Some thoughts on Spotify and its value to music makers

The following is a thoughtful article originally shared on Facebook last week by Rachel Hurley, a long time music industry professional and writer. She currently runs her own publicity firm, Sweetheart Pub, which provides services to a great many artists in the acoustic and Americana world. Rachel has also worked as a music supervisor and talent buyer, and has written for major newspapers, worked at cable music channels, live concert events, at a record label, at a legendary recording studio, and as a publicist for many years.

Here she shares her thoughts on Spotify and the many arguments that the company’s actions raise in music circles. Rachel brings forth many trenchant and cogent thoughts on issues like the rates Spotify pays to artists, and the value of the service to the musicians with whom she works.

We commend her article to all our readers, not as an official statement from Bluegrass Today, but for rational consideration of a debate that continues to rage within our industry. It appears with her permission.

You can subscribe to her Sweetheart Pub newsletter on SubStack.

As always, your comments are welcome.

This is probably a bad idea.

Okay. I’m going to say my piece about Spotify. I realize that some people won’t like what I have to say, so here goes nothing.

Spotify and streaming are not the problem. Too much music is.

With the Neil Young vs. Joe Rogan battle coming to a head this week and Neil Young losing (what a poorly thought out maneuver that was 🙄), I’ve seen a renewed battle cry about Spotify being some demon corporation that devalues music and keeps musicians from making a living.

It’s hard to take seriously anyone who thinks that quitting Spotify will have any impact on anything. It feels performative and hollow. It doesn’t present any viable solution. And it tells me that they obviously have not looked at the numbers.

Streaming has been around for over a decade, plenty of time for musicians to unite and form a union or an advocacy group that could study Spotify’s extremely transparent numbers and come up with a more fair payment plan. But no one has and that’s because the math doesn’t work.

Even if Spotify doubled what they paid out, which they can’t afford to do, it would make no significant difference.

Streaming isn’t keeping musicians from making a living. The real issue is that music is an over saturated market. There are too many musicians and too much music. Spotify estimates that there are 60k songs uploaded to their platform DAILY. Now think about how much music is uploaded to Soundcloud, Youtube, Tidal, Apple, Amazon, and on and on and on.

You know the whole economic theory about the more there is of something, the less it’s worth?

The barrier to becoming a musician has been lowered to the ground. And that’s great in terms of giving everyone equal access, but due to the influx of people participating, well, that’s what has devalued the product.

If diamonds grew on trees we could get a basket of them at the corner market for $3.99.

Plus, the lower bar hasn’t created an influx of more musical geniuses, but it has given us an abundance of very good musicians. The downside to so much great music is it’s harder for individual musicians to rise to the top. I listen to and read about music for a living, and I still can’t keep up with all of the good music just in my niche. Every single day I come across new music from new artists.
The simple truth is that the market can not supply every good musician with a full time living making music. If NO ONE created another song from this moment on, you would still never get through all of the music that has already been made. As a matter of fact, the popularity of catalogue music, songs more than 18 months old, rose from 60.8% in 2018 to 66.4% in 2021. In sharp contrast, new music listenership is falling. That’s why all of these legacy artists are selling their catalogs right now. Investors are forecasting that older music can be repackaged for commercials, tv, movies, etc and bring in major dollars. Yes, this is something that has been done in the past by individual artists, but now there are going to be one-stop-shops where you can choose from a David Bowie, Prince, Fleetwood Mac, NEIL YOUNG, or John Lennon song. Publishing rights usually stay with publishers and songwriters and recorded rights belong to labels and performers, but with companies like Hipignosis spending 100s of millions to purchase back catalogues, it will be easier than ever to purchase rights to use this older music.

But I digress. Back to musicians making a living from music.

