[NewsPoster]

Spotify has responded to claims by singer Taylor Swift that the service does not pay music producers enough, by revealing it has paid more than two billion dollars in music royalties. A blog post by CEO Daniel Ek following the removal of Swift's music from the service and a further attack in an interview also notes Swift was on track to receive $6 million in streaming revenues for this year alone.

Swift told Yahoo Music that Spotify felt to her "a bit like a grand experiment," and that she is "not willing to contribute my life's work to an experiment that I don't feel fairly compensates the writers, producers, artists, and creators of this music." After putting new music on the service, Swift claims it did not feel "right," and was effectively telling her fans that, if they create something, someone could easily get a copy of the content for free and without payment.

In the blog post, Ek attempts to disprove three myths typically circulated in discussions over streaming. The first, "Free music for fans means artists don't get paid," is countered by the existence of the ad-supported service, which Spotify still pays royalties for. Ek points out that pre-Spotify services floundered by offering either all-free or all-paid streams, with paid-only services failing because "users were being asked to pay for something that they were already getting for free on piracy sites," and the free services paid "next to nothing back to artists and labels," and are claimed "were often just a step away from piracy, implemented without regard to licensing."

The blended option, namely Spotify's use of both systems, is more useful for paying artists, with the limited free service also successfully driving users to the paid tier. Spotify claims it now has more than 50 million active users, with 12.5 million subscribers paying $120 per year for the service, or three times more than the average music consumer spend. It is noted that, of this 12.5 million, more than 80 percent started out as users of the free service.

Spotify CEO Daniel Ek

The second myth, "Spotify pays, but it pays so little per play nobody can ever earn a living from it," has Ek comparing Spotify to radio station royalty payments. While one play on a moderate-sized radio station covering 500,000 people is claimed by Ek to pay the recording artist "nothing at all," the equivalent 500,000 streams on Spotify would pay "between three and four thousand dollars." It is suggested that the $6 million figure for payments to Swift could double by next year.

The claim that Spotify hurts downloads and physical sales, the third myth, is put down as a "classic correlation without causation," namely analysts seeing downloads going down and streaming increasing in popularity, assuming one is causing the other. After pointing out that downloads are "dropping just as quickly in markets where Spotify doesn't exist," Ek gives a list of established artists who used Spotify to promote their releases, including Ed Sheeran and Lana Del Ray.

Before signing off, Ek asks Swift not to look at Spotify on it's own, as her songs are still available on other services at no charge to the listener. Despite congratulating Swift on selling more than 1.2 million copies of 1989 in its first week, Ek notes that "if you looked at the top spot on The Pirate Bay last week, there was 1989."

"We're getting fans to pay for music again. We're connecting artists to fans they would never have otherwise found, and we're paying them for every single listen."

[bobolicious]

Zoë Keating chimes in...

http://www.cnn.com/video/data/2.0/video/tech/2014/11/04/qmb-intvw-spotify-taylor-swift-zoe-keating.cnn.html

[DahlBryn]

Using Eks stated number of paid subscribers, their annual earnings would be 1.5 billion at best.
Advertising revenues for the free-stream part of their service would not be enough to cover
all of their hardware, bandwidth, legal and office(s) costs to then be able to issue a claimed
2 Billion to artists plus mentions costs. So then, what amounts are artists actually getting
(Taylor Swift is at the extreme high end as an example, most won't see anywhere near that kind of revenue).
Somethings not right here.

[pairof9s]

That $2 billion in royalties is a total figure that Spotify has distributed, not a yearly amount. So considering that it's been in existence for over 5 years, that's not a "funny math" figure to arrive at.

[southwick]

Goodbye, Taylor. Kiss your $6 million goodbye. God, this girl has an enormous ego. Too bad she doesn't have the talent to match.

[Spheric Harlot]

She certainly has business talent, though, and I'm pretty sure you don't get to be the world's most successful artist by making stuff that nobody likes.

So it would seem that having to point out that you don't like her stuff is all about your own insecurity, and nothing to do with her, and CERTAINLY nothing to do with her business decisions regarding Spotify.

