Spotify CEO Daniel Ek responds
Daniel Ek, CEO of Spotify, wrote a blog post to clarify Spotify’s position on Taylor Swift pulling her catalog from Spotify, artist payouts, and Spotify’s business model in general. A few select pieces that stuck out to me:
Piracy doesn’t pay artists a penny – nothing, zilch, zero. Spotify has paid more than two billion dollars to labels, publishers and collecting societies for distribution to songwriters and recording artists. A billion dollars from the time we started Spotify in 2008 to last year and another billion dollars since then. And that’s two billion dollars’ worth of listening that would have happened with zero or little compensation to artists and songwriters through piracy or practically equivalent services if there was no Spotify – we’re working day and night to recover money for artists and the music business that piracy was stealing away.
True, piracy doesn’t pay artists money directly, but the one thing piracy does that no other model with money involved can provide is broaden the audience that it can reach. If your music is free there are the fewest amount of barriers between the artist and the listener which can result in a larger fan-base and, thus, revenue. It is not sustainable, of course, but to just paint it as $0 vs. $2 billion isn’t accurate.
Spotify has paid more than two billion dollars to labels, publishers and collecting societies…
As I said, we’ve already paid more than $2 billion in royalties to the music industry…
Now, let’s look at a hit single, say Hozier’s ‘Take Me To Church’. In the months since that song was released, it’s been listened to enough times to generate hundreds of thousands of dollars for his label and publisher.
At our current size, payouts for a top artist like Taylor Swift (before she pulled her catalog) are on track to exceed $6 million a year…
Not once did he mention how much money goes to the artist. It is a bit unfair to expect him to know what those numbers actually are because it will fluctuate with each artist depending on many factors such as contracts and amount of splits involved, but to just gloss over what the artist is actually receiving is disappointing, if not somewhat deceiving. The main gripe is about an artist being able to earn a living, and this piece posits that a blanket payout to the entire music industry of $2 billion makes everything right.
He also mentions the theory behind their “freemium” model:
We believed that as fans invested in Spotify with time, listening to their favorite music, discovering new music and sharing it with their friends, they would eventually want the full freedom offered by our premium tier, and they’d be willing to pay for it.
Then later in the piece adds:
We don’t use music to drive sales of hardware or software. We use music to get people to pay for music.
I’m pretty sure that the “full freedom offered by our premium tier” is not unlocking more music to listen to, but rather the features in the software that allow users to listen music more freely. That is using music to drive the sales of software, or software as a service.
Don’t get me wrong, I think Spotify is a great service. Most everyone I know has a subscription. But as I mentioned before, Spotify is a piece of technology, music is the king and must be treated as such. There just has yet to be the proper balance of technology, music, and monetization that works for all players in the music industry.
