Spotify: Starving Artists?

Little known fact: only 3% of artists on Spotify make more than one thousand dollars. And the people who work on albums who aren’t top-billed artists, like backup singers and songwriters, make even less. In fact, most artists make fractions of a penny per stream.

So where does all that cash go? 

Show Notes

• Read Blake Morgan’s article about his meeting with Spotify execs: Spotify’s Fatal Flaw Exposed: How My Closed-Door Meeting with Execs Ended in a Shouting Match
• Learn more about Kaydence and her impactful work with the 100 Percenters here.
• David Turner writes a weekly blog called Penny Fractions ‘as a way to think through various record industry topics’.

This episode uses the following tracks from FMA under a Creative Commons Attribution License: "What Dreams Become" by Audiobinger, "Moonlove Funk" by Cullah, "Ugly Truth" by HoliznaCC0, "Leave The Country (Instrumental)" by Anthem of Rain.

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:06):
I remember when I was eight or nine years old
and my parents finally allowed me to use the record player,
like all by myself, choose an album line up, the
needle pulled the little lever, watch as it slowly lands
on the spinning record, so satisfying. When I moved to

(00:41):
New York in my twenties, I poke around record stores
in the East Village near CBGB, but my go to
place for buying music was Tower Records on Broadway. Like
It's spent an entire afternoon browsing for c ds, going
into listening booze, admiring the album art in the little
jewel cases. The experience, you know, it really brought music

(01:03):
to life, and I certainly wasn't alone in CD revenue
made up most of the fourteen point five billion dollar
music industry. But of course change is the only constant,
and in two thousand and six Tower filed for bankruptcy.

(01:26):
It was a sign of the times. Websites like Napster
and you torrent ushered in a new way to discover
and share music. Each song could be duplicated and passed
along endlessly with no loss in quality. Physical music sales plummeted,
and the music industry suffered a massive pay cut. Music

(01:50):
had moved to the Internet, where everything is free. Welcome
to Calling bull Ship, the podcast about purpose washing, the
gap between what an organization says they stand for and
what they actually do, and what they would need to
change to practice what they preach. I'm your host time

(02:12):
onto you, and I've spent over a decade helping organizations
define what they stand for, their purpose and then help
them to use that purpose to drive transformation throughout their business. Unfortunately,
at a lot of institutions today, there's still a pretty
wide gap between word and deed. That gap has a
name bullshit. But, and this is important, bullshit is serious,

(02:38):
but it's also a treatable condition. So when our bullshit
detector lights up, we're going to explore everything the organization
should do to fix it. The same year that Tower

(02:59):
wreck It's closed, Daniel Eck founded Spotify. He had been
the CEO of u Torrent, a platform that allowed users
to anonymously swap large media files. The program itself was legal,
but it ended up mostly being used to pirate music.
Pirate of music wasn't profitable, Labels and governments were cracking down,

(03:23):
and X saw an opportunity. By working with labels and artists,
he could charge listeners for access to a massive digital
library and reclaimed the value of music. And so he
started Spotify with the mission to unlock the potential of
human creativity by giving a million creative artists the opportunity

(03:46):
to live off their art and billions of fans the
opportunity to enjoy and be inspired by it. Streaming now
makes up about eight of the music industries revenue, and
Spotify is the most popular streaming service in the world,
with one eight million people paying for the premium subscription

(04:10):
and hundreds of millions more listening for free on the
ad supported tier. But is it actually possible for artists
to make a living with Spotify? Spotify positions themselves as
artist friendly their platforms. Spotify for Artists helps musicians get

(04:31):
stats on listeners and manage their profiles, and they launched
the Loud and Clear campaign in one to quote give
artists clarity about the economics of music streaming. How exactly
do artists and songwriters get paid? Let's break it down first.
It's important to know that Spotify does not pay artists

(04:53):
or songwriters directly. Instead, Spotify pays the rights holders. So
who are they? These are typically record labels, distributors, aggregators,
or collecting societies. Artists and songwriters choose their rights holders
and make agreements on their music, including giving them permission
to deliver it to Spotify. In return, Spotify pays these

(05:15):
rights holders and they then pay the artists and songwriters.
As of Spotify has paid over twenty one billion euro
and royalties to rights holders, including over one billion euro
every quarter of for a total of five billion euro
last year alone. That's a lot of cash, but in

(05:37):
only three percent of artists on Spotify made more than
a thousand bucks. In fact, most artists make fractions of
a penny per stream, and people like backup singers and
songwriters who aren't top build artists make even less. Back
in the c D age, it was possible to make

(05:57):
a middle class living as a professional musician. Today that's
a lot harder. So where does all that cash go?
Is Spotify's purpose, which they say is to give a
million creative artists the opportunity to live off their art
actually a core principle or is that just a song

(06:18):
and dance? To help me further understand the relationship between
Spotify and artists. I called up musician, producer, label owner,
and activist Blake Morrigan. Folks, I am very excited to
introduce entrepreneur, musician, activist, and all around busy person Blake Morgan. Blake,

(06:43):
thanks for being here and welcome to calling bullshit. Hey,
thanks for having me, um so for the folks at
home as it were. Would you mind just telling us
a little bit about your your background, how you got
into music, and and some of your adventures in it.
I'm a recording artist and songwriter and record producer and

(07:04):
label owner here in New York City, my beloved hometown.
Grew up on the Lower East Side, and I've been
making music my whole life. Both my parents are writers,
and so I grew up in an artistic household. I
think if I'd i'd grown up to be a tax attorney,
that would have been more rebellious growing up to be
a rock and roll musician as I have. So, you know,
you've gone on to have a very successful career. You've

(07:27):
recorded several of your own records and also started your
own label, E c R. What motivated you to make
that leap to entrepreneurship, The cliche goes is a necessity
is the mother of invention. But you know, so it's desperation.
And I've had a huge record deal with with still
Ramon and his label and two K, which is Sony Red,

(07:50):
and it was it was a great artistic experience, but
it was terrible label. And I had to fight my
way out of my seven album deal. And I was,
you know, following sort of standard industry advice and showcasing
to get other deals. And I was actually walking down
street with my mother and I said to her, you know,
if I had any guts, what I would deal is
I would just start my own label. All these demos