There was ONE golden period in the mid to late 20th century when a significant number of musicians and the music business were able to harness the market well enough that it really seemed like being a successful professional musician meant being well paid (even though they were all ripping each other off back then too.) The truth is, there was still always a very limited number, as compared to other professions, of musicians who were able to make a good living from music for an extended period of time. For the majority of musicians, just having a 2 to 3 successful album cycle was an epic win. And most professional musicians still made a low to middle class salary, it was only after the idea of the musical star was born that a limited number started raking in the big bucks.

For the majority of human civilization, making a living from being a musician was obtainable by a very small number of people. Music used to be just passed on through friends, families, communities, churches, etc. Music as a commodity is fairly new. Before the idea to sell music on a large scale came about, once you heard a song, it was yours forever, because the only way to hear it again would be to sing it yourself. We as humans have over-glamorized and overvalued music. It’s a natural, abundant resource that the majority of humans can create. Just about anyone can learn to play an instrument. It’s no harder than any other skilled profession, the only thing you really need is time. Human brains love patterns and patterns create dopamine, we are biologically wired to love and make music.

Obviously, the invention of the phonograph, record players, radio, television, etc had a huge impact on people’s relationships with music, but none more so than the internet. The World Wide Web has made it very easy for people to be extremely well versed in music: to know its history, to learn to play it, to learn theory, recording techniques, network with other musicians, book shows, market their music, etc etc etc. I think you’d be hard pressed to find anyone who would argue that this low bar of entry has been detrimental to the evolution of music. But what it HAS been detrimental too is the selling of music.

Fans have a finite amount of time and money to expend on musicians and listeners are spending more today than they ever have in history. Music listening is up 10% since 2020. 10% is HUGE.
But for every 10 musicians the average person might be a fan of, they only have the time and money to support 2 or 3. I realize that most of the people reading this are probably hard core music fans, but I’m talking about the average person, whose attention is being pulled by an inordinate amount of entertainment options like tv, movies, social media, books, video games, and other hobbies. Add this to the before mentioned love of older music, or music by musicians that listeners no longer feel the need to support financially, and herein lies our conundrum.

It’s simple supply versus demand.

Not to mention, that streaming services and social media have over inflated most musicians’ sense of their fanbase. Are people who have never purchased anything from a musician really fans? Or should we change the valuation system from people who clicked a button to follow them with people who are actual customers, because measuring a fanbase based on streaming and social numbers is a complete fallacy.

It’s not that difficult for a song to reach 100,000 streams if added to the right playlist, but that doesn’t mean 100,000 people liked the song. You can gauge true interest in the artist by looking at the streams of all of their songs. You can have 100k streams on one song and an average of 2k on your other songs. This tells me that your song with the high streams is not converting people to listen to your other music. But the artists often look at it like they have a ton of streams which means they have a large fan base and their not making the amount of money that they think is equivalent to the amount of people listening, when in fact, all that’s really happened is 100,000 people got to sample a song and it didn’t convert. But without streaming services, they would never have had that opportunity in the first place.

I often feel like I am in a giant feedback loop of people saying that Spotify is stealing money from artists without anyone ever acknowledging the massive benefits of streaming. And I don’t just mean the convenience of it. Most people would never have access to such a huge variety of music and on the flip side of that, so many musicians would not have access to such a variety of fans. Streaming has allowed so many different styles, genres, and people to enter the conversation. It has also knocked down the income barrier, giving those with less money access to the same variety of music as those with plenty of disposable income.

Do you remember the time between ages, say 12 and 18, when music was SO important to your life? Well, not every teenager has access to the money to purchase music from all of the artists they love. Only 17% of teenagers work. And we all have way more bills than we did 20 years ago. At the height of my music purchasing time period, I wasn’t also paying for a cell phone, internet, all the streaming accounts, etc etc. Streaming makes music accessible to everyone and has expanded our horizons exponentially, affecting every aspect of our culture.

So, should musicians just give away their music for free?

Well, they do and they always have, and they always will.

But no one is making anyone give their music away. No one is making anyone put their music on streaming services. They can just sell their music the old-fashioned way. But most musicians won’t go this route, because they know the enormous opportunities, NOT GUARANTEES, that streaming services give them.

