Sounding Off
How Spotify turns artists against one another to turn a profit
Spotify the Villain, Spotify the Hero - Hasty Generalizations
Spotify makes for a perfect villain. The headline could read, “Giant tech corporation makes promises of change, leaves artists still struggling and makes off like a bandit.” And while this clickbait title doesn’t tell the whole story, something definitely sounds off about a model which puts millions of dollars in the pockets of some, while millions pocket pennies.
The International Federation of the Phonographic Industry published a report in 2024 that demonstrated that the recorded music industry had experienced growth for the ninth year in a row. And according to Spotify, it paid $4.5bn to “independent artists” in 2023, which represents almost 16% of the $28.6bn that the entire music industry generated that year. But it can be very hard to make sense of numbers like this - is that high or low and how does that translate to the individual? In a way, data like this can be unhelpful in telling the story of what musicians are experiencing today and how streaming services are impacting them.
My personal network of people paints by no means the most comprehensive or authoritative picture of the music industry as a whole, but when you’re trying to make music and put on shows, people talk about how to make it work. Best practices, tips and tricks are so nebulous and constantly changing because the industry is constantly changing that talk is all we have - there’s no universal playbook. And so I’ve had dozens and dozens of conversations with artists who are either signed or trying to get signed, or just gigging as a matter personal necessity, about how they manage to keep finding time to come back to music, to keep developing their skill and craft without getting worn out by their day jobs (because nobody - even the most successful of us - makes money exclusively from music).
In my personal community, the consensus on streaming is not entirely negative. I can name a handful of examples where musician friends of mine have been able to make a living from streaming royalties. One friend owns an indie record label which makes its revenue primarily from streaming and they recently hired a new employee. Another friend developed a significant following on TikTok (close to 3M likes and 86K followers) during the pandemic and, while Canadian artists can’t make money from TikTok or Instagram views (unlike our American counterparts), he said that he sees a significant bump in streams whenever a video gets a decent number of plays. He told me that he makes between $600 and $1000 a month on streaming revenue.
What’s more, Spotify and services like it have solved a significant problem in the music industry in creating a distribution service that can, with a relatively small amount of effort, connect an artist with listeners that would otherwise have been completely inaccessible to them. Streaming (in conjunction with social media, it must be said) has created a reality in which a metal band can sell out a show in India before they have even played there once (true story - happened to a friend of mine). There is a democratizing element to streaming.
Or at least there has been.
Things are changing at Spotify and these limited examples of success can’t reasonably be used as a defence against the potential harm that Spotify’s streaming model causes on the industry.
Content with Content
In a recent article for Harper’s magazine, which is an excerpt from her recent book “Mood Machine: The Rise of Spotify,” Liz Pelly argues convincingly that Spotify is not working for artists. That is to say, it’s not working for artists who create a kind of art that we have traditionally relied upon for music. In the article, Pelly outlines her research into “fake” or essentially “virtual artists” who produce music designed to fill playlists and are promoted more frequently on Spotify in exchange for a smaller cut of the premium through a program called “Perfect Fit Content” (PFC).
It’s largely through this program that Spotify has generated its first annual profit since its incorporation in 2006. The name of the program is the perfect fit for itself, since it reveals what the music is to the execs at the company: Content. The logic goes that if people are just looking for a soundtrack to their daily lives, then perhaps Music is not what’s required. Perhaps Content is sufficient. And since artists are being paid to create this Content, then surely this is good for artists.
Pelly talks to a number of people who have had direct contact with this model on the inside, including playlist editors and content creators who say that this is happening with increasing frequency. But in the absence of cold, hard numbers about whose music is being pushed on playlists and promoted in the algorithms (not readily available for obvious reasons), we can reasonably assume that the prevalence of Content is likely very high and only going to increase. Spotify will invest in a large pool of its own music made by artists that no one really knows or is looking for, but sounds similar enough to what’s popular that it can pass for the music people want. It’s a near certainty that Spotify will place on its playlists music that it owns rather than promote music it has to pay full price for.
