Justin Snyders Lyra Hilliard ENG101 04-20-14 CAP Final Copy The music industry has hit a sharp

decline recently. Music sales have been in free fall since 1999. Plummeting from $27.3 billion in 1999 to $15 billion in 2013 (Morgan 1). The way people consume music has changed as well. People used to listen to physical albums, now radio singles seem to be the major selling point of the music industry today. This disgruntles a lot of artists as the majority of the bands do not make any radio play. All is not lost in the music industry though. There is a service that has fought the battle of piracy and won, has generated millions of dollars in additional revenue for artists, brought back paying for music in the mainstream again, and even offers a free ad-based service for those who do not want to pay. This service allows listeners to a virtually unlimited collection of the worlds music. Now you can listen to bands you never even heard of with just a little research. Spotify has come into our society and reestablished what it means to consume music in todays society. There are some skeptics about the new trend though, claiming that the new music streaming service is harming the music industry by paying out little royalties to artists. This is just an example of misattribution of blame. The rights holders are the ones getting in the way of artists making the money they deserve, not Spotify. In fact, this streaming service offers so much opportunity and is a breath of fresh air in the decaying music industry. Some background information on Spotify is needed to understand what the debate is about. Spotify is a company that was formed in 2006 by Daniel Ek and Martin Lorentzon (Haupt para 1). Spotify now have over 15 million tracks and are rapidly growing (Leurdijk et al. 93). Jon

Haupt of Project Muse wrote a review of Spotify. Spotifys mission statement bills themselves as a "legal and superior quality alternative to music piracy," with the goal "to help people listen to whatever music they want, whenever they want, wherever they want" (para 11). Spotify is an audio player that uses a downloadable client where the consumer can choose any song at any time (on the computer). Spotify offers their catalog of millions of songs with a two-tier system. Spotify offers an ad-based listening experience where people can use Spotify for free but have to listen to ads every so often and some extra features are excluded. The other experience that is offered is the premium subscription service. Almost like Netflix, Spotify charges you a monthly fee, that is $9.99 for regular listeners or $4.99 a month for college students, to listen to music as much as you want. The skeptics believe that Spotify are not paying out enough to artists, but the statistics and expert analysis proves otherwise. Spotify will be presented as not a suspect, but as a victim. Support for Spotifys innocence in this bad relationship between artists and band will be developed through the introduction of statistical support backing the premise that Spotify supports artists. Also, the topic of how Spotify toppled piracy will also be analyzed. Any counter arguments will then be addressed afterwards and then will be put into conversation with each other. This way common ground can be built between the two sides and the truth of the matter can be developed efficiently. Is Spotify good or bad? That is the center of scholarly and popular debate when addressing the streaming service. The first factor to consider is the statistical facts behind Spotifys payouts. The company offers a Spotify Explained page on their website where they offer independent studies, research, and statistics to show what they stand for as a company. In the first part of this page, the company explains their royalty payout rates. With a company that

makes almost all the music out there available, one would hope their payout is immense due to all the artists they have to reimburse. As Spotify has gained popularity, they have also dramatically increased their payout. In 2013 alone they paid out around $500 million, and have paid out $1 billion since their creation (1). Also, Spotify reports that out of their total revenue, they pay out 70% of it to rights holders (1). This shows that Spotify isnt just putting up a faade of company statements saying they support artists, but the statistics show they are practicing what they preach. As stated in the thesis, the issue lays with the rights holders. These label companies then trickle down the money they get from Spotify to the artists, leaving the artists with the scraps of the meal. People who are disgruntled with Spotify are not wrong in some sense. Artists are disproportionately making less than their label companies, but what people need to realize that it is not all Spotifys fault. Why are the record companies to blame instead of Spotify? Well, as stated earlier Spotify pays out an immense sum (70%) of its total royalties. So, what happens to that? Are rights holders the ones to blame? In Bloomsburg Businessweek, Andy Fixmer wrote the article Spotify Doesnt Sound So Great To Some Artists in 2012 to enter the conversation of if Spotify or the rights holders are to blame. The article presents the idea that labels are fans of Spotify, while artists are shown to dislike it (Fixmer 1). This is due to the fact that the label companies hold leverage in handling the revenue and decide how to distribute whats given to them. This relationship sees Spotify as having a direct responsibility for their low pay check. Spotify does in fact payout less per stream compared to an outright sale of the same song, but this is due to the fact that Spotify is still young and that streaming a song doesnt cost the same as owning the song (Fixmer 1). To back Spotify up on this claim, Time magazine reporter, Victor Luckerson, works in the magazines money and business section. Even though it would be impossible to