The fact is most bands that have listeners on streaming services, would not sell an equivalent amount of records. I listen to hundreds of records every year, but I would not purchase 100 records a year, due to the laws of time, space, and money. With streaming I can read about an artist and immediately go check them out. If I had to go purchase an album every time I wanted to listen to someone’s music, well, I just wouldn’t do it.

I also never see anyone talk about all the negatives of purchasing music before streaming. Like, it was sort of a scam, and definitely a seller’s market. If you’re over 40, how many times did you buy an album because you heard a song on the radio, and the rest of the album was terrible. Or you bought an album and listened to it 3 times and then just forgot about it. Or you bought an album because of the cover, and again, it was not good. How many times did one of your LPs break or melt, or your CDs get stepped on and shattered, or even stolen. How many CDs are sitting in landfills? How many of your cassette tapes got jammed in your car stereo or just stopped playing? I do not want to go back to any of that. The pendulum has swung and now listeners have more power. But that doesn’t mean that it can’t swing again and become more even. More on that later.

Let’s talk about the math of paying musicians more for their music streams, even if some of those streams are just people sampling their music who would never actually purchase anything from them.
It’s with an uncritical eye that anyone could look at Spotify’s revenue and think that they should just pay more and that would solve everything.

First of all, only 15% of Spotify’s artist base made over $1000 in streams in 2020 – (and streams count whether people listened and hated it or played via algorithmic playlist that the listener had no control over. ) So let’s say that 15% is the number of musicians on their platform with actual fan bases. It’s not an exact analogy, but it works for this discussion.

That dollar amount seems paltry until you add in the context that that 15% was over 187,000 artists. Now, $1000 is just the minimum amount paid out to be a part of this top 15%. But to keep it simple, let’s say they gave 187000 artists $1000. That’s 187 million dollars. Some of these artists have streams in the billions. 13000 of those made over 50k. They are paying out a LOT of money spread out among a lot of artists.

In 2020, Spotify brought in 8 billion dollars in revenue – NOT profit. As a matter of fact, Spotify has never published an operating profit. In 2020, it posted a 581 million euro loss. But just for fun, let’s say you you took every dime of their revenue – and they didn’t pay their CEO, or a single employee, electricity bill, server cost, marketing – (and on and on) and split that money between the artists with enough streams to make 1000 bucks – that would only be $4200 bucks per artist. Now split that between the publisher and the songwriter and the band members and the manager, etc, and that is hardly enough for anyone to live off of.

According to Business Insider, Spotify pays rights-holders between $0.003 and $0.005 per stream on average. Approximately 70 percent of the total revenue earned per stream goes to the artist, while the rest is absorbed by the platform itself. So in order to double what Spotify pays artists, they would have to raise their revenue to at least 13 billion dollars.

I also see people say that if they took away the crazy salaries of their top executives, you could use that money to pay musicians. The salaries of many higher ups at Spotify may seem outrageous, I get it – but if you paid Spotify’s top 11 executives nothing at all, it would literally have no effect on the amounts paid to musicians. It would be like taking away someone’s extravagant dinner to solve the hunger problem of a major city.

The ONLY way to raise the monetary amount that musicians make from streaming is to raise streaming prices SIGNIFICANTLY for consumers.

But it’s hard for any streaming company to do that since they all offer basically the same product. If Spotify raised their subscriber fee to 19.99 a month, people would just switch to Apple or Tidal, if those 2 services also raised their rates, people would switch to Youtube. If they ALL raised their rates, a new service would just come in and undercut them all. You should never underestimate the average person’s total disregard for if someone is getting paid enough for the product they are purchasing. They just want the product at the cheapest price available.

And let’s say that you could get an across the board payment hike on streaming services, well now you’ve started to price some people out. And you’re probably definitely going to damage the discovery aspect of streaming services. If Spotify had to pay a significant amount to artists whose songs their algorithms and editorial playlists served to their customers, that would be like them paying to promote the music themselves.

