by Emma Parkinson
Photo courtesy of Spotify
A college student sits in her dorm room attempting to finish the piles of homework that sit on her desk. She opens her laptop, deciding that some music might help her focus. Spotify is already on the screen, ready for her to play. She clicks on her “Discover Weekly” playlist and doesn’t think about anything except how much she needs to finish her math problems. She doesn’t know how the artist she’s listening to gets paid, or how streaming is changing the music industry. She doesn’t think to ask: How does streaming work?
Launched in 2008, Spotify has quickly become one of the most successful streaming services available, boasting over 75 millions users and 1.7 billions hours of listening each month. Users have the option of creating a free account, meaning they have to listen to ads as well as songs, or a premium account for $9.99/month with no ads. Students are given a special deal of $4.99/month and receive the same privileges as premium users.
Samantha West (CFA ’19) loves the student deal.
“It’s the price of a large coffee,” she said in an interview. “A large coffee that I can sacrifice in order to hear whatever music I want, pretty much whenever I want.”
The progression of streaming has affected more than just the accessibility of music. According to “19 Important Things That Happened to Streaming in 2015” from The Fader, the Billboard 200 chart began to include streaming data at the end of 2014, just as revenue from streaming in the U.S. broke $1 billion. A few months later, Jay-Z created Tidal, a creator-oriented service. Apple Music launched in June after an argument with Taylor Swift over artist payments, and had 15 million users by October.
Recently, the Recording Industry Association of America (RIAA) moved to include streaming into its system. 1,500 audio/video streams are the same as 10 track sales, making one album sale. This gave 17 albums new certifications earlier this year, including updating Kendrick Lamar’s To Pimp A Butterfly to platinum and The Weeknd’s Beauty Behind The Madness to double platinum.
Does this really benefit the artist? Spotify’s Terms and Conditions say so, but local artist Ray McNamara thinks it could be better. A member of Afrobeat band “Big Mean Sound Machine” and the creator of Avant-pop “The Ghost of Electricity,” McNamara’s life is all about music.
“I think the service that streaming sites provide is the future of music,” he said in an interview. “It's 2016, we've got the technological infrastructure for anybody with a decent Internet connection to have access to any digitized recording.”
McNamara thinks Internet streaming should adopt the same procedure as the radio, where the government regulates the amount the writers get paid when the song plays on the radio.
“I think musicians would benefit from that, and we would get music would become better for it,” he said.
Spotify explains how artists are paid on a section of the website designed to answer questions from content creators. “Spotify pays royalties for all of the listening that occurs on our service by distributing nearly 70% of all the revenues that we receive back to rights holders,” it says. Rights holders refer to labels, publishers, distributors and, through certain digital distributors, independent artists themselves.
“That 70% is split amongst the rights holders in accordance with the popularity of their music on the service. The label or publisher then divides these royalties and accounts to each artist depending on their individual deals. When we pay a rights holder, we provide all the information needed to attribute royalties to each of their artists.” The website notes that independent artists retain up to 100% of the royalty payouts if they use a suggested partner.
Rights holders are paid an average of between $0.006 and $0.0084 “per stream,” though that is not really how Spotify measures payouts. This number is a combination of activity across all Spotify services, whereas the payout from Premium users is higher.
Local artist and producer DeVon Campbell thinks that this system untimely supports what music is about.
“I think the streaming services benefit listeners, which is good because not a lot of people get a chance to listen to as much music as others because they can afford to buy albums like that,” he said. “My goal is to live off of my craft, but at the end of the day, the influence and the reach to fans is much more important in my opinion, from both a business and a personal standpoint.”
West agreed that availability is important. “With Spotify, illegally downloading music is something that doesn’t need to happen. Spotify is accessible and affordable for most college students.”
That is a large part of Spotify’s mission. “Young people and teenagers are the most likely age groups to pirate content and are also the least likely to pay for a music service,” says the website. “Spotify has been successful in convincing this younger generation to abandon piracy and begin using and paying for a legal service.” A recent study showed that 55% of 18-29 year old pirate less when offered a free, legal alternative.
And in the end, it should be about the music. Artists and their fans are meant to build relationships through music, and Spotify is a perfect medium for it. Larger names in the industry seem to have problems with the way that streaming has changed things, but if it’s spreading the connections, isn’t that a good thing?