(08:11):
that I'm making and producing these EPs and pseudo records
that I'm making, you know, they could actually be real records.
I had any guts, you know that That's really what
I would do. And my mother turned to me and
she was like, yeah, you know what, if you had
any guts, that is what you would do. Um And
I remember stopping in the middle of Fifth Avenue in
the Weaven Street and just putting my hands on my
knees and oh my god, this is now what I'm
gonna have to do. And you know, John Milton said,

(08:35):
it's it's better to rule in hell than serve in heaven.
And it's turned out not to be hell at all.
It's turned out to be a heaven of its own.
It was more desperation even the necessity. It's like I
had simply gotten tired of handing music that I bled over,
tired of handing it over to people who then invariably
screwed it up. Um. And that still happens to this day.
But now that they when they screw it up, they

(08:56):
have to deal with me. He was the president that
you see our music group. And along the way you
you have become an activist. You've been a critic of
of streaming platforms in particular like Pandora and and Spotify.
So I wonder if we could pivot and start to
talk about Spotify. Um. You know, they're a company who

(09:17):
says their mission is to unlock the potential of human
creativity by giving a million creative artists the opportunity to
live off their art and billions of fans the opportunity
to enjoy it and be inspired by it. So what, what,
if anything, do you take issue with in that statement.

(09:38):
I mean, it's just a statement that appears to have
words in English strung together. You know, thank God that
that green logo and that company is here to unlock
my creative potential because I didn't know what to do before.
I just didn't know what to do. Thank God for
Daniel k. Thank God for Daniel Eck, the CEO of
you Torrents, which then became in bit torn he's a pirate.

(10:02):
I mean, this statement would be like Philip Morris saying
we're here to teach people to breathe more deeply. You know,
I mean, like, where do you even start with a
sense like if it's so offensive? Yeah, so Hubris in
that statement for sure. But the part that really gets
my attention is the by giving a million creative RC
opportunity to live off their art. How true or untrue

(10:24):
is that? It's just it's nonsense. You know. The thing
about Spotify, Their free tier means that when I release
a record, my record is available for free on every
phone in the world. Right, Okay, Now, this is not
the case with Apple, This is not the case with Title,
it's not the case with Deezer. You know, I wrote
an op ed you huff in the post. It's started

(10:45):
with I love streaming and I do you know but
there aren't all all all streaming platforms are not equal.
Apple pays twice as much to artists as Spotify. They
pay songwriters three times as much. They don't attack artists
when artists criticize the platform, and they reform their platform.
I don't work for Apple, and Apple is far from perfect.
But the idea that all streaming services are the same

(11:07):
is absurd. So let's let's follow that thread for just second,
and then I want to return to the money. You know,
other more pro let's call them pro artists platforms have
been launched, title among them. It doesn't feel like those
platforms have gotten the traction that Spotify has though, you know,
just in terms of sheer size and momentum. Why is that, Well,

(11:32):
that's a narrative that Spotify has put out into the world.
So let's be clear about a couple of things. Spotify
has a free tier. Apple does not. So this is
where we run into a problem. Spotify has essentially a
quote unquote legalized pirates platform, which is their free tier. Right,
So that's the comparing Spotify to Apple titled Deezer and Amazon.

(11:56):
It's not the same business model whatsoever. And the bind
that Spotify is, and of course is that you know,
Spotify actually thinks it's saved music. And I've dealt with
many executives of Spotify. One of the big parts of
my music advocacy is actually about big radio and the
music fairness at and so I deal with big radio
broadcasters all the time, and I liken the bullshit and

(12:19):
the big radio broadcasters. They're sort of like big oil
or big tobacco in that they know that they're doing
wrong and they almost kind of admit it, but they're
basically able to get away with it. So they're gonna
get away with it for however long they're going to
get away with it, and then they'll move on. Spotify
is very different. When you talk to executives that Spotify,

(12:39):
they are evangelistic about the platform. They really believe that
they are saving music. So the bullshit in the statement
that you read at the top of this part of
the conversation isn't just offensive and ridiculous. They need it.
It's a really amazing phenomenon. I wonder if you could,
just because most people, myself included, don't really understand this,

(13:02):
can you explain the relationship between Spotify, record labels and musicians, like,
how do the royalties work in streaming? So Spotify pays
um sev of their revenue to right solders. Okay, this
is a number that they tout constantly because they it
sounds like an amazing number, Like, well, wait a minute,

(13:22):
what's the problem like that They're they're paying seventy of
revenue out to right solders? Right right. But again, even
if we forget about the free tier for a moment,
and we remember that a subscription of Spotify its ten
dollars a month, So ten dollars a month is a
d twenty dollars a year, and over the course of
that year, as a Spotify subscriber, you can listen to

(13:43):
tens of thousands of songs, thousands of records. Right at
the end of that year, all of those people who
made all of those records are splitting sevent a hundred
and twenty dollars, which is eighty four dollars. So you
just list into four thousand songs that year. All of
the people, not just the artists, all the people who

(14:07):
made those records, all the people who worked on all
of the revenue that went into making all of those records,
All of those people are splitting eighty four dollars, And
that's fundamentally the problem with streaming. They fundamentally undermined the
ability of musicians to make a living at their at
their music. So that's how the money works, plain and simple,

(14:28):
and we can get granular about different parts of it.
But seventy of a hundred and twenty dollars is eighty
four dollars after a year. Where does the other Here
are some important numbers when it comes to you know again,
how this breaks down. Where does the money go? Where
does spotifystent go? Right? So it takes an artist like me,

(14:49):
uh or any artist on Spotify. It takes four hundred
thousand streams a month for me to earn minimum wage
on Spotify four hundred thousand streams a month to earn
minimum wage. So the money where does that percent go?
It goes to paying coders, It goes towards paying for
Spotify is five and fifty million dollar offices here in

(15:10):
downtown Manhattan, year ground zero, and it goes towards paying
Joe Rogan two hundred million dollars for his racist and
misogynistic and homophobic anti science podcast. So that's where your
money is going that's where goes. So of all the
artists on Spotify, how many of them get even four
hundred thousand streams? I mean, four hundred thousand streams is

(15:33):
not a superstar number, but it's a serious number because
you'd have to do it every month, you know. So
it's four million streams after ten months. That's a lot
of streams. I would imagine that the amount of artists
getting four hundred thousand streams a month would be at
least in the single digit percentages, if not in the
like two percent, three percent, one percent kind of thing.