But the HUGE problem, that I’ve never seen anyone address, is that as time goes on, the economics of streaming only get worse. There are still 60k songs being uploaded daily – which means there is even more music to listen to and more musicians who want a cut of the pie. The song pool is further diluted. Which means the amount of money that can be garnered from streaming can only diminish no matter how much you charge customers to access it. The only way to make the math work is to limit the amount of music on Spotify while still significantly increasing their user base.

So why do I continue to work with musicians when I think that the market is oversaturated and selling music can’t lead to a full-time living for the majority of musicians?

Because I don’t think the modern day music business is solely about music. I think it’s about the people behind the music. It’s a total package game. You’ve got to be a good musician, a good performer, a good storyteller, a good marketer, and basically be good at having people buy into YOU. Sometimes it’s hard to gauge exactly what the thing is that makes a person drawn to someone, but if you do it right, they’ll be your lifelong fan and they’ll buy whatever you’re selling. Just go take a look at Taylor Swift’s merch store.

The musician is the brand and the music is just one of the products. People will buy stuff from musicians that have value – whether it’s tickets to a show or live stream, t-shirts, specialty products, one on ones, VIP packages, music lessons, deluxe editions, demos, books, etc etc. Musicians are only limited by their own creativity when it comes to selling products.

Personally, I think making money is easy. Just like learning an instrument, it may take time and effort to become adept at it, but the steps are pretty simple. Build your audience through building connections with them, get to know your audience, provide products for your audience that have value.

All you have to do to be successful as a musician is know who you are, what you stand for, have a story to tell and SERVE your audience rather than have them serve you. Hell, you don’t even have to be a good musician. There are plenty of bad ones out there making money.

Musicians get upset because they JUST want to play music and not have to do the business part. But business owners are the ones who make the money. Making music and making money are two very distinct talents. You can be a musician and not sell your music. There’s no shame in that. But if you want to make money from your music, you’re going to have to have an entrepreneurial outlook. This means you’re going to have to learn and perform tasks that make your business profitable. Sure, I’d love to just do the fun parts of my job, but I own a business, so I have to do tons of stuff above and beyond just publicity.

The reason why you’ll never hear me complain about these conditions is because I know that working in the music business is a privilege. I work in an industry that’s only goal is pleasure. New music is not needed. “Paid Musician” is not a job that society needs. As mentioned before, we have plenty of music to last any individual a lifetime. Plus, people will alway make and play music, even if they outlawed anyone ever making a dime from it again.

In conclusion, I believe streaming has been vastly beneficial. I don’t believe that it is keeping anyone from making a fair living, there are other far more likely factors that have affected the economics of musicians, the most important one being the over abundance of them. I think that it is naive for musicians to hold Spotify accountable for not paying them money that doesn’t exist for streams from listeners that they probably would not have without streaming. I think that all of this energy bashing Spotify was wasted when it could have been used to find a solution. Maybe there’s a tiered subscription plan option, or after you stream a song so many times you own it, or after your song hits a certain amount of streams, you no longer get paid for it and the money goes to less popular artists who need the money more, or maybe, and I can hear some of you groaning, NFTs and Web3 streaming will solve a lot of these problems.

I saw quite a few people on Twitter cheering that Spotify lost 2 billion dollars this week due to the Neil Young controversy. I don’t understand that. Spotify is not a person. It’s a publicly traded company, so it was really just people with individual investments and people with retirement funds that lost money. And with NO solution being offered by the naysayers, it was all for nothing.

I’m not some corporate apologist, free market worshipping, Ayn Rand fan. I just like to look at the full picture of situations and acknowledge that there are hardly ever any easy answers. Nothing I saw this week came close to actually solving any problems, because that takes time and effort, something that few people want to actually do.

If you want to disagree with me on my position, that’s fine, I’d love to hear your fact-based plan on how to keep all of the benefits that Spotify provides and make it a viable income stream. But be ready to show your work.

Rachel Hurley, Sweetheart Pub