Snyders 1

Justin Snyders
Lyra Hilliard
ENG101
04-20-14
Why Are Artists Attacking Spotify?
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 gain
sufficient radio play. Piracy has also chopped into the earnings of artists across the board. 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
people can listen to bands they have never even heard of with just a little research. Spotify has
come into our society and reestablished the rules on how to consume music in todays society.
Some skeptics claim 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 has over 15 million tracks and is rapidly growing (Leurdijk et al. 93).
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,
Snyders 2

wherever they want" (para 11). The service acts as 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. By offering 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, and the other experience that offers a premium subscription
service. Almost like Netflix, Spotify charges people a monthly fee, which is $9.99 for regular
listeners or $4.99 a month for college students.
The skeptics believe that Spotify is not paying out enough to artists, but the statistics and
expert analysis proves otherwise. Spotify will be presented not as 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
Snyders 3

paid out $1 billion since their creation (1). Spotify also 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 dead wrong. Artists
are disproportionately making less than their label companies, but what the anti-Spotify
population needs 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). Doing some math, one can find that 2013 Eminems single The Monster had
Snyders 4

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 $300,000 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 affected the relationship between Spotify and artist.
Digital media specialist and former Wall Street Journal contributor, Joan E. Solsman, shines
some light on this subject in 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 digital age flooded the musical gates. Spotify has had an effect on that. In
Sweden (Spotifys home country) studies showed that people who pirated music fell by 25
percent between 2009 and 2011 (Spotify 1). In the U.S.A, P2P file sharing now accounts for less
than 10% of internet traffic (Sandvine 1). Also, in the United Kingdom the key finding was
that in recent years, three-quarters of all digital consumers was legal consumption (Kay 1).
Snyders 5

These studies show that since Spotifys creation it has decimated piracy as it offers a free and
legal alternative. Since piracy has fallen, this helps build a new cultural norm of buying music
again. 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. Policy makers have been trying to defeat piracy for years now,
and Spotify has done what lawmakers and law enforcement couldnt do, and that is the
destruction of internet piracy.
Robbert Ooijen wrote his masters thesis on streaming and its effect on piracy, in Home
Streaming Is Killing Piracy. Ooijen addresses the relationship streaming services and piracy has
with each other. Ooijen looks at Spotify and asks if it really is making a change in peoples
behavior to pirate music. Ooijen sees the influence Spotify has on music to move away from
being a commodity to being a service (57). As the music industry is becoming more
entertainment than product, it is safe to say that music is a service. Music has never been so
available or widespread and its streaming services like Spotify that help give opportunities to
consumers to interact with the new structure of the music industry. With that said, the argument
Ooijen creates is that piracy will become irrelevant because if music is seen as a service then it is
impossible to steal a service (57). Robbert believes in this transition to a service so he also
believes that Spotify is helping change, the rhetoric on music piracy (57). It is understood that
rhetoric is one of the most inuential elements in the discourse on music piracy, and building
on that Ooijen ends his idea stating, finally, one might say: not copyright enforcement, but
streaming music is able to kill music piracy (57). This is just another piece of wood in the
collective fire among the facts that support Spotifys positive influence.
Snyders 6

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). Sisario and Keating make the strong argument
that take the opinion that artists are getting paid very little. They ask the fundamental question, if
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 completely
discredit the streaming service, claiming that Spotify is b******t 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
Snyders 7

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 of
that 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 offered, 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 people go to for
entertainment, but throwing attacks blindly at this prospering service will not do anyone any
good.
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 randomly 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.
Snyders 8

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. Jon
Haupt creates the idea that Spotify is popular, but there are many reasons to be unhappy with it
(para 37). Another solution to the issues Spotify has is that 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 (Haupt 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
(Haupt 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 along 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 has given 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
Snyders 9

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
Snyders 10

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.
Kay, Danny. "Online Copyright Infringement Tracker Wave 4." Ofcom. UK Intellectual, 2010.
Web. May 2014.
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. "How Universal Music CEO Lucian Grainge Became The Most Powerful Man
In Music." BuzzFeed. N.p., 08 Apr. 2014. Web. 08 Apr. 2014.
Ooijen, Robbert. Home Streaming Is Killing Piracy. Thesis. Universiteit Utrecht, 2010. N.p.:
n.p., n.d. WorldCat. Web.
Sandvine. "Global Internet Phenomena." Sandvine. Sandvine Inc., 2013. 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.
Spotify. "Spotify Explained." Spotifyartists. Spotify Ltd. Web.