So much for democracy.
A musician eating its own tail
Part of this is our own fault. As listeners, our habits are often very passive. For the most part, we aren’t actually as interested or invested in who the artists are and what their story is as we are interested in having a sonic backdrop for our lives. And artists are at least partially to blame to the extent that they are the ones participating in this new business of music-making.
But musicians are divided about the ethics of participating in Content creation. Some artists see no problem getting paid work making music, even if it’s not the music that they are promoting under their own name. There are now numerous examples of this practice that are well documented including one artist, Johan Röhr, who is alleged to have amassed 15 billion streams over 656 different artist names. This is obviously bad for independent musicians and the labels that sign them, which get a smaller cut of the subscription service fee that Spotify collects because Spotify pays artists out as a proportion of the total streams. Less money translates to less capacity for artists to make new music and less capacity for labels to seek out and promote new and emerging talent, something independent labels do best as entities that are more connected to the key players in their respective genres.
It’s not just hard for indie labels, though - content farms are bad for the industry as a whole. Musicians who work for Content farms like the one Röhr worked for make loads of money, which, whether you like what he made or not, is still a musician who’s getting paid. But it’s important to point out that it’s Röhr’s skill in emulating different genres that is being leveraged to generate huge profits for a corporation. The creators of the genre itself, the ones who put the time in to innovate and create something new, that would resonate with audiences, are not being paid for their original work. Even Röhr might be unable to bring the music he is most passionate about to market at a fair rate because some other artist is probably undercutting him.
Understanding why this is a serious issue requires an understanding of how music is made, and how the skills and sounds that eventually become the music that we all know and love are initially developed in small communities. Good music is good because it is culturally relevant. And cultural relevance comes from that magic combination of musical skill, life experience and access to tools that makes people able to distill an experience into something with cultural cachet. Someone in Sweden who knows nothing about hip-hop lifestyle can identify a subculture that resonates with a particular sound and co-opt that style for their own financial gain, leaving the original creators of this trend collecting pennies. Content creators are not doing this innovative work, or at least this is not the work that they are being compensated for fairly by Spotify. They are skimming off the top, benefitting, much in the same way that large language models benefit, from the hard work and human labour that sees individuals taking risks and testing new material on their communities to see which resonate most.
When this becomes one of only a few music-related sources of income, it puts musicians in the position of having to sell out their fellow musicians in order to make money doing music. As Spotify replaces music with Content, it will increasingly employ musicians against one another to undermine original creative work by creating copy-cat work that they can then buy at a discount.
The more things change, the more they stay the same
It might be tempting to think that the Major Labels will see this as a kneecapping of the industry upon which they rely. The Majors have largely set streaming rates by negotiating access to their music collections - it would be theoretically possible for them to negotiate a higher rate. But, in a bizarre twist even for capitalism, some of the Majors, including Universal Music, are actually incentivized to de-monetize their own artists, as the profitability of Spotify becomes more valuable to them as shareholders of the company than as collectors of streaming revenue.
Spotify itself is dismissive of the debate about the ethics of their approach, which is unsurprising given that capitalism is a process whereby ethics are set on fire and the ashes are sold in a plastic urn for a profit, but it makes Spotify, a company which started as a self-proclaimed defender of the small artist and a “leveller of the playing field” in a market dominated by the majors, into another example of how quickly high minded ideas can be co-opted to serve capital when put through the machine. The structure of publicly traded companies dictates that profit be the only motive. And as a company that only recently turned a profit, Spotify can argue that it’s paying artists as much as, if not more than, it can. It’s claim to have paid out $4.5bn to “independent artists” in 2023, is an objectively staggering number. But who are these ‘independent artists”? How many of them are PFC composers? And how is this fee structure affecting the ability of artists to continue to make the new and engaging work that we crave?
