How To Solve The Spotify Problem

We can't - recorded music is valued just above toss

It’s that time of year for the ritual complaints about Spotify. Woes, musicians can’t get any money.

The reason for this is that we out here, the Great Unwashed, value recorded music at something just above toss. Therefore musicians get paid, on average, just above toss. And there we have it, there’s the whole and the complete of the thing.

Spotify is trumpeting big paydays for artists – but only a tiny fraction of them are actually thriving

Yep.

$10bn is a hefty number, but it needs to be closely examined. This money, around two-thirds of its total income, is what Spotify has paid through to record labels and music publishers. Spotify cannot be held responsible for egregious label and publisher contracts, but it needs reiterating that only a portion of that $10bn will make its way to the people who wrote and recorded the music.

The company also says this $10bn is “more than any single retailer has ever paid in a year” and is “10x the contribution of the largest record store at the height of the CD era”. That may be true, but it says less about Spotify’s benevolence and more about how streaming’s market share has mostly consolidated into the hands of four global heavyweights – Spotify, Apple, YouTube and Amazon.

Only one part of that has any relevance. The $10 billion and the 2/3rds.

Obviously there are costs to running a company. To running the servers which hold near all of all recorded music. Of being able to get that out onto the internet.

The $10 billion (OK, 15) is about what people think music is worth to them.

OK, we can expand out to the industry if we prefer. So, call it $40 billion for all streaming. Why not? So, 200 million people are willing to pay $200 a year each. Or 400 million $100. Don’t worry too much about the absolute accuracy here, think orders of magnitude.

Or, perhaps we want to say 2 billion people are listening. The vast majority of whom are not paying anything, they’re just suffering the ads.

Well, OK, this is what people value access to the entire history of recorded music at. We do know that people don’t value it all at $1,000 a year, $2k, because if they did then Spotify would be charging it. So the overall value here, the revenue stream to be split, is not $400 billion, or $800b. It’s that $40 big ones.

But there are million upon million of musicians who have recorded stuff out there. If it’s 1 million then on $40b revenue that’s $40,000 a year each. Which is nice but not wholly a living for an entire band. If it’s 10 million (and it’s possible to point out that the deeper depths of recorded, vinyl pressed, music include me on both banjo and trumpet, though not as entertainingly as both at the same time, and bootleg tapes have me on garden hosepipe too) then that’s $4k each a year. Per band. And there are more than 10 million pieces out there, very many more. I’m willing to bet that there’s more than one performance of 4’33’’ on Spotify in fact.

Then we get to how the music business is a tournament market. Returns follow a power law, those at the bottom gain, aggregated, some tiny fraction of all rewards, the top 5 or 1 or even 0.1% make a living and the very tippy top of the top 0.001% get to launch their own marque of brandy. Just like acting in fact.

None of this is anything to do with streaming, Spotify, capitalism or anything else other than this one simple fact.

The reason your really important socially relevant indie band is touring the upper peninsula, still after all these years, the bogs are your changing room and the only rider you’ve been able to achieve is access to tap water, is that the general public values your output at some fraction above toss. Therefore you earn that fraction above toss.

Really, that’s it. It’s not capitalism it’s general public indifference. Really, folk just don’t care.