analyze the details of every artists contract with their label company, Luckerson did some research and found that artists typically pocket less than 10 percent of the money given to label companies (1). That is absurd. Artists are the creators of said product. Doing some math, you can find that 2013 Eminems single The Monster had 35.1 million streams (Luckerson 1). This brings Luckerson to the rough estimation that the song earned somewhere between $210,000$294,000 (1). Using the 10% that artists pocket, the artist would obtain $21,000-$29,400. This is a lot of money for anyone, but the fact that 90% of that money is not going to the artist is confusing to say the least. In the example just used, Spotify pays out close to almost 300 grand for one song in a short amount of time. While the rights holders pay out a tenth of that to the artist. This must raise the question of why exactly is Spotify being condemned in this situation? The rights holders need to be put in the center of attention in this debate. All this research into Spotify and revenue is beneficial to the conversation, but not enough time or effort is put into researching how label companies alter the relationship between Spotify and artist. Digital media specialist and former Wall Street Journal contributor, Joan E. Solsman, shines some light on this subject when she wrote an article for CNET celebrating Spotify. Labels and other rights holders, this is all about money. So long as they get paid, they dont care which service wins (para 15). Solsman views the label companies in a negative light as they are notorious for sucking money away from the music creators themselves. Label companies are tarnishing the transactions that should be dealt directly between consumer and artist. Another benefit that helps build Spotifys defense is its immensely successful fight against piracy. Internet piracy has been an elephant in the room when addressing the music industry ever since the technological age flooded the musical gates. Spotify has had an effect on that. To prove that, look back at the Spotify Explained page and one will find that Spotify

posted independent studies done in six countries that support this claim. In Sweden (Spotifys home country) studies showed that people who pirated music fell by 25 percent between 2009 and 2011, in the U.S.A P2P file sharing now only accounts for less than 10% of internet traffic, and in the United Kingdom the key finding was that three-quarters of all digital consumers was legal consumption (1). Those were just some highlights from the independent studies. Since piracy has fallen, this helps build a new cultural norm. Buying music is starting to become the norm instead of pirating music. Piracy used to run rampant from computer to computer, but now people rather subscribe to a legal alternative as long as it is cheap and effective. Spotify has done what lawmakers and law enforcement couldnt do, and that is the destruction of internet piracy. Robbert Ooijen wrote his master thesis on streaming and its effect on piracy, in Home Streaming Is Killing Piracy, Ooijen addresses the relationship streaming services and piracy have with each other. Ooijen looks at Spotify and asks if it really is making a change in peoples behavior to pirate music. Ooijen looks at Spotify and sees its influence on music to move away from being a commodity to being a service (57). Therefore piracy will become irrelevant because according to Ooijen, if music is seen as a service it is impossible to steal a service (57). Robbert believes that Spotify is helping, the rhetoric on music piracy is changing too and will continue to do so in the future. As this rhetoric is one of the most inuential elements in the discourse on music piracy, the way music piracy is understood is changing too. Finally, one might say: not copyright enforcement, but streaming music is able to kill music piracy (57). Even though there is a lot of statistical, academic, and social support for Spotify. There is also some credible opposition that needs to be understood. What most people in the opposition focus on is the debate surrounding how artists are paid through Spotify. Ben Sisario, contributor

of music related topics of the New York Times, takes the stance in his article that royalties are slowing to a trickle (1). Musician Zoe Keating is a real-life example, she garnished 131,000 plays on Spotify that earned netted her $547.71 (1). Ms. Keating is also quoted by Sisario, In certain types of music, like classical or jazz, we are condemning them to poverty if this is going to be the only way people consume music (1). This is a good argument made by Sisario and Keating, artists are getting paid very little. Hell, the artists are the ones making the music; shouldnt they be making more money? Another example of an artist having hatred for the company is found with Thom Yorke. In Stuart Dredges article in The Guardian, the front man from the rock collective Radiohead, Thom Yorke, is the center of Dredges attention. Yorke goes on record to bash and completley discredit the streaming service, claiming that Spotify is bullshit and that Spotify is the last desperate fart of a dying corpse (para 14). Yorke also feels that Spotify is artistically restricting artists like him, what was most exciting was the idea you could have a direct connection between you as a musician and your audience. You cut all of it out, it's just that and that. And then all these f*****s get in the way, like Spotify suddenly trying to become the gatekeepers to the whole process (para 7). Obviously, Yorke feels very strongly about this subject. He even went as far as to take down his other bands (Atoms for Peace) material from Spotify and other streaming services. The opposition makes a few solid points. Artists do make very little, no one would disagree with that. An average of less than 10% of the money made by the music and given to the artists is completely disproportionate to the amount of work put into the music making process (Luckerson 1). Sympathy has to be given to artists like Yorke or Keating. They both are upset with the situation the digital age has brought them to. Label companies are taking

