. Zoe did not pull her music from Spotify, she just hasn’t been able to find an aggregator that will handle streaming without also handling her iTunes business. So I think there are two basic questions to deal with:

Fairness: why should indie labels and artists be paid less than major labels?

Evasiveness: if Spotify has compelling reasons (or better, an algorithm) for different pay structures, why do they keep avoiding the question?

Since Spotify uses peer-to-peer technology to deliver their streams, I can see where it would be more expensive for them to manage tracks that are rarely requested. But that’s a quantitative problem that could be easily solved, and applied equally to both independent and major label artists. That’s business. To pay someone less just because they belong to different class of artist isn’t business, it’s discrimination. And it’s unfair.

Some Dude September 24, 2011 at 9:24 pm

Pretty ironic that the biggest music store in the world, Apple’s iTunes , treats artists more fairly than upcoming competitors like Spotify…

Vince Millett September 25, 2011 at 5:01 am

Excellent article. We have a small label and we’re following the model Zoe suggests – we sell/give away on Bandcamp and similar sites and we use Tunecore for flat-fee distribution. Our download numbers are very, very low, even by Zoe’s standards and services like Spotify are absolutely of no use to us at all. I believe we’re on there (friends have listened to us there) but we’ve never knowingly received a penny in royalties. Tunecore is great, though, and the best payers via them are iTunes and Amazon, which comes as a surprise to many people. Spotify strikes me as a last-ditch attempt by a dying industry to pretend to be part of the new digital economy by dressing up old world business practices and ethics in shiny garb. I fully expect them to be out of business in a couple of years’ time. Netlabels are the future , with direct distribution that disenfranchises the old dinosaur labels and distribution networks. The constant bleating about ‘piracy’ by out-of-touch record industry moguls is tiresome. The old ways are dying because they’re inappropriate in the new world – it isn’t piracy that is causing their labels to die, it’s greed, ineptitude and a woeful lack of imagination. And their shoddy products don’t help, either.

Mark November 16, 2011 at 5:08 pm

Love Spotify, it’s on my laptop, phone, & iPad…so I have it everywhere. The reality for me is, if you are not on Spotify, I’m not going to hear your music.

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