13 August 2020

Music Ally: “Spotify CEO talks Covid-19, artist incomes and podcasting”

One of the lines that jumped out of Spotify’s Q2 earnings announcement was “Gone are the days of Top 40, it’s now the Top 43,000” – referring to the fact that the streaming service’s ‘top tier’ of artists – those accounting for the top 10% of its streams – now number more than 43,000, compared to 30,000 a year ago.

What does that mean in the big scheme of things? “The real thing is that there are more relationships being formed to more artists”, said Ek.

“This is something that’s been near and dear to us for some time: it’s in our company mission to enable more artists to live off their art, and it’s really coming through in the numbers. More and more artists are breaking through in a big way, being impactful and creating new fan relationships.”

He suggested that compared to 10-15 years ago “the average consumer has way more diverse tastes: through the various genres, and they know of a lot more artists”.

Stuart Dredge

This interview had a lot of negative reactions on Twitter, mostly people complaining loudly about the minuscule payouts from Spotify to artists and proposing ridiculous ideas such as a $1 payment per stream. I can only assume that they know absolutely nothing about how the music industry actually works; Spotify does not pay anything directly to artists, instead their relationship is mediated by the big music labels who set the payment rates to artists. In fact this is precisely the reason why Spotify is pursuing other revenue sources, especially original content from podcasts, because in that case the company can have better profit margins by acting as a direct distributor. As for paying $1 per stream… a relatively old source estimated that Spotify users listen to more than 1,300 tracks per month – who would be willing to pay $1,300 each month for Spotify?!

The diversification of music tastes is another aspect that has been noticed for quite some time. Speaking for myself, I would never have listened to many artists without Spotify (or a similar streaming service). I am not a fan of owning physical CDs to clutter my house and to have to search for a particular album to play when I’m in the mood for it (I prefer e-books for much the same reasons). Living outside Western Europe, smaller artists would not even have CDs available for sale in my country, so streaming is a big opportunity for them to access new markets and listeners, and for people around the world to have access to more songs.

“There is a narrative fallacy here, combined with the fact that, obviously, some artists that used to do well in the past may not do well in this future landscape, where you can’t record music once every three to four years and think that’s going to be enough,” said Ek.

“The artists today that are making it realise that it’s about creating a continuous engagement with their fans. It is about putting the work in, about the storytelling around the album, and about keeping a continuous dialogue with your fans.”

Stuart Dredge

As always, it pays to read the articles of Bob Lefsetz on the subject, as he has been talking about this cultural and economic shift in the music business for years.

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