(15:54):
It's very very it's very few. Yeah, crazy. Let's pivot
to to just talk about some of the things that
you've been up to in terms of solutions. First of all,
you started a movement called hashtag I Respect Music, and
as a part of that, you know, you've said that

(16:14):
you were against the way streaming companies treat musicians, but
you're not against streaming itself, and I wonder if you
could break that down for us. You know, I love streaming,
I love its convenience, I love making playlists, I love
I love lots of things about it. But you know,
so how can I love streaming but be against the
way streaming is affecting musicians. Just because I'm saying that

(16:37):
we should be paid fairly and unscrupulous, you know, corporations
like Spotify should be reformed. That doesn't mean that I
think streaming is the problem. So who is getting it right?
You've mentioned Apple? Is it sounds like better? Um? Are
there other services that you feel like are are doing
a better job. All of the major dreaming services are

(17:01):
doing a better job than Spotify. Apple is better, far
from perfect, but they're better. Title far from perfect, better either,
actually maybe one of the best. Right. I was very
excited back in the day when Title launched, you know,
because it seemed like they had real some some very
famous artists backing and and the proposition appeared to be

(17:23):
to create a service that was pro artist and try
to get consumers of music to adopt that platform as
a as a kind of rebellion against the way that
musicians are treated in the industry. But it doesn't appear
that Title has has taken off. What what went wrong there?
I think that they really had their hearts in the

(17:44):
right place, and I think they still do. Um, that's
the platform you want to be on as a subscriber
if you really care about Audio's a really good example.
But I think that they really bundled their press conference
because the way that they came out is that they
had all of these mega stars at their press conference
at their launch, and they were all talking about how
they weren't paid enough. And it's true, they're not paid enough,

(18:04):
But the problem with that tack is that then what
listeners do is they see a press conference like like that,
and they're like, why do I care if Madonna isn't
getting enough money? She's got millions of dollars, Why don't care?
Fiance is not. And what I wish that they had
done in their press conferences if they had had in
a row on stage, if they'd had Madonna and to
her left a music teacher, and to the music teachers

(18:24):
left Jay Z and this is and the sound engineer
and the carpenter who builds the recording student, and the
guy who's driving the van, and the woman who's setting
up merch because all of those people are funded as
part of our music industry. So I think that's the
mistake that they made. Um it was a pr mistake,

(18:46):
but I do think that their hearts are in the
right place, just following the thread of changes that that
need to be made. Are there legislative avenues to solve
this problem? I think that legislation is one way to go.
I think digislation is going to be much more helpful
when it comes to the battle that we have with radio,
which you know, some of your listeners may not even

(19:06):
know that artists don't get paid anything for radio airplay
in the United States. The United States is the only
democratic country in the world where artists don't get paid
for radio air That just blows me away. Has that
always been true? Always been true? The only countries in
the world that share the distinction with the United States
or North Korea, Iran and China. Nice good company. You

(19:27):
meant yes, you mentioned I respect music, which is something
of an homage to Aretha Franklin, because Aretha Franklin never
got paid one dime for for respect being on the
radio United States, which is insane. That's insane, It's completely insane.
It's completely insane. And um That also impacts the streaming debate,
and it impacts the struggle with Spotify, because what Spotify

(19:49):
says to musicians is, hey, listen, we don't pay you
a lot, but you know what, it's better than nothing,
and you get nothing on radio. So if we can
close the loophole that big, big radio has enjoyed for
a hundred years, that's going to actually really effects how
we're able to propressure on streaming services, which we want
to do. You know, it's interesting other parts of the

(20:11):
media business went through this after the music business and
seemed to have recovered. Like there was a period of
time when there was a big there was a collapse
of of many journalistic entities because people were getting their
news for free and didn't want to pay, And it
turns out that for the right outlet, people will pay
for it. Have we trained people at this point that

(20:31):
music should be free and is the problem untraining them? Yeah,
that's a big part of you know, a major problem
that Spotify has that I've talked about often is Spotify
doesn't make anything. Do you see the motion picture industry
or the television industry or actor's equity up in arms
about Netflix or HBO or Apple? No, you know why,

(20:52):
because Netflix makes things, They make stranger things, which employs
gaffers and carpenters and screenwriters and actually right, they make things.
Spotify doesn't make anything. So again, there are a distribution
platform and they take thirty of revenue. Why why are
they taking to upload my my music to the magical interweb?

(21:14):
And there's another thing that Spotify I could do that
would really change things, and in fact that this is
something Apple could do. All of the major streaming services
have a payment model outside of Deezer. Deezer is the
one that's changed, and your listeners may not notice either.
But you may think that I get paid a certain
fraction of a penny per stream when I'm streamed on

(21:35):
Spotify or Apple, but I'm actually not. There's no streaming
rate nor is Like if you have a ten dollar
subscription to a streaming service Spotify, Apple, something like that,
you'd think that the people you listen to are splitting
the seven dollars of your ten dollars, like in other words,
that your seven dollars is going to the people that
you listen to. But that's not the way it works

(21:58):
at all. The major streaming come copanies outside of Deezer
and SoundCloud has changed as well. They use a pro
radar system where all of the streams are put into
a pool divided by the amount of streams, and then
you get paid by the amount of market share you
have in that pool. Because Beyonce has a larger market
share than I do, it means that she's actually getting

(22:21):
paid more money from my streams than I am. It's
not a listener centric model, obviously. The way it should
work the artist, the artist who gets listened to should
get paid, should get that s exactly. And what that
would do just the obvious thing of like, well, wait
a minute, you don't even get paid for the streams
that you're actually receiving. What that would do is that

