Going Against The Stream

Songwriter Aloe Blacc supports Taylor Swift’s high-profile decision to yank her music from Spotify:

The abhorrently low rates songwriters are paid by streaming services – enabled by outdated federal regulations – are yet another indication our work is being devalued in today’s marketplace. Consider the fact that it takes roughly one million spins on Pandora for a songwriter to earn just $90. Avicii’s release “Wake Me Up!” that I co-wrote and sing, for example, was the most streamed song in Spotify history and the 13th most played song on Pandora since its release in 2013, with more than 168 million streams in the US. And yet, that yielded only $12,359 in Pandora domestic royalties— which were then split among three songwriters and our publishers. In return for co-writing a major hit song, I’ve earned less than $4,000 domestically from the largest digital music service. If that’s what’s now considered a streaming “success story,” is it any wonder that so many songwriters are now struggling to make ends meet?

But Bill Wyman argues that Swift was unwise:

Why? Because we can already see where folks are going to get their music if they decide a streaming option like Spotify doesn’t give them the service they want. Here’s what Swift’s — and Spotify’s — real competition is:

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That’s a screenshot of just part of a Pirate Bay page dedicated to 1989 torrents. I count about 7,000 folks sharing the thing right then, a week after the album came out. (With that many seeds, downloading an album takes about 45 seconds, so you can imagine the churn.) A single page on a different BitTorrent site, Kick Ass Torrents, said that just one particular torrent of many for the album had been downloaded close to 110,000 times. And remember that this comes in the face of what I’m sure was a strong behind-the-scenes campaign by her label to keep the thing off the illegal networks.

Spotify’s per-stream payout seems small, all right, but it’s a lot bigger than the Pirate Bay’s.

Meanwhile, Felix Salmon takes the opportunity to make a case for oligopoly:

The fact that there are only three major record labels is a godsend to the world of digital music. It means that if you’re trying to do anything innovative with digital music, you basically only need to deal with three counterparties. Once Spotify or Rhapsody gets three contracts signed, for instance, they can effectively tell the world that they’re offering all the music you might ever want to listen to. Sure, there will always be a few exceptions here or there. But, as anybody with one of these services knows, you can generally play just about any album you want to listen to. It’s an amazing, magical thing— and it’s a service which, to boot, is generally offered on a freemium basis. To have the world’s music at your fingertips, these days, you don’t need to do anything illegal, and you don’t need to pay a penny.

In contrast, he says, small record labels such as Swift’s Big Machine are “a real headache for digital music services, especially when they have ulterior motives“:

The majors can be counted on to drive a hard bargain but ultimately to act in their own best interest; with independents, that’s not always the case. What’s more, streaming contracts with big labels generally operate on a Most Favored Nation basis: whatever the label offers to one streaming service, it has to offer to everybody else. That’s good for competition and innovation — but again, it’s not necessarily something which happens as a matter of course with independent labels.

Joshua Gans disagrees:

Salmon fears instead that what Swift might do is strike an exclusive deal with just one retailer (or broadcaster or streamer or what have you) and we won’t be able to get our music in one place. This happens with video but the consequences aren’t too bad there – after all, we have always had to switch channels and I think in a little while our devices will make that easy too. … [And] that remark Salmon makes about ‘most favored nation’ clauses being for competition and innovation is completely and utterly wrong. They are terrible because they drive all these services towards a common business model and diminish experimentation. When someone who does a deal with Pandora is forced to offer the same terms to Spotify, that doesn’t give Spotify room to move. It means the first service to strike a deal can mould the entire industry going forward.