Is Spotify harming the music industry?

It’s the music streaming app which grants almost immediate access to a hitherto-unthinkably broad library of music, but after the company’s fifth birthday in October, the jury is still out as to whether or not Spotify is a negative force in the industry.

Michael Perry

Lynchpin detractors like Thom Yorke seem to think the Spotify issue is “simples”: a case of The Man crushing the little guy into penniless submission.

But it’s this dogged insistence on binaries which is so flippantly unhelpful. Spotify need not exist in opposition to traditional forms of accessing music; instead, it is a springboard which allows greater access and distribution in economically limited times. Especially for earworm-hungry students who are already attempting to scrimp and save in every other facet of their daily lives.

Consider the benefits which have been wrought by the advent of legal streaming sites. There has been a downshift in music and film piracy in recent years, and while legal businesses such as Spotify and Netflix aren’t wholly responsible for such a change, the correlation is interesting to observe.

It’s clear that there are more integral issues elsewhere which must be addressed

Furthermore, isn’t assuming that Spotify will bring about the death of the industry rather insulting to the loyalty of listeners? Has Yorke himself forgotten the successful response to the honesty-box release of In Rainbows? Even though a good proportion of customers paid bobbins for the new material, let’s not forget how many copies of the £40 deluxe discbox also got shifted. If the quality is high, real fans will do more than listen passively – and this also applies to Spotify.

Instead, if there is one problem which must be addressed, it’s the same issue which afflicts almost all avenues of distribution: the cut taken by labels and managerial companies. Spotify allegedly works on a meritocratic basis, with 30% of total revenues distributed to Spotify itself, while the 70% bulk is doled out to those in possession of the music rights. Of that percentage, the cut which goes to the artist depends on his/her contract with a label. Some labels offer as little as a 5% share, whereas others (such as Beggars Banquet) offer as much as a 50:50 split.

While the debate rages on about how beneficial/detrimental Spotify is to the music industry as a whole, it’s clear that there are more integral issues elsewhere which must be addressed; namely, in how fair the relationship is between artists and their parent labels.

Sam Evans

“You’re just like an old guy yelling at fast trains,” said Moby of Thom Yorke last November, who had in turn attacked Spotify for the somewhat questionable structure the music streaming service has in place for recompensing artists. The company has since become slightly more transparent on its pays-per-stream system, but the figures still suggest it’s hard to deny Yorke’s point. Spotify gives a figure of around $7,000 per million streams. This isn’t a problem for musical heavyweights like Moby: these figures suggest he has made just shy of $100,000 for streams of ‘Porcelain’ alone.

Looking deeper into the economics, it becomes much more of an issue

The figures become more worrying when you drop down a tier in popularity. Grizzly Bear, who are arguably one of the bigger names in alternative music, and thus ostensibly more comfortable money-wise, have around 31 million streams of their ten most popular Spotify tracks. This works out to generate about $220,000 in revenue. Factoring in label costs, managerial costs etc. this represents a minimal per-member profit for the band, especially when you consider this is a few years’ worth of streams.

It’s hard to turn down as much music as you want for £10 a month. But looking deeper into the economics, it becomes much more of an issue. Between the two camps of artists big enough to make money off the service and those who are just happy to get their music out there, there’s a decently sized collective of artists who lose out in the end. And your favourite band might just be one of them.