The music industry is famously cruel. It doesn’t care if you get sick from playing shows without proper ventilation; it doesn’t give you benefits or sick days or mat/pat leave. It will steal your work if it can, underpay you if it can’t, and definitely force you to sell merch to make ends meet (itself made under questionable working conditions, and from which the industry will often take a significant cut). None of this is Spotify’s fault - it’s been a tough business since before Mozart died (un)famously in a pauper’s grave - and to place our societal undervaluing of music-making labour squarely on Spotify is admittedly unfair. But great music is a public service. We need the “best and brightest” (a term you hear in education a lot) to be making music that will dazzle us, bring us to a better version of ourselves, bring us out of misery, help us see God. And a company that relies on artists to function has a responsibility to consider their working conditions and compensate them fairly.
The terms of the financial contract with musicians is changing as a result of streaming, and as these new rules are being written, it makes sense to remind people of how little artists get paid, and to demand some change in these conditions. Some of the artists who produced some of the best music last year, in my opinion, are hanging up their skates (hockey idioms are popular among young Canadian readers) because making music continues to be an incredibly tough business despite the millions being made in the industry. We are seeing vast disparities, across multiple industries, between the CEOs and the average worker; the music industry is no exception. This disparity is not simply “the way business works” - the average take-home for a CEO in America is 3-4 times more than the average take-home of the CEO of a comparable Japanese company. So when Daniel Ek cashes in to the tune of $35.8 million (just a fraction of his purported net worth), while 158.6 million artists have their work entirely devalued, their share of the revenue channeled to artists signed to Major Labels, PFC artists, or other artists that Spotify deems better for their bottom line, there’s a direct line connecting those two numbers: if each of those 158.6 million artists had just 75 plays each, it would pay for Ek’s new fortune. Part of the critique of Spotify lies in its exploitation of existing power imbalances, and its refusal to challenge the status quo. An entity can be criticized for profiting from and perpetuating poor working conditions, even if it hasn’t caused them.
Imagining an alternative is a whole separate thing. I’ll weigh in on that another day. Suffice it to say that there are seeds of hope.
Determining the value of music: Substance over form
I think the real question we’re collectively grappling with is What is music worth? As a way of understanding how much we should be paying for music, and how much artists should be earning. It seems safe to say that music is worth “a lot,” but the general approach to justifying this statement of floating metrics about money spent, and tickets sold may not truly apply here. These metrics just indicate how much money people are willing to spend on music in a capitalist market, and how much money corporations are making on music reduces its value to a dollar figure, which fails to truly address the question of music’s value.
Our need for music is one that expands to fill the space that we give it and is deeply personal and connected to context. As anyone who has studied music knows, the more you know about music, the more you get out of it. In fact, this is literally true of music from a psychological perspective: we get pleasure out of having expectations about what will happen next and either having those expectations met or being surprised by what came next. Without any expectations, or without paying attention enough to let our brains expect something, we get no pleasure out of it.
The prevalence of earbuds and bluetooth speakers has done for music listening today what FM radio did in the 1930s. We can listen to music in the background, our experience dictated by a cast of music curators - DJs in the 20th century, and algorithms and playlist editors in the 21st. Spotify is capitalizing on this trend as we use music to get our work done, to burn some extra calories, to get a good night’s sleep, etc. and perhaps we don’t need this music to be made by “premium” artists. In fact, it’s easy to imagine a future in which AI creates pleasing music for these occasions and nobody seems to mind.
It’s difficult to imagine, however, a future in which Content has replaced our need for Music. When experienced fully, music invites us to become attuned to what wells up inside us when different elements combine; it helps us mourn the dead; it gives us a reason to flail our limbs in public and express our love; it is the inspiration to gather together and experience something with others. It is an essential means of communication from one human to another. But the value in this case is less attached to our monetary framework of understanding. It’s difficult to assign a value to things that just make us feel more human, and have no objective or fixed value, but which might become extremely valuable in the right context to the right people.