advantage of these artists, so the artists are angry about the entire music industry and some hate is being targeted at Spotify. Yorke and Keating have different reasons for having contempt for Spotify. Keating is specifically upset with the monetary insignificance and Yorke is more upset with how Spotify is altering the creative process. There are some that are clearly unhappy with the service, and it is reasonable why. Artists are frustrated with the lack of pay and how the music industry operates, and sees Spotify as the culprit. Honestly, musicians are underpaid. They are the leaders and creative minds behind the works of art that we consume. There are some criticisms with the opposing arguments as well. The issue with Sisarios argument is that he does not factor in the contract Ms. Keating has with her rights holder/label company when looking at her specific royalty checks. This has a huge impact on how much an artist makes and digging into that would have made Mr. Sisarios argument much stronger. This is disappointing, as artists opinion on this matter should be held to high regard since they are the ones at the center of this debate. Thom Yorke sees this as a detriment to artistic flexibility and the music industry as a whole, and it is just sad to see people not seeing the positives this service is bringing to the table. Both of these artists are blinded by their rage at the imbalance in the music industry and blindly throwing attacks at the music streaming service. The agreement diverges from that point though. A lot of the skeptics surrounding Spotify place the blame wrongly on Spotify and attack the service instead of trying to use it to their advantage. Artists deserve their fair compensation, but the battle they are picking with Spotify is not where they should be using their resources. Its not without saying Spotify has some flaws. Going back to Jon Haupt, Spotify is popular, but there are many reasons to be unhappy with it, and the industry should seek out additional revenue from personal connections to artists, extra textual and visual material, and other value-added approaches, to fix the issue of royalties and

revenue (para 37). Yes there is room for improvement, but Haupt sees Spotify as being successful in the future, everyone will consume music by paying a monthly fee just like a gas, electric, and Netflix bill (para 38). More people need to jump onto this specific payment method, artists would be paid evenly based on how many subscribers the service has and he sees Spotify leading this movement in music. The important thing is to build on Spotify, instead of discrediting it. The service is only a few years old and has accomplished so much, and Haupt with many other scholars/experts portray a very bright future for Spotify and the music industry. Reaching the conclusion of this argument, it is important to understand the influence Spotify has on the industry. Spotify has done so much for music the past few years. It is reinventing the way people listen to music. This is such an important discussion to have because Spotify is in the position to change the industry forever, for either good or bad. One thing both sides can agree on is that Spotify has gained enough power to alter the playing field. Spotify has tumbled the piracy tower, introduced an additional revenue source for artists that will only continue to grow with its popularity, and it gives consumers the ability to listen to almost anything. Spotify has even done the impossible and incentivized the purchasing of music in an age where music sales are at an all-time low. The momentum is swinging in Spotifys favor but there is one thing slowing its progress, and that is the label companies. No matter how much money Spotify pays out to artists, as long as there is a middle man, musicians revenue will stay tremendously disproportionate. The real problem lies with label companies, not with Spotify. Until more attention is brought to the label companies, the artists will continue to see this problem for the foreseeable future.

Works Cited Dredge, Stuart. "Thom Yorke Calls Spotify 'the Last Desperate Fart of a Dying Corpse'" The Guardian. Guardian News and Media, 08 Oct. 2013. Web. Fixmer, Andy. "Spotify Doesn't Sound So Great to Some Artists." Bloomsberg Businessweek 4261 (2012): 41-42. Academic Search Premier. Web Haupt, Jon. "What Is Spotify?" Project MUSE. Music Library Association, 2012. Web. Leurdijk, Andra, and Ottile Nieuwenhuis. Statistical, Ecosystems and Competitiveness Analysis of the Media and Content Industries: The Music Industry. Rep. no. EUR 25277 EN. Ed. Jean P. Simon. Luxemburg: Publications Office of the European Union, 2012. Worldcat. Web. Luckerson, Victor. "Time.com." Business Money Heres How Much Money Top Musicians Are Making on Spotify Comments. TIme, 03 Dec. 2013. Web. 12 Apr. 2014. Morgan, Richard. "BuzzFeed." BuzzFeed. N.p., 08 Apr. 2014. Web. 08 Apr. 2014. Ooijen, Robbert. Home Streaming Is Killing Piracy. Diss. Universiteit Utrecht, 2010. N.p.: n.p., n.d. WorldCat. Web. Spotify. "Spotify Explained." Spotify for Artists Spotify Explained Comments. Spotify Ltd., n.d. Web. Sisario, Ben. "As Music Streaming Grows, Royalties Slow to a Trickle." The New York Times. The New York Times, 28 Jan. 2013. Web. 01 Mar. 2014. Solsman, Joan E. "Spotify Sets Mobile Music Free. What Took so Long?" CNET News. CBS Interactive, 12 Dec. 2013. Web. 01 Mar. 2014.