Lashing back at artists who have recently come out against music streaming — namely, Taylor Swift — Spotify chief Daniel Ek released a statement insisting that Spotify has already “paid more than $2 billion to labels, publishers, and collecting societies for distribution to songwriters and recording artists.”
Interestingly, Ek shares that out of that $2 billion total, $1 billion was paid out to artists over the last year.
Although Ek’s essay is pretty long, his argument breaks down to four points: Spotify is better than piracy; Spotify’s free, ad-supported service has increased its count of paid subscribers; Spotify plays should be compared to radio station plays, not iTunes downloads; and Spotify doesn’t hurt physical and download sales, because regions where Spotify is not present have still experienced a decline in both.
“We’re trying to build a new music economy that works for artists in a way the music industry never has before,” said Ek, “And it is working — Spotify is the single biggest driver of growth in the music industry, the number one source of increasing revenue, and the first or second biggest source of overall music revenue in many places. Those are facts.”
Ek makes a valid point about asking people to revise their opinion of the service as a leech on the system that takes money out of the pockets of starving artists (or, hell, even well-fed artists).
Since 2013, Spotify has been crystal clear about its business strategy: pay artists 70 percent of all the money it makes, build a business with the remaining 30 percent.
That means Spotify is not the enemy here.
What’s interesting is that the company did disclose exactly how much that 70 percent was. In the last year alone, Spotify said, it has dished out $1 billion in royalties to musicians, songwriters, and others. On top of that, it’s attempting to provide artists with tools that enhance the other side of the business, geared toward music shows and selling merch. Earlier this year, the company even teamed up with Bandpage for this very reason.
We’ve already written extensively about the thought process behind Taylor Swift’s (or rather, her representation’s) decision to yank songs off of Spotify. The move is likely based on the fact that Swift is probably the biggest music artist on the planet right now and is confident she can pull in more money from CD sales if she yanks her music from Spotify than she can earn by staying on the service. Swift’s label, Big Machine, is also probably using this opportunity to show its strength, since it’s currently trying to sell itself for over $200 million.
The downside to Swift yanking her music from Spotify, however, is that the service — and by default the business of streaming music — gets demonized in the process. Neither Swift nor her managers have said a word publicly about Spotify since that happened, too. And there’s probably a good reason for it.