(22:43):
would shore up local artists, niche artists, niche genres as
opposed to the constant gravity pool of mainstream gigantic pop music.
And it wouldn't cost them anything. It's the same seven dollars.
It's just going to the right people. So what what's
it going to take? I saw that a bill has
been introduced uh the American Music Fairness Act. What's the

(23:06):
status of that? Would that begin to level the playing
field for artists? American Music Fairness Act would actually finally
close the loophole and and American broadcast radio would have
to pay artists for radio play. Yes, just just like
the rest of the world. Is it going to pass? Well,
we're really hopeful, and it was just introduced into the
United States Senate, so it has a lot of momentum

(23:28):
um and we find like this is the farthest that
this bill has ever gotten. There's been versions of this
bill earlier, but there's a different kind of ground swell now.
I think that listeners, music lovers, and music makers have
really come together with this bill and said, well, wait
a minute, there's a lot of things that we can't fix,
and this is not one of those. This is easy
to fix. To one, how does Spotify think about this? Um?

(23:52):
You were you were part of a meeting with Spotify
execs uh with some artists a few years back, and
it ended in a debate. But can you talk about
your experience in that meeting? Sure? So I was invited
to this so called artists only meeting with Spotify about artists,
and uh. It turned out that it was kind of

(24:13):
a trojan horse. They had several artists that nobody had
heard of on a panel, all just touting how wonderful
Spotify is. And then people in the audience started raising
their hand and saying, excuse me, what the hell is
going on here? What what we were supposed to have
a dialogue here, you're preaching to us about what your
whole platform is about. So it became very contentious, and
as you would imagine, I was a vocal participant in

(24:35):
the meeting and uh and afterwards, um, a bunch of
exects from the company sort of you know, surrounded me
and we were talking and they're like, Blake, I just
don't understand where why do you say these things like
our product is so fantastic, it's the best product there is.
And another guy would say, Blake, I think if you
understood more about our product, like you realize that it's
just the greatest thing that's ever happened. But they get

(24:56):
really emotional, and I said, Fellas, you know, you keep
using this word product and I'm just curious, what do
you think your product is? And the executives said, what
do you mean Our product is Spotify? And I said, no, Fellas,
it's not Spotify. Your product is music. You're confusing the
word product with the word brand. And the guy I

(25:19):
was talking to you went, you know, man, you're crazy. Man,
it's crazy. It is our product is. And I had
to say, like, you know, while we're at it. By
the way, stop calling people users. They're not users their listeners.
You're the user. You're using our music to monetize our
little listeners for your profit. That's what you're doing. And
you really looked at me like I shot Santa Clause

(25:40):
in the face. You know, But that's I think it's
an important story. It's it's it's funny, but you know,
that's not what happens when you talk to broadcasters. It's
very specific with Spotify, and it's a really like religious
atmosphere over there where you feel like you're talking to creepy,
weird cult people. And I'm not having a go just

(26:00):
to like be mean. It really just is like that,
and that story kind of illustrates them. Yeah. Um, so
I want to wrap up with with two questions. First
of all, um, if you were Daniel Eck, what are
the things that you would do to change Spotify. I'll

(26:21):
give you three, all of which he could do by
the end of the day today. The first is he
could do away with his free tier. Music should not
be free. Okay, it's morally wrong, it's it's uh, it's
a bad business practice. So he should do away with
the free treat free tier number one, number two. As
I outlined before, the people who get strained are the

(26:42):
people who should be paid. I should be paid for
the streams eye garner. Other people shouldn't be paid for them.
It would save UM niche artists, It would save UH
fringe artists, It would it would be would be a
huge boon to jazz music, classical music, big band music,
blue ask music, and on and on and on. So
that's the other thing. Switching to the listener centric model.

(27:04):
He could do that by sundown doesn't cost Spotify anything.
It's the same seven dollars just going to the right people.
And the third thing he could do he could do
away with the counter, the number next to all of
the songs on Spotify that tell you how many times
it's been streams. Interesting, what's the virtue of this number?
I get that Tom Waits's music is not less valuable

(27:25):
because it's been listened to less than Nickelback. Right, So
that's the third that's the third thing he could do,
And there are many others, but those three things he
could do by midnight tonight. Man, Yeah, I love that.
I love all three of those. Okay, last question on
this show, Blake, we have a tool called the b
S Scale. It goes from zero to one hundred, zero

(27:47):
being the best zero bs, one hundred being the worst
total BS. So on that scale, what score would you
give Spotify? Okay, that was definitive, Blake. This has been
a fantastic and illuminating conversation. I want to thank you

(28:08):
for coming on the show today. Well, thanks so much
for having me, folks. At this point, my BS detector
is playing highway to the danger zone. The bottom line
here is that Spotify spends a lot of money on
their brand, but they don't fairly compensate the people who
actually create their product. After speaking with Blake, it's clear

(28:30):
that the b S and the music industry extends way
beyond Spotify. Blake was so demoralized by record labels that
he was compelled to start his own. I also cannot
believe that every single radio station in the US plays
music without paying for it. I really can't believe that
that's insane. The good news is there are real opportunities

(28:54):
here for Spotify to change their tune and better support
the artists who's support them. So we've assembled a panel
of industry experts to help them make that shift right
after the break clip the record check on the B side. Folks,

(29:22):
I am very excited to introduce two industry experts who
are going to help us help Spotify better live their
stated purpose. Our first guest is two time Grammy winning
artist and executive producer Cadence. Cadence, Thanks for being here
and welcome to calling bullshit. I'm happy to be here.
Thank you for having me so, Cadence. I'd love it

(29:44):
if you could just tell us a little bit about yourself.
I started off as an artist and then I fell
in love with songwriting. Once I decided to move out
to l A. Um was when really things changed for me.
I would say like it was a very creative, but

(30:06):
I wasn't thinking so much business. Uh So when I
came out to l A I really got uh slapped
in the face with the reality of business. You know.
I've had some some really big records, thank You, Next
Seven Rings, Black Parade, Um, to name a few, and
you would think that I would be well off. Um. So,

