Debate | Is Spotify killing the music industry?
At over £103million, music streaming services such as Spotify accounted for 10 per cent of total music revenues last year, compared to 7 per cent the previous year. Despite its dramatic rise to fame many artists and musicians have been critical of spotify, opting to leave the streaming site. LS Debate asks, is Spotify killing the music industry?
Fourth Year English Literature
Following the digital revolution, for most of the noughties it looked as if the future of the music industry was doomed. Thanks to piracy and the Youtube explosion, for the first time consumers had the chance to stop paying for music. Record sales plummeted, record companies’ profits fell and, perhaps most importantly, there was little to no investment in new talent and a huge amount of pressure on artists who did get signed. With six million paying subscribers, some commentators hail Spotify as the saviour of the music industry. Six million is undoubtedly a massive number by any account; but the reality is that Spotify needs at least 10 times this amount before they can start thinking about paying artists properly. Spotify is no saviour: it is perpetuating the problems of an already dying industry.
Spotify certainly occupies an acceptable space between the guilt ridden piracy route and buying an over priced CD for £10. However, with the industry average offering slightly less than 0.4p a stream – this means that 1 million streams of a song would generate about £3,800. It is unrealistic to suggest that most songs will receive anywhere near that amount of plays.
Furthermore, most of the Spotify’s payouts go directly to the label; the artists and songwriters see little of this profit. In 2010, Lady Gaga claimed that she personally received a $167 cheque for over 1 million plays of her song ‘Poker Face’ on Spotify; it is important to remember that there are few songs as ubiquitous and over played as ‘Poker Face’. Large labels also get considerable pay-offs for supplying their back catalogue of well-established heritage acts. That’s money coming in for albums that have already made huge profits and don’t need to be marketed. Irrefutably, the Spotify business model benefits labels and not the artists making the music. Thom Yorke, lead singer of Radiohead, put it quite simply: “Make no mistake, new artists you discover on Spotify will not get paid. Meanwhile shareholders will shortly be rolling in it.”
The main problem is that Spotify does not encourage or help fund new music. I am not convinced by the argument that Spotify increases exposure of new acts, and it definitely does not make artists and independent labels enough money to keep their lights on. But unlike millionaires such as Thom Yorke, small artists cannot afford to vote with their feet. Spotify are attempting to create a monopoly in which they are the ‘go to’ service. With the birth of the Internet, there are so many other, and more democratic, channels for consumers to find, share and buy music – Spotify is just not sustainable and it is draining the industry of all its artistic credibility. We need to find a new model that treats music as an art form, rather than music as a business. At the risk of sounding like a hippy, Spotify is just another cog in the machine. In this case, the machine – the music industry – is broken, and will soon be obsolete if changes are not made. Spotify might not be murdering the music industry, but it is certainly an accomplice.
In the 1980s the slogan “Home Taping is Killing Music” was adopted for an anti-copyright infringement campaign to stop consumers from taping songs from the radio to blank cassette tapes. Although the industry claims that radio to cassette taping continued to be a major problem right into the 90s, the Spice Girls debut album still managed to sell 28 million copies worldwide in 1997 – not a bad year for Virgin Records. It was the very fact of the industry’s unrelenting boom during the 80s and 90s that led to “Home Taping is Killing Music” becoming a perfect foundation for parodies, most hilariously in “Home Sewing is Killing Fashion”. Fast forward to the digital age and here we are again with similar reservations about the next logical step in the music business. This sort of scaremongering is not new.
Admittedly, with the digitisation of music and, as a consequence, a rise in illegal peer-to-peer file sharing, the music industry did suffer a commercial shock. Digital downloads spearheaded by Apple began successfully tackling the problem, but, before long, streaming music for free on Youtube took off. Who is spearheading solutions this time? Spotify.
The ethos of the service focuses on the most important tagline when dealing with free culture: make paying more appealing than paying nothing. Spotify’s database has over 20 million streamable songs. Opting for a free account will disrupt your listening pleasure with irritating adverts, whereas for a mere £4.99 a month, you can have an unlimited stream of music with no interruptions. For the premium version – which allows the app to run offline on mobile devices (essentially functioning as a Spotify iPod) – the price is a still a reasonable £9.99 a month. The free version really does look like the worst deal of all and Spotify’s users are beginning to see this; the service now boasts 6 million paying customers – a quarter of all its users.
Following an incident in which Radiohead’s frontman, Thom Yorke, declared Spotify as “the last desperate fart of a dying corpse” before swiftly removing his music from the service, Spotify responded with a partner website, Spotify for Artists, where they offered a completely transparent outline of their business model. A staggering 70 per cent of Spotify’s revenues are paid to the rights holders. In 2013, that amounted to £300 million. Since opening their doors in 2008, £600 million has been paid to artists. Embarrassingly for Yorke’s ego, only one other major artist followed suit and removed their music. Over 20,000 songs a day continue to be added to Spotify.
The reason illegal downloading proved so catastrophic for the music industry was because no one reacted quickly enough. Spotify recognises streaming as the inevitable next step. When launching in new countries and hitting 40 million paying users, Mark Williamson, the director of artist services at Spotify, told the Guardian “[the] small indie band will be looking at $17k a month from Spotify alone, and the global pop superstar will be looking at over $2m.” Spotify is going to save the music industry, not kill it.