FEATURE:
Streaming Bifurcation
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Could Major Artists Earning Millions from Spotify Get Behind An Initiative That Redistribute Wealth to Smaller Artists?
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THERE is this vast gulf…
IN THIS PHOTO: Taylor Swift performing during her Eras Tour/PHOTO CREDIT: Jutharat Pinyodoonyachet for The New York Times
between huge artists who can command enormous money from a single album or viral hit. Some of the biggest artists in the world like Ed Sheeran and Taylor Swift get millions of streams for singles on Spotify. Their albums can get giant numbers. Whilst they do not earn megabucks and can retire after a single album, there is no doubt they have made millions alone from the site because of their success. One can look at someone like Taylor Swift and the millions of streams her songs will get. I have enormous respect for her and she is deserving of all the success she gets. As she is a billionaire and someone whose wealth will continue to rise, I wondered whether any central pot or vault could be put onto a site like Spotify where a percentage of her streaming earnings go in. That she can donate to. Think about artists who stream hundred or thousands for their songs. They put so much hard work in but, when the year is out, what does that amount to?! For many, we are talking a few dollars or pounds. It is a very meagre sum for quality music that has reached as far as it can go. Hugely successful and established artists will always have this instantly receptive audience that will stream her stuff. She donates to charity and is worthy of her money. That said, at a desperate time when so few artists can earn a living from touring and rely to an extent on any pittance from streaming sites like (but not exclusively) Spotify, there must be a solution that can work where the earnings gap is reduced.
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Of course, it is not incumbent on artists who earn a lot through streaming sites to solve an issue that is caused by the sites themselves! Rather than it being an obligation, it is a redistribution and nice thing to do so that there is some – if not massive and hugely significant – reapportionment of wealth. As it stands, we can see the gigantic earnings gulf between the very biggest artists and pretty much everyone else! Naturally, when we say that, it is clear that platforms like Spotify need to do a lot more. This has been an issue for years now. I think they could raiser their subscription rate too. I pay £10 for full access. It seems like very little to have access to a whole library of albums, songs and podcasts. I, alongside many others, would happily double that pledge and monthly fee if it meant that more artists got more money! This urgency to ensure that all artists are paid – and paid more – comes after some devastating plans from Spotify that heaps misery on artists whose songs do not do big numbers:
“Last month Music Business Worldwide broke the news that major changes were coming to Spotify‘s royalty model in Q1 2024. The most controversial of those changes? A new minimum annual threshold for streams before any track starts generating royalties on the service.
At the time of our report, we couldn’t confirm a precise number for this minimum threshold. Now we can: It’s 1,000 plays.
The news was first nodded to by a guest post from the President of the distribution platform Stem, Kristin Graziani, published on Thursday (November 2).
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MBW has subsequently confirmed with sources close to conversations between Spotify and music rightsholders that 1,000 streams will indeed be the minimum yearly play-count volume that each track on the service has to hit in order to start generating royalties from Q1 2024.
We’ve also re-confirmed Spotify’s behind-the-scenes line on this to record labels and distributors right now: That the move is “designed to [demonetize] a population of tracks that today, on average, earn less than five cents per month”.
Five cents in recorded music royalties on Spotify in the US today can be generated by around 200 plays.
As we reported last month, Spotify believes that this move will de-monetize a portion of tracks that previously absorbed 0.5% of the service’s ‘Streamshare’ (i.e. ‘pro-rata’-based) royalty pool.
Spotify has told industry players that it expects the new 1,000-play minimum annual threshold will reallocate tens of millions of dollars per year from that 0.5% to the other 99.5% of the royalty pool.
In 2024, Spotify expects this will move $40 million that would have previously been paid to tracks with fewer than 1,000 streams to those with more than 1,000 streams.
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One source close to the conversations between Spotify and music rightsholders told us: “This targets those royalty payouts whose value is being destroyed by being turned into fractional payments – pennies or nickels.
“Often, these micro-payments aren’t even reaching human beings; aggregators frequently require a minimum level of [paid-out streaming royalties] before they allow indie artists to withdraw the money.
“We’re talking about tracks [whose royalties] aren’t hitting those minimum levels, leaving their Spotify royalty payouts sitting idle in bank accounts.”
MBW itself nodded to Spotufy’s new 1,000-play threshold in a commentary posted on Thursday entitled: Talking “garbage”: How can Spotify and co. sort the dregs of the music business from the hidden treasures?
In that MBW Reacts article, we referenced comments made by Denis Ladegaillerie, CEO of Believe – parent of TuneCore – made on a recent podcast interview with Music Business Worldwide.
Ladegaillerie specifically expressed disagreement with the idea of a 1,000-stream monetization lower limit on music streaming services.
He said: “Why would you not pay such an artist [for getting less than 1,000 streams]? It doesn’t make any sense”.
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As it stands, we have only a select few artists who can make a lot of money from streaming platforms. Even if many other artists do make some money, the reality is that it is very little. There is this unfair competition where the biggest artists are going to keep learning and expanding their wealth, whereas so many smaller acts are going to struggle. Many coming through need platforms like Spotify for visibility and get their music heard. They also need to earn money and continue to make music. I think it is only fair that there are options explored so that all artists earn more than they do. As I suggested, many a Robin Hood-style redistribution from the richest to everyone else would create some short-term relief. It is almost like a literal flood in some way. The digital stream breaking and engulfing struggling artists. Maybe the tidal wave of success that mainstream artists gets compared to the drought that other artists experience. I shall drop the water imagery…though my point is that there could be this bifurcation where incredible capital earned by the most commercially successful artists put something into a central location or Spotify ‘vault’. There is then a redistribution where most other artists can share that. It does sound ambitious and idealistic, yet we have come to a time when there are calls for something to happen! With Spotify seemingly more determined to make it an elite platform where the richest and most bankable can succeed and profit and everyone else seemingly should be grateful that their music is on the site! It would not be a notable financial loss to any of the biggest artists if they were to agree to a small percentage of their streaming revenue gallantly and altruistically, than that can be shared among other artists. When so many artists are finding touring tough and not earning much from it, streaming profits are very low for them – which means that their sources of revenue shrinks. Streaming sites that make huge profits each year need to do more to ensure that people who upload tracks there are compensated and get much more than they do at the moment. I think that we all can agree that it is…
PHOTO CREDIT: Jovan Vasiljević/Pexels
THE least that they deserve.