Why Spotify and Rdio are Worse Than Torrenting: Op-Ed

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Streaming services like Spotify and Rdio erode musicians’ ability to support themselves and sustain their musical careers. In order to earn a US monthly minimum wage, an artist would need to sell 143 self-pressed CD’s a month, 155 CD’s on CD Baby, 1,229 album downloads on iTunes, or get 4,053,110 track plays on Spotify. Lady Gaga is rumoured to have made a mere $167 from over a million plays of her song “Poker Face”, the most popular song on Spotify during that period of time. If Lady Gaga, the number one artist on Spotify, can’t earn minimum wage from streaming, then who can?

Feeling like they’re receiving the shaft, many artists have elected to remove their music from these services entirely, most notably Sir Paul McCartney. Swedish artist Magnus Uggla went as far as to say “I’d rather be raped by The Pirate Bay”.

It’s said that the industry is presently in a transitional hump and it’ll take some time for this new distribution paradigm to be profitable for all parties. True as that may be, having those with the fewest resources available to them bear the burden of an immature business model is clearly unjust. The risks inherent in catalyzing a new distribution paradigm should be borne by the businesses angling to become pillars of the new model.

It’s commonplace for web startups to exist for years on venture capital before they’re able to monetize. Instagram notably went from a being a startup sustained by venture capital with no revenue to be being purchased by Facebook for $1B. Twitter has yet to be profitable. Yet nowhere in the picture are artists, sometimes living day job pay cheque to pay cheque, being expected to bear the risk of a new business model that has yet to be profitable.

Why is it like this?

If artists make next to no money from services like Spotify and Rdio, then why are these business models being put in place, and why are they seemingly working (for everyone but the artists)?

You want it to be this way

By and large, consumers don’t want to pay very much for a digital experience. For musicians to be adequately compensated for their work, subscription rates would have to be higher, and most consumers are unwilling, or perceived to be unwilling, to pay more.

It’s beneficial to the service.

Commoditizing music benefits distributors greatly. Music is the product, and if prices are lower, profits are higher.

But why is this worse than torrenting?

I hear what you’re saying, musicians aren’t being paid very much by these services, but something has to be better than nothing. Paying must be better than not paying. Right?

Though that would seem to be the case, this isn’t necessarily true. Whereas an underlying feeling of guilt commonly accompanies torrenting somebody’s album, people don’t feel that when they pay for a subscription service. By paying their monthly fees, consumers feel as though they’re doing their part and helping to compensate musicians, even though the amount of money finding its way to musicians is negligible.

In contrast, those that torrent albums will frequently use torrenting as a way to preview an album, and will frequently purchase that album if they find themselves enjoying it. A study from Ipsos MORI found that those who share files spend 75 percent more on music than those that don’t.

Another common practice amongst file sharers is to see an artist you’ve been listening to live when they come to town. Knowing they’ve been enjoying the artist’s album for free, the file sharer commonly feels behooved to financially support the artist in this way. This isn’t necessarily seen amongst subscribers of streaming services as they’ll feel like they’re already doing their part with their monthly fees, even though those fees don’t go to the artists in a meaningful way.

  • Shloof

    You should do some research. Paul McCartney is on Rdio, and many artists have vocally loved Rdio.

  • Waiter

    I agree streaming money is scanty, but you know who Spotify pays much better than? BitTorrent and PirateBay. The argument that consumers at least feel some “guilt” when they illegally download so it is somehow better is ridiculous. You know who else Spotify pays better than? Terrestrial radio, which in the US at least doesn’t pay a dime to performing artists for playing their music to zillions of people. Don’t forget that Spotify immediately pays through 70% of all their income to rights holders (the record labels) who then pay through a royalty to artists. New artist royalty rates are notoriously shit and contracts are still mostly based on an outmoded distribution model. (Seriously – terms like “breakage” and “obsolescence”- in this day and age?) Artists need to get a much bigger piece of the pie from the labels who are making a shitload of cash from SoundExchange and advances from the streaming services, plus advertising inventory they can use at their discretion.

  • JSA

    You say that “those who share files spend 75 percent more on music than those that don’t”… but it would be interesting to know how much that is.

    Subscribers to music streaming services pay around $100 a year. How much do “those who share files” spend on average every year?

    Among “those we don’t share files” you’ll find:

    – people who actually buy physical or digital music (not a majority)

    – people who just don’t care that much about music and don’t buy nor download (a lot of people)

    – those who pay a subscription service… and don’t have files to share/download anymore (still a minority)

    Of course the average spending of this group is going to be very low because a lot of people dont spend nothing on music, those who actually buy don’t spend more than $40 a year in average and subscription services are still to become mass market.

    Once they actually become mass market (e.g. all those who share files, and buy music actually pay $100 a year), more money than ever will flow to music labels.

    Then, the other question is: how do labels actually give the money back to the artists? A lot of contracts in place today are not in favor of the artists, as they are based on a model where digital/streaming revenues were insignificant. It’s unfortunate that you don’t question this.

    Mass market streaming subscription and better revenue sharing between labels and artists will make this industry work better, and help artists develop. Keep torrenting wont.

    ps: Paul McCartney actually recently made his music available on most streaming services (Deezer, Spotify, RDio, etc…).

    pps: I have rarely seen any real guilt in people who torrent.

  • Peter

    The cost of playing songs on these sites will increase as the traffic on these sites increases, which it will. This will inevitably result in the increase of advertising on the sites (already happening). As time passes, the revenue from these advertisements will increase, and this increase will ultimately be passed onto artists. Ultimately, someone could literally record an album in their bedroom, upload it to rdio, become famous from people listening it for free, and live off the advertising dollars. Capitalism at work, for better or for worse.

  • Jack

    Spotify is the first services that made me pay for music. Before it was all illegal.
    In your article you are mixing people who play music with people who are professional musician.
    If you just want to play your own music you must accept that you won’t have so many fans (except very few exceptions).
    If you want to play professionally than you have to compromise on your style and music. I don’t think that Lady Gaga songs are the one she would put out from its “creative” process rather they are made through focus group, testing, etc. Its like in every category (you can play soccer but its really hard to play soccer professionally) or be an app developer (there are currently 9mio app developer and only 10% make minimum wage). So stop complaining and decide if you want to play music or be a professional musician!

    PS: This year I’m not going to the concert of Black Keys because they are not on Spotify.