Challenging the Spotify Narrative: A Music Publicist’s Insight on Artist Payouts and Market Saturation — A Truthful Take on Streaming Economics
I can’t sleep, so let’s stir some shit up.
Good morning, my lovely musician friends! I have seen your cries and complaints about Spotify, and it’s time to give some of you a spoonful of truth — and I promise it is done out of affection, even though many of you will not listen. I look forward to your non sequitur replies, although I will not respond. Some of you might remember my 4000-word viral essay on Spotify from 2 years ago when I dug into their financials to figure out: Is Spotify taking advantage of musicians?
Several music outlets published it, and you can still find it if you’re so inclined, but I can save you some time because the answer is no. Here’s why:
Spotify is not the evil empire trying to take advantage of you. There are too many musicians and insufficient subscription money in this saturated market. Too many artists fail to grasp the intricate economics that underlie the streaming business. The numbers are cut and dry.
To better understand, let’s delve into Spotify’s 2022 financials (which I will link at the end of this thread if you want to look for yourself). They shed a lot of light on the company’s economic challenges. Despite what would seem like an impressive 21% increase in annual revenue, reaching an astonishing €11.72 billion ($12.77 billion), Spotify reported a net LOSS of 270 million euros in the fourth quarter alone. This highlights the delicate balancing act required to ensure fair artist payouts while also maintaining the company’s own financial health. 70% of Spotify’s revenue is already allocated to rights holders. But what seems like a massive amount of money actually leaves little wiggle room for drastic increases in artist payouts when you factor in the number of artists.
Why? Imagine the music industry as a toilet bowl and the influx of artists and songs stopping it up. As streaming platforms continue adding more content, the water rises to a point where it is unmanageable. Eventually, the bowl can’t hold anymore, and it overflows. This overflow represents the oversaturation of the market. The number of artists is growing exponentially faster than the rise in fans. The math’s not mathing.
There’s way too much music, y’all, and way too many musicians who think they are owed a living wage simply because they’ve chosen music as a profession. There are over 11 million artists on Spotify. Imagine if there were 11 million music publicists, and we all complained that we should be paid a livable wage simply because we decided we wanted one.
The simple fact is that not enough money is being paid into streaming services to give all musicians the financial benefits that so many think they are owed. Many often decry Spotify’s allocation of funds to high-profile deals, like Joe Rogan and FC Barcelona, arguing that these resources could be better used for artist compensation. However, reallocating these funds would have a negligible impact when spread across the vast number of artists on the platform. Plus, these deals are pivotal in attracting and retaining users, ultimately contributing to Spotify’s overall revenue stream. They, and all the streaming services, are battling just as hard as many artists are for listeners — just on a much larger scale. How many apps, games, and video streaming services do you divide your attention between?
Research suggests that the average person uses about 9 apps daily and around 30 apps monthly. The average internet user has accounts on more than 8 different social media platforms. On average, households subscribe to 3 to 4 streaming services. Our entertainment dance cards are full. And listening to music has become a passive act, leading to people wanting to pay less and less for it.
The clamor by some independent musicians for “one cent per stream” fails to acknowledge the financial realities of Spotify’s operations. A significant increase in payouts would necessitate raising subscription prices, which risks alienating consumers accustomed to affordable access to music. Instead of paying more for Spotify, many might move to YouTube or finally set up that Amazon Music account they keep getting badgered about. And that would be really bad for smaller artists because the one thing that Spotify does better than other services is discovery. Furthermore, even with a price hike, the increase in royalty rates would still not be enough to make any real difference.
There was recently a total uproar over Spotify’s decision to no longer pay royalties to songs streamed less than 1000 times per year — but anyone tuned in had to see this coming. Spotify does not have unlimited accounting and manpower to process a never-shrinking number of payouts. Did I mention there are over 11 million profiles on Spotify now?
I decided to write this after seeing two particular inane posts on Threads yesterday. The first was from a musician complaining about the amount of money workers at Spotify make compared to musicians. What he failed to realize is that Spotify is a proven product that people are willing to pay for, and if you are not making money from your music — it is not. If people want to give you their money, they will.
The other was a reply to a post I made about many newer musicians not understanding the integral part a publicist plays in their career. Out of complete left field, this man replied:
“Please stop perpetuating the idea that artists should be responsible for anything other than creating and performing their art. The lack of fair, livable wages from venues and insulting streaming platform’s “paychecks” needs to be addressed before you victim-blame the artists. We’ve done enough for decades, yet it’s always our fault for not doing more.”
First, I don’t know what he thinks I said — but after I educated him, he must have realized he was out of turn because he deleted his post.
Here’s what I told him: I am exactly the same as a musician. I am a small business owner with no parachute, out here trying to convince people to pay me for my talents. I built, designed, and update my website. I manage my own socials, do my own sales, book consults, take meetings, network, send invoices, pay all my own bills, including web hosting and internet and phone and electricity, and all the monthly software fees. I buy all the equipment. I create content, coach my clients, create podcasts, write newsletters, manage online stores, and pay my own way to festivals, showcases and clients’ shows. No one is wining and dining me, or paying my insurance. For me, it’s sink or swim — just like it is for you. And how ridiculous would it sound if I constantly complained that I didn’t want to do any of that stuff — I JUST want to write pitches and press releases because that’s MY art.
Listen. No one likes it when I say this — but the fact remains that being a professional musician is a privilege, just like being a music publicist is a privilege. I am not owed anything, and neither are you. And you sound like a clown when you complain about the things you have to do to make money FOR MAKING MUSIC! You are sabotaging yourself.
It is possible to make a living doing what you love, but it is not easy — and that is a feature, not a bug. If everyone was good at it, you would be paid even less.
Artists of every kind must diversify their income sources. Relying solely on streaming revenue is untenable in a saturated market. That should be obvious. If you feel like Spotify does not pay a fair rate — take your music off Spotify and sell it yourself. But we both know why you won’t.
And now, I will tell you the two things every seasoned person in this industry knows but doesn’t want to say to you:
Success in any arts-focused career can rarely be predicted by talent — it’s predominantly based on your ability to connect with people and straight-up luck. It’s being in the right place at the right time and being ready to grab hold of any advantage you can. The longer you stick around, the more opportunities you get. And you may look at the musical field in your particular genre and want to argue that “so and so” is obviously undeniably talented and would be successful no matter what. And I will remind you that there are 11 million music profiles on Spotify. And 99% of them are not making a living from their art.
The point is — do not waste any of your precious time complaining about a system that isn’t fair and wasn’t created to be. You’re not serving your fans or your colleagues. And as I mentioned, you look like a clown.
To conclude, vilifying platforms like Spotify fail to appreciate the music industry’s broader economic dynamics. The challenges lie in the abundance of music options, the finite resources available to consumers, and the delicate balance required to maintain a profitable streaming service while ensuring fair compensation for artists.
If you have a solution, please speak up — if not, stfu and keep it moving.
Spotify’s 2022 PUBLIC Financial Report
