The Mechanics of Streaming: How and Why to Shame Spotify

In the shadow of WeWork, in front of a seafood packhouse and directly under a trendy unmarked headquarters in the arts district, a small crowd gathered. One of the coolest crowds I’ve seen in my days covering civil unrest. They made signs and chatted music and art, waiting for direction. 

The protest was aimed at Spotify and organized by UMAW, Union of Musicians and Allied Workers, as part of a mass protest against the streaming giant’s treatment of artists at their HQ’s world wide. 

The plan was to march into the Spotify courtyard and deliver them a list of demands along with thousands of signatures in support of those demands, and ideally speak to someone from the company directly.

But let’s back up. Why are all these musicians mad at Spotify? Don’t they help you get in front of a larger audience? Isn’t it a revolutionary tool that has helped thousands of artists, independent and otherwise, support themselves? 

Yes. Spotify unequivocally is all of those things, but good ideas can end up creating a really shitty reality. Facebook, a platform designed to connect horny college students (a good thing) has pretty much destroyed the world and made everyone’s uncles racist (a bad thing). Spotify, like Facebook, is a giant tech company and giant tech companies are 99.99% fucking evil in some way or another. 

In a roundabout way, musicians who participate in the streaming game all work for Spotify. Let’s substitute “stream” for “sale” for the sake of the analogy. Musicians make products which Spotify is able to sell via a revenue share model: for every sale, the creator and Spotify each get a cut. If you have a good product then it will sell well. If it sells well, you and Spotify (who facilitates your sales) both get rich as all hell. But Spotify, as we know it, works differently for musicians big and small. Essentially musicians give their music to Spotify for “free” and Spotify uses that music to attract subscribers who pay per month for unlimited streams of that music. Spotify then kicks back an infinitesimal amount of money per stream back to the artist. 

$0.0038 per stream to be exact. 

It takes 1000 streams to buy a cup of coffee. 100,000 streams makes you about $380 dollars. 1 million gets you about $4000. Pretty tough considering that 1,000,000 plays is a shit load. When you factor in band members, taxes, record labels, distribution companies, etc., that 4 grand from 1,000,000 streams gets chopped even further. Don’t quit your job at Pizza Hut, cause it’s incredibly difficult to make a living off of Spotify alone.

That’s why UMAW organized this day of protest, not only because Spotify pays artists like shit, but because there’s not much choice in whether or not you’re on there. When was the last time you paid an artist for their music? Yeah, I can’t remember either. 

They gathered in the courtyard and chanted. A group of construction workers in the area stopped what they were doing and gathered around the edge, filming and cheering on the unionists. “Solidarity!” one yelled, throwing his clenched fist in the air. Spotify, or their executives, refused to come out of the building. Instead, they called the cops. 

UMAW has a list of demands: $.01 per stream, adopt a user-centric payment model, be transparent, end payola, credit all labor on a recording, stop fighting artists. 

1 cent per stream is self-explanatory. Pay the artist one cent for every stream, effectively tripling what they currently pay. 

A user-centric payment model just means to actually pay artists per stream. Spotify currently operates on a pro-rata model: all the money from all artists’ streams is pooled together and is then allocated based on the proportion of streams their music accounted for. Some artists who stream more are able to get a larger percentage-per-stream.

Transparency pertains to the way Spotify operates their playlists. Playlists like New Music Friday or Indie Hits or whatever are obviously huge for artists trying to get their streams up. People are lazy and actually listen to those playlists; maybe you listen to those playlists. That’s fine, just know you are lazy. It is alleged that massive labels, like UMG, have purchased a number of spots on these playlists to fill with their artists, but nobody really knows. The Kollection has it on good authority from an industry source that this is true, and that the lion’s share of these playlists are bought and paid for well in advance, effectively making them a PR tool for majors. This leads us into the next demand: end payola. 

What is payola? It is ‘pay-to-play,’ a practice originating in radio that was outlawed in 1960 by reactionary politicians who were upset with DJ’s playing rock and blues (corrupting the pure and innocent white youth!). DJ’s were incentivized to take risks and play new music because they would be paid directly by the small labels or get a cut of future sales of that music. So payola originally didn’t help majors, and actually helped small DJ’s make a living from spinning new and alternative music. But now, in relation to Spotify, payola accusations pertain to preferential treatment of the major labels with big money–i.e., UMG paying the platform for spots on Rap Caviar or New Music Friday. 

Credit all labor is a call for recording engineers to be credited on Spotify and for Spotify to make their names searchable within the platform.

Stop fighting artists is in reference to lawsuits filed by Spotify (and other streaming services) to fight an increase in mechanical songwriter royalty payments. In essence, they don’t want to pay songwriters any more than they already do. 

For the purposes of time and my Gen Z attention span, let’s dive into the marquee demand: pay artists one cent per stream.

This would mean that eight million plays would make an artist $80,000. That actually sounds fair on its face, but it’s impossible because Spotify is restricted by its business model. To be blunt, Spotify doesn’t actually make much money at all. This has to do with their overhead, especially relating to the amount of money they spend on back catalogue music. Since its inception, Spotify has spent 23 billion dollars on royalties to right holders, with five billion dollars in 2020 alone. 