Who, by the way, are not an option for the future of the music business, the way they're structured right now.
And it takes people of the caliber of a Taylor Swift to get that point across, apparently.

[Grendelmon]

Originally Posted by Spheric Harlot 

So it would seem that having to point out that you don't like her stuff is all about your own insecurity, and nothing to do with her, and CERTAINLY nothing to do with her business decisions regarding Spotify.

So a matter of opinion regarding personal taste in music alludes to insecurity? That's ridiculous. Lighten up.

[Spheric Harlot]

Well, it certainly has nothing to do with the topic.

And there's a definite pattern whenever anybody in the music business speaks up against the status quo, or makes a (imo) sensible argument that *might* result in people no longer getting a free ride, of accusing them of being "talentless hacks" or worse.

In this case, a woman is called a "girl", told to "kiss goodbye" six million dollars as if she weren't deserving of them, accused of having an "enormous ego" (rather than business sense), and not having talent to match (despite being the most successful artist on the planet at the moment).

Apart from being sexist and ignorant, why would anybody bother to open their mouth and expose themselves by saying something so stupid?

[shawnde]

@Spheric Harlot

I concur with Grendelmon on this one, even though on most issues, I do like your viewpoint. However, I think you need to consider a few things here .... I remember with the iTunes Music Store started, Metallica and a few others were vehemently against the idea (of not buying the whole album and cherry picking songs). They all refused to bring their catalog to iTunes. I think it became a matter of "when", and not "if". They all eventually came over, because guess what: there is a lot of money to be made :-)

There is NOTHING sexist by calling her a "girl" ... whether she's a girl, woman, or what have you ... a girl is not a derogatory term :-)

Also, I don't believe Taylor Swift's argument was sensible, either from a business or personal perspective; I think it's a ploy being played by HER LABEL, more than anything else. Labels are using streaming services as a hedge against iTunes, and yet at the same time, don't like them, because in aggregate, iTunes pays MORE to the LABELS. They're just twisting her arm to go and say stuff like that. Whether she stayed or left, her iTunes revenue would not have changed much, so I believe she should have stayed and collected her royalties. Plus nothing about Spotify is a "free ride" .... as far as the artist is concerned, they're getting paid on all the streams (albeit at different rates).

Also being popular, or selling lots of albums does not equate to being talented; Justin Bieber is very popular and sells a lot of records. Britney Spears sold a lot of records too (she couldn't sing a single line without AutoTune). I think you're on a slippery slope there ... So success doesn't mean talent :-)

[Also remember, Bill Gates was very successful and made tons of money, but he also destroyed the computer industry, and made a lot people's lives a living hell ... his negative contribution to the computing industry is incalculable]

[shawnde]

I absolutely hate the commenting system here on MacNN.

[Spheric Harlot]

The current model run by Spotify and Pandora et al. is one not sustainable for the artists.

The labels don't mind as much because they OWN Spotify.

The difference between digital purchases and streaming is that there is no money to be made on streaming - by the artists. The royalties paid are pittance and turn recorded music into essentially zero-value promotional material.
When 180 million streams nets you $12,000 in royalties (Avicii's "Wake Me Up"), that's a sad joke. To get a production played 180 million times probably means staff phone bills alone are higher than that.

Consumers of course are loving what is essentially an endless music library that they don't have to pay for, but in its current form, it is not much removed from Napster, as far as the artists are concerned.

[Grendelmon]

Originally Posted by Spheric Harlot 

Consumers of course are loving what is essentially an endless music library that they don't have to pay for, but in its current form, it is not much removed from Napster, as far as the artists are concerned.

From the article:

The top 1 percent of bands and solo artists now earn 77 percent of all revenue from recorded music.

The Shazam Effect - The Atlantic

[Spheric Harlot]

What this is is the preliminary grumblings of free Music services going away.

Word on the grapevine is that this will happen REALLY soon - most licensing deals between labels and streaming services are apparently up for renegotiation this January.

Ad-supported free services will be limited to that material which the labels/artists deem "promotional", with everything else behind a paywall.