(30:28):
you know, while they had a budget for this in
the past before streaming really hit, there's not that now. Now.
It's almost like they expect these songwriters to just do
it for free. So I hopped into executive producing. I
saw that you were on the board of an organization
called the Hundred per Centers. Can you talk more about

(30:52):
what theer is all about. Sure, Yeah, we're all about
advocating for creative rights, UM, just sustainable income. We're just
advocating for change all over the board. UM even to
this day, like people, active listeners, consumers don't just don't
understand how music or streaming works. But I think if

(31:15):
people were more aware of the effects and you know,
the the issues, that there would be a shift because
it's it's more than just the artists. Like, yes, of
course the artist is a very major part of this,
but the the collaborators, the creatives behind the music, UM

(31:37):
are the ones that are are hurting even more. Thank you.
And we'll return to that theme a little bit later
in the show as well, Cadence, because we want to
dig into all of that. UM. But but I want
to introduce our our next guest. Next up, we have
David Turner, who is the writer of a widely read
newsletter on music streaming called Penny Fractions. David, welcome to

(31:59):
the show. I'm gonna say hey, hey, everybody, thank you
for having me on today. So, David, could you tell
us a little bit about yourself in your background? Yeah,
totally so. Yeah. So my day job is I a
strategy manager of SoundCloud, or i've been the last four years.
Prior to that, I was a music journalist where I
sort of covered different parts of the music industry, did
a lot of reviews, interviews, features, covered a lot of

(32:19):
like viral trends. So, I mean, I've been a fan
of music for most of my life. I like playing guitar.
I like thought about maybe could I DJ, but never
really took it that seriously, don't have the talent, but
I feel like I'm pretty good at writing. So that's
one thing I sort of kept up, which I do
be in my news letter of Penny Fractions, which I've
been doing for almost five years, which yes, like you said,
covered streaming, but also many parts of the music. This

(32:41):
sometimes we get a little bit of history of of
different music companies. So yeah, it's something that I've been
really passionate about the last few years and been really
excited to like see where it's gone to take great well,
I feel really lucky to have you both on the show. Uh,
let's get right into it. Cadence, I'm gonna ask you
to lead us off in two minute are less. What
would you tell CEO Daniel Eck to change at Spotify

(33:05):
to better live their purpose, which, just to remind folks,
is to unlock the potential of human creativity by giving
a million creative artists the ability to live off their
art and billions of fans the opportunity to enjoy and
be inspired by it. I would say, for one, I
think right now the Spotify premium is um I think

(33:29):
that can for one, be increased, as well as just
having transparency about where this money is going. I feel
like they kind of just wipe their hands and say, hey, um,
you know it's the label's fault. And I just think
that in order for everyone to feel like this is

(33:49):
fair and uh just understand how this is being distributed,
that we just need transparency, we need we need receipts. Right. Yeah,
So can you talk a little bit more about the
transparency part of your idea because that feels important to me.
If your purpose is to help artists live off live

(34:12):
off their art, right, fans need to know how the
system actually works. And I don't think a lot of
fans really do. Right for right now, we know UH
that we get penny's worth of a dollar for UH
for streaming, but we don't necessarily as far as transparency.

(34:33):
We don't know what the agreements are between the labels
and Spotify, Spotify or any streaming platform for for that matter.
And because of that, we don't know where half of
these funds are going to and like what we're actually
getting paid. It just feels messy, it feels secretive, and

(34:58):
so I think if we have a better understanding of
how that's that's happening. I mean, I'm looking at like,
remember over the pandemic, I'm trying to think it was
billions of dollars that went to the labels that they
proudly spoke about openly, And I'm sitting here looking at

(35:18):
my statements and I'm like, whoa that it just doesn't
add up. Um, you know, like, how how is it
that I have these songs and and my b and
my statements even over the pandemic, Like I I could
not even make rent for the next two months, Like
that's that doesn't make sense. Yeah, that's crazy. David, do

(35:41):
you have any thoughts on on what Cadence has been
talking about totally. So I'm going to say I think
the first idea about increasing the amount of money that
subscription costs makes a lot of sense. That's an idea
that I think many folks across the music industry. What's
the part and it's something that I know many folks
have been wanting to sort of get behind. I think
the biggest issue is I think many people aren't sure
customers are willing to take that sort of increase on

(36:02):
their subscriptions, especially when there are a number of streaming
services out here. But it certainly I understand that the
need and sort of the import of increasing how much
the subscription goes needs more money can go to songwriters
and recording artists, So that totally makes a lot of
sense to me. And then around the issue of transparency,
just to be real quick, is uh, I think that
one is also another one where like, yeah, a little
bit more transparency and clarity around how money move and

(36:24):
money pay payments go I think would be helpful. I
do think that is something broadly speaking, is that like
every part of the industry sort of needs like step
up to sort of help with that. Not always all
on the DSP. It's not always I mean, I guess
it's a lot quite a bit on the labels and
the contracts you actually end up signing, so that actually
is where a lot of that ends up resting. But
it is something where like their needs to be some
kind of sort of agreed upon way to try to

(36:45):
clear up some of this confusion. Yeah, I was reading
an article just on the price raies. Point like Rhapsody
charged ten bucks a month in two thousand and two
and Spotify charges ten bucks a month in two and
if you just adjust for inflation, Spotify should be charging
this article said fifteen fifty and that's just just to break,

(37:08):
you know, to stay even. And in that time Netflix
has gone from eight bucks to fifteen fifty a month.
And you know, another thing that they do that I
wasn't aware of is they do a lot of discounting.
So they have a student plan that's like five bucks
a month, and they have a family plan, and all
of that cuts into the amount of money that they
come they bring in and and therefore can distribute to artists.

