#042: The One Spotify Change That Would Transform the Music Industry [Revisited]
“Giants are not what we think they are. The same qualities that appear to give them strength are often the sources of great weakness” ― Malcolm Gladwell
UPDATE: The below article was originally published on July 20th, 2023. The reason for revisiting this article so soon is due to an idea presented by the founder of Music Business Worldwide, Tim Ingham. Universal Music Group is currently exploring a new streaming payment model with Deezer that is ‘artist-centric’. One of the pillars of this new system would lead to 2x payouts for artists with over 1,000 unique monthly listeners. Tim Ingham wants to add into this new model that artists with fewer than 500 monthly listeners get paid NOTHING. ZERO. ZILCH. And I’m willing to throw my full support behind this idea.
At first glimpse, it looks like that idea is anti-artist, right? Nope. An artist with 400 monthly listeners is likely getting about 1,000 streams per month at a maximum. That is about $4 in earnings. Taking away $4 per month from those artists isn’t going to dramatically change their life or hurt their ability to pay rent. But the increased earnings that would be paid to bigger indie/major artists needs to come from somewhere. About 80% of Spotify artists have less than 50 monthly listeners. That is a great starting place to find the funds to pay more legitimate artists closer to a living wage who then could actually pay rent/bills/etc with their streaming earnings.
Additionally, and maybe even more importantly, stream farms that endlessly loop songs in order to collect fraudulent earnings would now be ineffective. Currently, you can go create a new Spotify artist, release one song and set 20 phones to loop that 3 minute song all day and night. That would lead to roughly 9,600 streams per day or 288,000 per month. This is taking about $1,250 in revenue per month out of the pool of money that should be going to real artists who are fighting to earn a living wage. In stream farm example, that artist profile would only have 20 monthly listeners. In a model where artists — real or fake — don’t get paid anything if they have under 500 monthly listeners, the incentive to loop those songs is diminished since it wouldn’t earn any revenue.
Lastly, not paying the smallest creators on a platform is nothing new. This is already how YouTube (must have over 1,000 subscribers to get paid), Facebook (must have 10,000+ page followers to be eligible for ads), TikTok (must have over 10,000 followers and over 100,000 authentic video views to enter the Creator Fund) and other platforms already operate. Not paying artists who have fewer than 500 monthly listeners isn’t an attack on those smaller artists, but is instead a path to empower slightly larger indie artists who desperately need to find a way to earn more revenue than what they receive in the current streaming payment model. And if that smaller artist is a true songwriter/artist? Who is dedicated to their craft? Who continue releasing music? And continue building their team and dedicating even a little budget to advertising/content? They will be over that 500 monthly listener threshold and getting paid before they know it.
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Spotify has been widely credited with being the savior of the current music industry… and for good reason. But many people overlook how they have also become a villain and detriment to independent artists in a way that Apple Music, Amazon Music, YouTube Music and TIDAL have not. There are great benefits in developing technology to bring in money and profit, but there also should be great consequences for devaluing art and recording artists. And there is one change that Spotify could enact to instantly fix that.
Spotify launched their revolutionary music streaming service in 2008. As with any new technological innovation, there was a period of time to educate the public, grow the company and win over the music industry gate-keepers to embrace this new medium. But by 2015, Spotify had 68 million active users. In this same year, the recorded music industries revenue fell to it’s lowest point in over 25 years, bringing in only $6.7 billion USD. Since 2015, as music streaming has grown (across all streaming services), the recorded music revenues have increased accordingly. By 2019, Spotify had 217 million active users (with the recorded music revenues reaching $11.1 billion USD) and in 2022, Spotify had close to 500 million active users (with the recorded music revenues reaching $15.9 billion USD). With Spotify holding 30.5% of the overall market share within music streaming, with Apple Music coming in far behind at 13.7%, they should get full credit for this incredible transformation of what was a dying industry. In addition to the increased revenue, Spotify has also ushered in the first time in music history where music is viewed as a utility by the consumer vs. something that you purchase when you have extra discretionary income on pay day. The modern day music listener views their Spotify/Apple Music subscription in a similar way as their rent, gas bill or car payment. This has made music largely recession-proof because regardless of how tight the money gets or slowdowns in the economy, access to music and podcasts is likely the last item that a person will cancel when cutting back. There is no debate of Spotify’s contribution and value added to the music business over the last decade of growth.
With this capitalistic contribution, there is also a more negative side of the coin that is talked about less often within the music industry. That is Spotify being more responsible for the devaluing of art and (especially) independent artists than any other streaming services within the market. Am I talking about 100,000+ songs being uploaded per day? Nope. That is inevitable with the music streaming and distribution model coinciding with the ease of recording at home. And that is shared across all digital service providers aka DSPs aka streaming services. I’m talking about Spotify being the only major streaming service to show how many streams a song has received and how many monthly listeners an artist has. That one difference is responsible for many of the massive flaws that still plague the music industry today, including:
Streaming/Data Manipulation: Artists/labels/managers buy bot-driven streams or set phones to stream a song on repeat only on Spotify because that is the only platform where the data is public. Not only does this skew the reality of the number of streams or the fan base that an artist has, but it is also taking money away that should be going to rights holders (record labels and/or artists) due to the pooling system that exists for payments per stream. Removing stream counts and monthly listener statistics would significantly reduce, if not stop, streaming manipulation instantly.
Perception: I went on a run a few weeks ago and heard a song on a playlist that I loved. After the run, I checked to see who the artist was and when I saw that they only had 300 monthly listeners, my brain automatically said “oh, they aren’t anything, nevermind”. This is insane, but it also is how the human brain works. Streams and listeners in music are the equivalent of price in retail. When you see a pair of shoes being sold for $499.99 vs $19.99, what do you think about each of those products? Likely that one is clearly much better than the other. There are endless artists with incredible music who are being undervalued by the listening public due to not having the numbers or ‘buzz’ that others do. If stream and listener counts went away, then the music would only be judged on the art itself… which is how it currently works on Apple Music, Amazon Music and all other streaming services.
Mental Health: Instagram is slowly removing ‘like’ counts entirely from it’s platform in order to try to enhance the mental health of its users. This same situation occurs for recording artists in the music industry. I have conversations with artists weekly who go from immense excitement to put a song that their proud of into the world… only to then feel like a failure and feel depressed if the song didn’t perform well and knowing that all of their artist/songwriter friends can see that with a few clicks within Spotify. Removing stream and listener counts would remove this stigma that hurts so many artists and would improve the mental health of the artist community as a whole.
Spotify has done way more good than harm for the music industry. This is far from a hit piece to try to takedown the streaming giant, who is greatly responsible for the improvement and economic transformations that have taken place in recent years. But they aren’t perfect and every company should be striving to be the best that they can for themselves, but also for the greater community that they are a part of. Especially when a change wouldn’t hurt their revenues or bottom line at all. That is why I’m hoping and will be fighting for Spotify to remove streaming and listener counts on their platform as soon as possible.
