ARI SHAPIRO, HOST:
Musicians in the age of streaming cannot, quote, "record music once every three to four years and think that's going to be enough." That pronouncement came from Spotify CEO Daniel Ek in a recent interview with the website Music Ally. His comment made a lot of musicians angry and reignited frustrations over how much Spotify pays artists. At a time when the company's business is doing relatively well, NPR's Andrew Limbong takes a look at how the cash is flowing.
ANDREW LIMBONG, BYLINE: When Spotify first became a publicly traded company in 2018, it set a bold goal for itself - to give a million artists the opportunity to live off their work. So how's it going? I asked Tim Ingham, founder of Music Business Worldwide, a global music industry analysis site.
TIM INGHAM: They're never going to get to a million artists. The math doesn't stack up.
LIMBONG: In part because Spotify can't serve two masters - the musicians it streams and its investors.
INGHAM: Any pretense that they are operating in the interests of anyone that is not Spotify and/or a Spotify investor is a lie.
LIMBONG: Let's take a band like The Kominas.
(SOUNDBITE OF SONG, "TWIST THAT KNIFE")
THE KOMINAS: (Singing) I've got a knife.
LIMBONG: Drummer Karna Ray likes having their music on Spotify because of its global reach. But...
KARNA RAY: As a form of payment, I don't think anybody sees it as legitimate.
LIMBONG: Ray says the band made $4.18 for around 2,000 streams in June. Ray is a member of the Union of Musicians and Allied Workers, which is not a union in the strict sense of the term but a relatively new group that started at the beginning of the pandemic to help organize out-of-work musicians during a time when clubs are closed and nobody can tour. Daniel Ek's comments spurred them to meet, virtually of course, to talk about how the streaming economy puts artists, especially smaller indie ones like Ray, at a disadvantage.
RAY: It's an old tactic to point at workers within a particular industry and say that you have to work harder because the people that will achieve more will have their rightful outcome of a living wage.
LIMBONG: Right now if you wanted to make, say, a thousand bucks a month on Spotify, analyst Tim Ingham says you'd need about 200,000 streams per month. This is a rough estimate because Spotify doesn't pay artists per stream. Instead, the company takes all of the money it earns from subscriptions and advertising and puts it into one pie. Then it uses a complex formula to divvy that pie up between the artists, with those who get the most streams basically earning the most money. So say across one accounting period, there are 3 billion streams on Spotify.
INGHAM: Your personal market share, if you like, of those 3 billion streams will be the percentage of the total money that you get paid out.
LIMBONG: Meaning a band like The Kominas has to share a pie with the Drakes and Taylor Swifts and Ed Sheerans of the world who, you can imagine, eat a lot of pie. David Macias is the president of Thirty Tigers, which provides artists with the kinds of services a label would. He says this model of payment gives an advantage to artists who are popular with younger people with time on their hands who constantly stream.
DAVID MACIAS: Perhaps splitting up the pie where our $10 a month goes proportionately out to the artists that we've listened to might help even the playing field.
LIMBONG: What Macias is referring to here is what's known in streaming circles as a user-centric model. Essentially, if I pay $10 a month to stream but I only listened to The Kominas, that band would get all of my $10, minus Spotify's cut. And there are companies that use this model, like Spotify's competitor Deezer. But Macias says streaming has been good for the health of the music industry. According to the Recording Industry Association of America, revenues bottomed out at a little under $7 billion in 2015, and according to the latest numbers from 2019...
MACIAS: The industry has climbed all the way back up to $11.1 billion, which - you know, that's a 65% increase over four years.
LIMBONG: But that's a small comfort to the millions of non-superstars on the platform scrambling for leftover pie.
Andrew Limbong, NPR News.
(SOUNDBITE OF SONG, "TWIST THAT KNIFE")
THE KOMINAS: (Singing) Twist that knife. Twist it, twist it.
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