(37:31):
And so cleaning that up would be another aspect of
of raising their price right to to help get more
money to the artists. Okay, David, your turn in two
minutes or less? What advice would you give Daniel ac Oh?
They advice that out and kept act. I think would
be maybe a little bit less of advice and more
of a question that I think could be sort of
turned into sort of broader advice. My question would be

(37:53):
that if you're going to have a million artists sort
of make a living on your platform, how do you
plan to actually sort of like support those million artists.
How many people are gonna be working at Spotify? How
many more tens of thousands of people do you need
to like handle all of that? Are you gonna be
helping out with healthcare? It's all like there's a lot
of like questions to me that when I sort of
see here that mission statement, I think and it's very
grandiose and and and aspires to a lot and on

(38:14):
one part of it, the sense of having a million
a billion fans like Spotify as like hundreds of millions
of listeners, so like they are like well on their
way to that, But as far as like a million
artists that are making a living, they're certainly not on
the on the way to that. In the same in
the same sort of subjectory. Just to what David said,
I think that is a very strong question, especially for

(38:36):
artists that aren't signed to major labels, because major labels are,
you know, technically the biggest shareholders of Spotify, so they
control most of it. They control those playlists, they control
you know, their artists getting more plays in these indie artists.
You know, I don't see these indie artists invited to
these Spotify branches. I see major label a major artist. Um,

(39:01):
so how are you really leveling the playing field so
that you give these indie artists an equal chance? Yeah,
And I've heard that the way that that Spotify pays artists,
and and this is I'm still trying to get my
head around this. Like I, as I understand it, you're

(39:21):
not actually paid per stream even on Spotify as an artist.
The money goes to the rights owners, and then that
money then goes to the artists, and it's a portion
based on essentially averages, you know, the percentage of streams
on the platform that belonged to Beyonce. Then Beyonce gets

(39:42):
uh that percentage of money. But it means that Beyonce
in one way, as I understand it, Beyonce is getting
a percentage on lots of indie artists streams as well
because of the way that they do the accounting. And
so I've seen people advocate for a more direct model
there that like you actually pay your money as a

(40:04):
listener because they know who you are and they know
what you're paying them, that your money goes directly to
the artists that that you're listening to. What do you
think about that? Yeah, so I'll just speak on the
recording side. Yes, what you said is correct, where it's
like all the money is sort of accrudance is sort
of a big pot they said in the industry is
called sort of the pro rottle model. So, for example,

(40:25):
with Beyonce dropped her like this album and she had
seven percent of total streams that week, she would she
and the rest of the folks on the album will
be seven percent of over of the overall pot of
revenue generating in that period of time. So yeah, so
it does sort of work out where if you were
paying a Spotify subscription or an Apple Music or Amazon
subscription and you do not listen to Beyonce, you're some

(40:45):
seven some part of your money would still be going
towards Beyonce and the work, the work that she did
on that on that release. And yes, the other thing
that you're sort of hinting at with this thing called
the use a centric model, which I guess it's been
sort of mentioned by a number of companies like Deezer,
which is a French music fiom so can also title
I think of maybe years ago. And also it's SoundCloud.
Actually in summer, SoundCloud announced a partnership with one Er

(41:07):
Music Group where we actually we're now playing out artists
on one or one of the big three major labels
on the eccentric model along with artist that directly distribute
through through the platform. So but again that is all
just on the recording side. On the publishing on the
songwriter side is slightly different, like the way that's handled
very yeah, very different. Uh, our money goes through the publishers,

(41:29):
so we get what we get and yeah, we have
no control over over it. We feel like the powerless
m hmm. Yeah, and so somebody needs to take the
artist's side. So why don't we use that as a
moment to pivot to my my idea and again be savage.

(41:51):
I'm a total rookie here. So what I take away
is that Spotify actually is in like a vice or
you know, another to four would be between a rock
and a hard place, because all of their competitors also
charged ten bucks a month, and so Spotify as a
service is basically an undifferentiated commodity, and commodities have trouble

(42:16):
raising their prices to make matters worse. You know, two
of their competitors are Apple and Amazon, and Apple and
Amazon can afford to lose money forever in music just
because uh, music isn't their main job. It's a side
hustle to them. And so to get out of this vice,
Spotify has to innovate. And you've seen them trying, like

(42:40):
they tried video and that didn't work. They've tried actually
going around the rights holders by by you know, cutting
direct distribution deals with some artists, and that didn't work
because the labels pushed back. Now they're trying podcasting and
that led to the Joe Rogan debacle. And so as

(43:00):
I thought about, like what they do have, they have
two things. They have a great artist centric purpose, this
idea that they want to take a million artists and
make it so they can live off their art, which
I love and they have scale. They're big, um I
think four hundred and six million monthly actives currently. So

(43:20):
my idea is for Spotify to become a laboratory for
artists centric innovation, to continue to innovate themselves. But also,
and maybe this will be controversial, I don't know, but
also to look across the industry for other really good
ideas that that other platforms are trying but maybe don't
have Spotify scale like Title, and adopt it to scale it.

(43:44):
So to use their scale for good is the essence
of my idea. And I'll continue to use Title because
I was reading an article in a in a thing
called louder Sound, and I'll just read from this article.
Title recently unveiled their direct artist pay up plan and
which sees ten percent of your subscription going directly to

(44:05):
the artists that you listen to most. This initiative is
based on actual streaming activity of the fans versus the
industry accepted method of aggregating streams and allocating it to
the most popular artists. According to Title, uh so this
is a move. This is now the writer of this
article saying this is a move away from some other
payment plans and could cause a shift in the streaming industry.

(44:27):
And so what I'm advocating for is, let's use it
to cause a shift in the industry. Let's Spotify adopt
this as well as well as any other great artists
centric ideas across the industry and really deploy them at
scale to help fans support artists directly and take on
the mantle of artists centricity, which is, you know, sits

(44:48):
at the center of their purpose. What do we think
about that pipe dream possibility? In many ways, I think
what you're sort of describing as kinds of me like Instagram.
Soon It's like on Snatchat they took on the story
feature of Snapchat, and people are like, oh wait, Snapchat.
I love Snapchat. But now all of a sudden, it's
it is it is what I'm describing. Yeah, but I'm

(45:09):
trying to say for good because that that practice I
think of as evil, like the whole Facebook empire. He
Zuckerberg does this to put other companies out of business.
And what I'm saying is, since Spotify has skill, maybe
they could use it for good. Maybe Yeah, I don't know, Yeah, no,
I guess I guess the reason why that immediately jumped
to me with because I think of the perception of
the users is that perception of users would probably immediately

