While artists bitch about low payments from Spotify royalties, YouTube, Grooveshark and The Pirate Bay pay artists less or even nothing. The reason Spotify pays so little is because it’s forced to compete with illegally operating, unlicensed sites who pay nothing at all. Artists need to focus on the big picture.
Spotify has become the symbol of inequity for artists in the digital age, and we’re not saying artists are wrong to focus on the Spotify royalty payments as an example of this inequity. We’ve written our own criticisms of Music Streaming Math and our doubts that Spotify could ever actually scale to be a sustainable business for both artists and labels.
Whatever the criticisms we may have of Spotify it is important to note that they are legal and licensed with secured rights.
The truth is that Spotify is only a symptom of a much larger disease. The actual cause of the inequity is mass scale, enterprise level, corporate sanctioned piracy for profit. Ad Funded Piracy is the primary mechanism by which the work of artists and musicians has been devalued to fractions of cent and here’s how it works.
Imagine creating a business where you could profit by attracting every fan of every musician and band.
Imagine not requiring any licenses or permission from any of the musicians and bands.
Imagine selling advertising based on not only the overall popularity of the musicians and bands, but also from providing free streaming and/or downloads to the music of the musicians and bands.
Imagine not having to pay musicians and bands and keeping all of the advertising (and/or subscription/access fee) money.
One of the most accessible points of piracy starts at Google search and they can absolutely do more to assist legal and licensed businesses that pay artists. Digital Music News recently reported that “Google Receives Its 100 Millionth Piracy Notice. Nothing Changes…” As we’ve seen with Google’s swift retribution to Rap Genius, search can very effective to discourage or remove bad actors from the legitimate marketplace (When it is in Google’s business interest to do so!). Google is also tracking over 200,000 known domains engaged in active piracy. This seems like an easy problem to solve.
Not only did a series of research studies by the USC Annenberg Innovation Lab identify Google as one of the primary companies feeding advertising to pirate sites, but there is actually a longer darker history of Google assisting illegally operating business online.
Artists don’t get paid anything from pirate sites profiting from advertising revenue. This is the big one, those who pay nothing at all but distribute the most music at the highest volumes.
YouTube is a company that was intentionally founded and designed to profit by ripping off artists, musicians and creators. These practices are well known from court documents published by sources such as Daily Finance.
It appears that much of the music on YouTube may still be generating profit for YouTube but not so much for musicians. East Bay Ray of the Dead Kennedy’s details the state of things here on NPR.
Even when YouTube is paying, they are paying half as much (or less) than Spotify on a per play basis.
We’d love to hear from artists (musicians and songwriters) who actually have their music legally licensed on Grooveshark. And, for those who do, we’d love to see what some of those royalty statements look like. We can’t imagine that Grooveshark is paying better than Spotify and that’s only for those artists who may actually have a valid license from Grooveshark.
As of this writing Grooveshark is still embattled in a number of lawsuits, which at one time included every major label. Essentially Grooveshark designed their business to be like an audio and music only version of YouTube. We detailed their practices in the post “Grooveshark, Notice and Shakedown”.
We don’t know how much money Grooveshark is making, but it’s enough to put the companies founders on the Forbes 30 Under 30 List… It seems that it is the (new boss) gatekeepers controlling the money and once again it is the artists themselves getting screwed.
As of this writing Pandora has abandoned it’s ill conceived attempt at legislation that would have reduced artists royalties by 85%. But let us not forget that the arguments used by Pandora for attempting that move were also motivated by the downward economic pressure placed on artists whereby the majority of music consumption is happening with no compensation at all due to various forms of Ad Funded Piracy.
Welcome to the Exploitation Economy.
We suggest that artists focus on the disease that is creating the symptoms of businesses like Spotify.