Spotify promoting artists or decreasing profits?

Andrew Hout

Spotify, an online music streaming service, has received withdrawal of songs and harsh feedback from many artists in the past few years due to its exceedingly low royalty rates.

Taylor Swift recently expressed her dissatisfaction with Spotify by pulling all her music from the streaming service.

Since Spotify was introduced in America from Sweden, many musicians, like Swift, have expressed their dislike for the streaming service and its low royalty rates of under 1 cent per stream. Spotify pays record companies and music publishers 70 percent of their yearly revenue, which amounted to about $1 billion last year.

Photo by Andrew Hout

Only a decade ago, 100 percent of music industry revenue came from CDs. Now, music is mainly divided up between digital downloads and streaming. The music industry used to make $15 billion a year. Now the revenue is only $7 billion. Those who are receiving pay cuts are not the record companies, but the up-and-coming artists.

Spotify was founded in Sweden by Daniel Ek in 2006 and is now worth $4 billion. The streaming service generates revenues from brands who advertise on the free service and from consumers who pay the fee for subscription without ads. The difference between Spotify and other streaming services is that it has many more artists and cheaper subscription prices. In 2014, Spotify was open to 58 countries around the world.

Many local artists, like Jeffrey Halford, don’t feel like they receive much revenue at all. Last year, Spotify revealed that they paid record companies less than a penny per play and that is just going to the labels, not the artists. A Taylor Swift song with 46 million streams would only make around 280k according to Time magazine.

In a recent interview for Time magazine, Swift was asked why she left Spotify.

“Everybody’s complaining about how music sales are shrinking, but nobody’s changing the way they’re doing things,” Swift said. “They keep running towards streaming, which is, for the most part, what has been shrinking the numbers of paid album sales.”

Halford expressed his discontent with streaming services like Spotify. Halford plays rock and blues music with an American rhythm. Although he has released many albums between 2007 and 2014, which are being played and downloaded by hundreds of fans, he has very low royalties.

“They’re there, they’re being played, and I’ve just seen nothing income-wise,” Halford said.

Halford said he believes it is unfair that streaming services’ growing fan bases are taking away money that he previously made from iTunes users. iTunes pays artists 70 cents per download.

Many privileged artists like Swift and The Black Keys have withdrawn their music from Spotify to make a point on how streaming could hurt artists and music industries in the future. Bands like The Talking Heads, The Black Keys, and Beck have all displayed a disinterest in streaming services like Spotify publically.

Redwood sophomore musician Matty Michna said that Spotify makes it hard for musicians to make a profit unless they are famous.

“Only famous artists will make money from Spotify. For most [up and coming] artists, all the money goes to the music producers,” Michna said.

The only thing up and coming artists have to gain from Spotify is the promotion of their music. Redwood musician and sophomore Ella Marlatt believes that Spotify is a great promoter of music for trending artists, despite of low royalties. Marlatt said that many popular artists are heard on the radio, but less-well known artists are often found only on streaming services like Spotify. Marlatt believes if new artists stopped using Spotify, that they might lose some future fans who would find their music.

Halford also said that he believes that streaming is diminishing the music industry and Spotify is exploiting the consumer’s wants by offering free service and cheap subscriptions. Halford said he believes that this promotion from Spotify is not very helpful. Most of the time, when he is hired for gigs or concerts, the ones who discovered him did not do so on a streaming service.

According to Halford, Spotify can not afford to pay their artists more because they’ve only just started making money. He believes the problem is not with Spotify alone, but with music streaming in general.

“They’re a company, they have to do what they have to do to stay afloat,” Halford said.