(45:31):
go towards that doing this thing. I think because because
if you say that you're doing this because you want
to help, but if it's just topping someone else, you're like, oh,
well wait, why are you helping by copy it didn't
have any of your own ideas. I think that maybe
I think that maybe sort of especially as like a
user of different platforms, and when all of a sudden,
every platform to your point had the same price point

(45:54):
and all of a sudden are the same features set,
you get a little less excited to hop between them
because you're like, oh, what if they're doubely different shape,
So you kind of need for the bigger company to
kind of have more actual innovation in an actual different differentiation.
But to the specifics I will actually say, I do
like that Tyle was saying this to someone yesterday, that
title actually has a number of really great features, Like

(46:14):
they actually highlight songwriters. They actually highlight producers of tracks,
so you can actually search for a producer, starch first songwriter.
There are a lot of things that title does that
other platforms don't do. So I do think there is
quite a bit actually there that that others could sort
of take from sort of and sort of I and
sort of maybe poke poke poke away. But I yeah, sorry,
I just want to rid a little because yeah, I
didn't know. It's it's it's it's a great I I agree, yeah,

(46:38):
you know, I think I think that would be great. Um,
I do think that it would be scary, uh, too
scary for the labels. So while I love love that
idea and hope that they do it, I think it's
far fetched right now because it's just they're making so much. Yeah, absolutely,

(47:03):
oh yeah, I mean they pretty much make the call
on if anything changes. I think they think that they're
doing enough, at least for the songwriters. I mean, I
know you've seen they had secret genius before. Um they
have notable now where they post your picture as a

(47:23):
songwriter or producer on a billboard and say, wow, look
at this person. Um. But and while that's great because
it gets you exposure, it still isn't enough. And I
mean to think of how much money they're spending to
do that, where that can really go towards other things

(47:47):
are helping helping us in a different way, like pay
our rent. That's the other thing about this that I
find hard to get my head around, and I assume
most casual music fans find they're hard to get their
head around, is just how complex the environment is. It's
really hard to figure out how people get paid and
why they get paid, and even people in it are

(48:11):
confused by it, and people on the outside just I
think glaze over a little bit um, which is a
shame because I think, honestly, if fans really knew what
was going on, they would do you know, if they
knew that they could directly support the artists that they love,
I think they would do it. You know, I I
really knew um. In this podcast, we do a single

(48:31):
guest up front for a kind of facts of the case,
and then we do this roundtable, and our first guest
was an artist named Blake Morgan. Blake had an idea
that I wanted to run by both of you, which
is essentially get rid of the free layer at Spotify,
because his perspective was, you can't say that you're trying

(48:53):
to help artists make a living and give their music
away for free. Those two things just don't go together. Yeah, yeah,
you agree with that. Oh yeah, yeah, I definitely understand
the sort of economic need for getting rid of the
free layer. As a consumer, I guess I started to
feel a little like, oh man, I kind of like

(49:14):
being able to like just go find a song, but
I won't listen to for free. But that's also something
that like, hey, I remember before YouTube, so I do
remember what it was like before that was the case,
and like it was fine. I don't know, there is
something to be said about like music not being always
at once aingo tip, where the songs can sometimes have
a sort of different life and a different residency in
your life rather than it's like, oh I always have

(49:35):
immediate access to this thing. So yeah, I feel like that.
Um that era, the Lime Wire era, where it was
like we were just able to download anything at any time. Um,
we kind of got caught into that mindset of like,
well I could just listen to it somewhere else for free,
and um, we're just not taking into consideration like the

(50:00):
the people that it affects effects, you know, It's it's
a hard thing. Once once a habit has taken hold
with people and that and like a habit, like oh yeah,
music is free. It's really really hard to break that habit. Again.
That's happening sort of throughout the world. Not to get
too philosophical, but we live in the modern world in

(50:21):
a way in which things are convenient and we do
them because they're convenient and they're easy, and we're starting
to learn that things that are convenient and easy aren't
necessarily good for the world. It's like, oh, I threw
away my water bottle because it was easy, but it
wound up in the middle of the Pacific Ocean, and
so paying artists for music should fall into the same category.
It's like, free music has an impact on people's lives,

(50:44):
you know. Maybe one thing that Spotify could do is
just do a better job of educating people about that
and really take an artist centric point of view on
making sure that people understand that there are implications for artists,
you know, and what those implications are. I mean, one
of the other questions I had for both of you,
I was looking on there's a service called Music Gateway,

(51:06):
and it allows you to compare what you would make
for a set number of streams as an artist on Spotify,
on a title on Pandora, on Amazon and Apple. So
I did this math right? The bottom edge of what
we consider to be the middle class in America is
thirty thousand dollars a year. I would say that's a

(51:29):
little stingy, but let's say thirty thousand dollars a year.
To make thirty thousand dollars a year on Spotify, you
would have to get about seven and a half million streams.
Right now, fifty two thousand, six hundred artists are making
ten thousand dollars or more on the platform, so it's
not even thirty thousand. So they've got a long way

(51:51):
to go to help. You know, a million artists make
a living off the platform. But the other interesting thing
was for the same number of stream on Apple, I
would make thirty seven thousand, five hundred dollars on Amazon
the same on Title I would make ninety thousand bucks
off of seven million, five hundred thousand streams. So Title

(52:12):
stands out. So I guess the question there is why
didn't Title do better? Uh? One, there's already the amount
of conversation when titled, so to enter the space I
think it entered around um so Spotify had already existed.
YouTube YouTube have been around since the mid two thousands.
Spotify had sort of come into the United States and

(52:33):
in the early and it into the mobile platform in
the mis um Apple Music it was also launching around then.
You still had people that are using Pandora and higher amounts,
and when titled only real again differentiation factor or more
like sort of like aesthetic things of like again like
twenty out producers and songwriters and stuff like that, that
just wasn't not to differentiate it when it's overall content

(52:55):
with the same content, it's basically every other platform and
title did try to have this clues an album for
like a very brief good of time in early and
I think maybe in sen but they kind of moved
away from that when artists realized that putting your music
only on one platform really limits the audience potentially, right
makes sense. One of the other observations that I have
is like I have no context for what artist should

(53:20):
be paid per play. It's like minimum wage raising the
minimum wage. Everybody knows roughly what that means, and so like,
do either of you have an opinion about, like what
is the right number per stream that artists should be
paid in order to create a more fair deal for them.

