Spotify wants to pay artists less for the music they make as it tries to cut a deal with the majors while preparing for its IPO. These attempts are generating a lot of criticism from those in the know.
Sean Glass is an indie label boss and helped launch Apple Music, though he is no longer an Apple employee. He was also the cofounder of the now defunct WinMusic service, so he knows plenty about the streaming music market he helped to build, “I’m no longer employed, I have no horse in this race. But I fully support Apple as the leader and only relevant party,” he wrote.
He’s no great fan of Spotify. Not only is it insufficiently supportive to indie labels potentially because major labels own part of it and stand to make millions from the IPO, but he also claims it fails to invest in musicians. “Exclusives are not the problem, major labels owning the streaming services and all of their playlist functionality is,” he writes.
Less is not more
That these criticisms come as major labels renegotiate their Spotify contracts is significant. Spotify at present pays majors 55 percent revenue share, in contrast to Apple’s 58 percent. Now the Apple competitor wants to pay less than that – and this inevitably means even less money will be given to the artists who make the music we love. So what else does it have to offer those acts?
Not a lot, points out Glass. The service “ha[s] never invested in artist’s content, and [is] now renegotiating [its] rates to pay artists LESS than they already were,” he says, pointing out, “Apple is paying higher royalties, and investing tens of millions in content that artists could never create without them.”
That’s not entirely true. Spotify has had a tie up with Metallica for a tour video, and does have an active playlist community (which Glass thinks is “dominated” by major label acts), but you’d be hard-pressed to find any big investments in new talent. Apple in contrast has made huge investments in supporting acts, from the Frank Ocean exclusive through to different forms of support for a diverse number of artists, from Taylor Swift through to Anderson Paak and more.
About Apple Music
“There were tons of music videos that I can’t go into detail about, but just would not have existed without Apple’s involvement,” Glass states.
Apple Music exclusives are accompanied by “exciting added content”. That’s everything from helping artists put together great videos, to live streams, physical collectible products and more. This isn’t just about footing the bill, either, these efforts represent ,“Intimate creative involvement from the Apple side, down to actually directing videos,” he says. All this activity is led by one incredibly creative individual at Apple Music, Glass explains.
It can’t possibly be completely altruistic.
All the same, even if these exclusives help Apple Music build its subscriber base, these investments in artistic careers deliver real benefits to those it champions.
Some think it may make sense for Apple Music to take over the role of being a record label, but one it is not attempting to do is to shore up its business by paying artists less. In future I think it possible it could start an Apple Music video channel on Apple TV, which would probably be very popular.
Why it matters
Streaming has become the dominant force in music access. The music industry association, the IFPI says it has grown to represent 19 per cent of global industry revenues, up from 14 per cent in 2014. “Streaming now accounts for 43 per cent of digital revenues and is close to overtaking downloads (45 per cent) to become the industry's primary digital revenue stream.”
However, even though there are signs of health, “The revenues, vital in funding future investment, are not being fairly returned to rights holders,” said IFPI Chief Executive Frances Moore.
Spotify’s attempt to reduce payments comes as recent IFPI figures estimate it paid record companies just $18/users in 2014, eighteen times the $1/user Google’s YouTube service coughed up.
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