This astronomical figure has a lot to do with back catalogue music that was created before the digital age. You may have noticed that before 2018, The Beatles were not on Spotify. Neither was Tool, but that was a good thing. The Beatles’ discography is worth one billion dollars and Spotify has to fork over a huge chunk of change to The Beatles’ estate and their label to get that music on the platform. Not only that, but they don’t have the rights to The Beatles forever; they lease the catalogue for a few years, so eventually they have to pay again to keep The Beatles on the service. And The Beatles aren’t the only legendary artist Spotify has to pay for. The Rolling Stones, ABBA, Miles Davis, Bob Dylan, etc.

Then factor in blanket deals. A blanket deal is when Spotify pays UMG, for example, a flat rate for the right to put all the music created between 1920 and 1960 that never sold x amount of records on their platform. That’s why that random psych band or experimental jazz record can be found on Spotify. UMG owns the rights to it and now pimps it out to streaming services for millions. 

Okay, so Spotify spends the GDP of a small nation on back catalogue, why can’t they give artists one cent per stream? 

Roughly 60,000 songs are added to Spotify every day. If all of those songs stream one time that’s $228 per day. But every song gets more than one play. Let’s say 10 percent of the 60,000 (6,000) are streamed 100,000 times. 6,000 times 100,000 is 600 million plays, which would be $2.3 million Spotify pays out for that 10 percent, per day. If one percent of those 60,000 do 1 million plays, it’s the same figure, $2.3 million. That gives us (roughly) $4.6 million per day for the hypothetical top performers — $1.6 billion per year for the new songs. Accounting for the billions they pay to labels for back catalogue, and the billions they pay to the top performing artists, like Drake, it’s no wonder Spotify loses money every year. Their net operating loss in 2020 was 581 million euros, 683 million dollars. 

If Spotify were to kick up streaming payouts to one cent per stream…it wouldn’t. It would go under immediately, and Daniel Ek would find something else to do. They would sooner disband the whole thing than pay one cent per stream — look at how much money they lose at $0.0038!

Spotify is like Tesla or Uber. They hemorrhage money like there’s no tomorrow to try and build a monopoly. Investors throw their money into it to keep it afloat in the hopes that one day Spotify and the major labels merge into a some demented, Voltron-like ultramachine and take over the entire game. In a way, it’s already happening – that was the point of Spotify the whole time. When piracy was the biggest issue facing the music biz, they found Daniel Ek, or Daniel found them (the details are a little fuzzy there), and they opened up their catalogues to Spotify for a collective 20 percent stake in the company. 20 percent is fucking huge. Absolutely massive by stock market standards. When Spotify went public in 2018, their shares got watered down to about nine percent in total, which is still enormous. 

All this to say, the whole situation is a royal cluster fuck that no amount of protesting at Spotify offices will change, as unfortunate as that may be. 

But that doesn’t mean it’s not worth protesting. The whole point of the demonstrations are to make these massive businesses nervous that the people they sell to and the people they screw are over it. They’re waking up to the fact that the business is all wrong and it’s not their problem that Spotify doesn’t make money. That’s Daniel Ek’s problem. They still deserve more. 

The US government “can’t” give us universal health care because there’s “not enough money.” That’s not our problem, they just spend our tax money wrong. They spend it on toppling popularly elected leftists in South America and drilling for oil. Spotify spends it on The Beatles catalogue. 

Spotify needs to free up some money to spend on new artists, the artists they suck the life force out of and feed on like a green dementor. My recommendation? Take The Beatles off Spotify. They had their day, if you want to listen to The Beatles go pick up a CD or some vinyl and spin that shit analogue. Better yet, go on Pirate Bay and steal it. Those guys made enough money. I love them to death and they literally changed the world forever, but that’s good enough. They don’t need the $20 million they make on the streaming from their top five tracks alone (I did the math). No platform should support dead artists more than the ones who are still alive and need to eat. 

The Stones too, and ABBA, and Dylan. Spotify should be for new shit, music made by people who still need the money, people who are making music this century. That should free up enough money to give everyone a penny when somebody listens to their song. Again, and I don’t think this can be said enough, if you want to listen to The Beatles, go steal it. 

The police arrived insanely quickly at Spotify HQ and informed the group that they were on private property. The property owners had called and requested they be removed. The organizers taped their demands and the signatures on the door, like Martin Luther nailing his 95 Theses to the door of the Catholic Church, and were promptly escorted out. 

They remained on the sidewalk out front, public property, for the next hour. Everyone chatted about music and politics, and I got caught up with some guys from PSL (Party for Socialism and Liberation). Hanging with a bunch of artists and musicians that are politically motivated and progressive, it was hard not to feel hopeful. Spotify execs had to hide in their big fancy building, but we were free to be in the street and amongst the people.

In discussion the question was raised, “do you guys think Spotify will actually change?” A thoughtful producer answered, saying we were relying on the good will of a massive tech company. “There’s no incentive to scale good will,” he said with a laugh. The rest of us laughed with him, Spotify employees visible in the windows of the building just above our heads, looking down at the group of people visibly having a good time. I couldn’t shake the feeling that they would rather be down there with us.