(53:40):
So I would love to know, um, what the labels
are getting per per stream um. And that's what makes
it hard. If if I could see those those receipts, yeah,
I would be right. And back to this transparency issue, right,
it's all a big secret, like what's go went on? Um,

(54:02):
Maybe that would be a thing that Spotify could advocate
for that everybody know what everybody's making. Like that would
be a huge step forward, wouldn't it. Yeah, it was
the only issue because I remember talking some about this
very recently, is that, like it wouldn't behoove the labels
to have that that knowledge out there because then your
conversation undercut you or sort of undermine some of the
stuff that you're trying to do. Yeah, no, it's hard, right,

(54:24):
they would definitely resist that. But but if there was
just like I like I've been saying, and even playing
field where the artists get what they get and it's
not it doesn't have to be a private negotiation, well
maybe it could be. Yeah, it could be aggregated and anonymised. Right,
So you don't know exactly what the deal between Sony

(54:45):
and and X is, but you know that ultimately Sony
is getting about this amount. Okay, my last question for
for both of you. Spotify says its purpose is to
give a million artists the opportunity to live off their art.
And as I said before, the fact is only fifty

(55:06):
two thousand, six hundred artists generated ten thousand or more
last year on Spotify, so they've got a ways to
go before they get to a million artists. We have
a tool on this show called the BS index, which
measures the gap between word indeed, and it goes from
zero to one hundred, zero being the best, zero bs

(55:28):
one being the worst total BS. What score would each
of you give to Spotify? David, I'm gonna ask you
to go first on this one. I think my answer
to the original question on public I put slight into
what I'm about to say, but it would have to
be one D because having a million a million people
also ten thousand is not also like, that's not like,

(55:50):
I mean, that's not no, that's not making a living.
That's no, no, no, that's not I also want to
like to be like I think it's kind of said
as earlier that like even thirty or party thousand, if
you're living in a major that's minimum ways. Yeah, yeah,
that is more than likely a lot lot lower, so

(56:12):
I would go, like a hundred. Okay, alright, I'm a
hundred percent with you. It's it's on a hundred. I
think they have plenty of ways to change this model,
and I think they know their power and they're using
the well what if what if we lose listeners? What

(56:36):
if we do this? I mean everyone I know uses Spotify, So, um,
I think they know their power. I don't think the
consumers are going anywhere. I think using the fact that
they can put more awareness out there and essentially become
an ally and if they can really be a voice

(57:00):
for us, I think that would also translate into even
more consumers and more listeners and more supporters. Um so yeah,
m hm. This has been a fantastic conversation at David Cadence.
I want to thank you both for being here today.
It was wonderful to have you on the show. Thank
you for having us, Thank you, thanks so much for

(57:22):
inviting Alright, folks, it's time to rate Spotify on the
B S scale. Spotify is certainly not giving a million
artists the opportunity to live off their work. All three
of our guests gave really high scores because of this,
and to one hundreds and that perspective totally makes sense.

(57:45):
Spotify has done little to provide artists with a living wage,
and there is so much more they might do to
support artists in a meaningful way, for instance getting rid
of their free tier or redistributing payment based on individuals
actual listening habits. However, their tools do provide artists with

(58:06):
valuable audience metrics, and they have created a great platform
to get traction if you're a musician. That's not nothing
far from it. So today I'm giving Spotify a seventy
two and Spotify CEO Daniel Eck if you'd like to

(58:26):
come on the show to talk about anything we've touched
on today, Please know that you have an open invitation.
If you're thinking about starting a purpose led business or
beginning the journey of transformation to become one, here are
three things you should take away from this episode. One,

(58:49):
make sure your purpose and your business model are aligned.
Free is never free. I feel like I've said this before,
it's still true. When you sign up for Spotify's free level,
somebody pays, even if it's not you. In Spotify's case,
it's the artists who you love and who Spotify claims

(59:10):
to want to help make a living who paid the price.
If you are going to make your product free, make
sure you're transparent about your business model and that it
aligns with your purpose. Two. Your purpose must drive action.
If you can't make meaningful strides towards delivering on it,

(59:31):
then it's not your real purpose. If Spotify's hands are
actually tied by the record labels, as it seems like
they may be, they need to figure out how to
advocate on behalf of the musicians they claim to care
about to change that situation or change their purpose to
accurately reflect what they really stand for. Three. Become a

(59:55):
force for transparency in your chosen industry. Transparency about your
own businesses table stakes. If your purpose led but purpose
led businesses are actually trying to make the whole world
a better place, and better things happen in light than
in shadow. In Spotify's case, it's actually super hard to

(01:00:16):
know how to help them help artists because it's very
hard to understand where the money is going in the
music industry. They should try to fix that. And if
this episode made you want to sing our praises, subscribe
to the Calling Bullshit podcasts on the I Heart Radio, app,

(01:00:40):
Apple Podcasts, or wherever you listen to people speaking to
your ears and friends. I'd like to ask for your help.
If you enjoy the Calling Bullshit Podcast, please take a
second to rate us on Apple Podcasts or on your
preferred platform. It helps more people find the show. Thank
you to our guests today, Blake Morgan, Cadence and David Turner.

(01:01:02):
Learn more about the I Respect Music campaign, the Centers
and David's newsletter Penny Fractions in our show notes or
at our website Calling Bullshit podcast dot com. And thanks
to our production team Hannah Beale, Amanda Ginsburg, d s Moss, Hailey, Pascalites,
Parker Silzer and Basil Soaper. A little bit of good news,

(01:01:26):
we recently learned that we are now the eleventh most
popular business podcast in the world. Kick Ass Job Team.
Calling Bullshit was created by co Collective and it's hosted
by me Time Montague. Thanks for listening.