It’s clear that we need humans to make this kind of music. And it’s therefore reasonable to ask, “How are we taking care of the artists that make this more meaningful kind of music, the kind that doesn’t just accompany our lives, but has the potential to alters its course completely, to be a lifeline, to give us experiences that are truly transcendent?”
One can ask this question from an ethical or altruistic standpoint, but the answer is important even from a selfish point of view as it is listeners who suffer the most from the undervaluing of music. As Spotify essentially devolves into easy listening radio minus the nostalgia hits from familiar songs, a greater number of artists will call it quits earlier, lacking the resources to support their dream of making new music for the masses. This leaves us all holding a bag full of potentially lesser songs, or at the very least, selecting from a less diverse pool of options that may or may not speak to us in quite the same way as someone else's music would have.
Symptoms of a deeply disconnected society
In a review of Pelly’s book in The New Yorker, Hua Hsu writes, “I’ve never heard so much music online as I have over the past few years yet felt so disconnected from its sources.” It reminded me of an observation I had while visiting my parents in the suburbs, that this was such a connected place in one way, with access to everything through Amazon Prime and proximity to a highway, and yet deeply disconnected in another, in the presence of asphalt and the absence of humans (unless walking dogs), everything hermetically sealed in climate controlled environments. It’s the same observation I have about kids these days in my work as a teacher - they can tell you all about so many things that they read on the Internet - they know so many things! - and yet they know so little about the function of that knowledge. What do I do now? Why should I do it? These are questions only humans can answer. I think what draws us to music, in many cases, is that music contains human answers to these questions.
If we separate the discussion of ethics in multinational corporations under capitalism from the discussion about Spotify, we are left with a discussion about what we want music to mean and how we preserve our ability to make meaning through music. There is a significant market for music that people listen to passively - and sure, maybe this music doesn’t need to be premium music of the variety composed by Freddie Mercury, Neil Young, or Tupac. My concern is that, in becoming farther and farther from the source of a musical idea - by consuming Threepac, Neil Youngsson, and Steady Mercury (cut me some slack on the names) - music will become yet another source of connection/disconnection. There was, in the pre-streaming age, a certain magic in being gifted music: a mysterious album cover gave way to the mysterious sounds locked inside, entrusted to you by a trusted friend or older sibling, a treasure not easily replaced and, thus, rewarded repeat listens which unlocked layers of meaning with each rotation of the disc/tape. And I don’t think I’m just appealing to nostalgia here - I think there is something genuinely lost in the exchange when human pieces are substituted for machine pieces. Or when humans act as machines or in service of a machine.
Big Tech is trying, as it always does, to distill these human pieces into machine pieces, which can then be owned and sold. But the profit motive is the obstacle that cannot be overcome in this distillation of human labour into machine labour: the human inclination to build relationships with each other resists market valuation. There will always be something more appealing about making human connections than letting machines do the same work, even if most of the time we allow it for the sake of convenience. We don’t always want a machine to hand us new artists on a platter - we want to discover them organically in order to feel connected to something, in order to feel like our experience of the world is somehow a part of something, or to experience how others have found a way to feel connected to something that we are not. We need this sense of wonder or this source of connection.
I have yet to fully read Pelly’s book, but from the short bits I have read about it, it seems as though Pelly draws the same conclusions that my friends at Water & Music have arrived at: that Indie Labels, which love music first and foremost and therefore care about the conditions of their artists, will prevail. And new ideas like Subvert, an artist-owned cooperative version of Bandcamp, will be the true future of the industry. The commodification of human gestures like selecting music that might change someone’s life is bound to fail because the relationship between people is singular : a person knowing a person cannot be replaced by a computer knowing a person. One has joy and care and compassion at its heart, the other cares only about its own hard-wired agenda which, in our society, will only be profit.