The Serial Dissembling of Daniel Ek and Spotify on Artist Pay (and Just About Everything Else)

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 Dissemble

Verb, dissembled, dissembling.

to give a false or misleading appearance to; conceal the truth or real nature of

For the past three years I’ve been advocating for better pay for artists from digital services.  However when I started on this quest Spotify was not at the top of my list.  While I have never been enthusiastic about having all my catalogue on the free tier of streaming services (there is a substantial difference in pay per spin on free and premium platforms)  I was willing to put this issue on the back burner while we focused on much bigger  problems like ad-funded piracy and much much lower rates from services like YouTube and Pandora.

But over the last three years I’ve come to believe that Spotify is a much bigger problem.  Not only because of their low rates  but because they deliberately use highly manipulative tactics, paid flacks, proxy organizations, leaked documents, and even paid bloggers to intimidate critics and counter criticism of their service.   As a former State Department employee remarked  “their public relations strategy resembles the playbook of an authoritarian regime.”  The real problem with Spotify is that you cannot trust them.

The latest object-lesson is the still-unfolding kabuki surrounding the leak of the Spotify-Sony Music contract  to the  technology website The Verge.   The Verge is the same site that leaked the  Sony pictures hack.  The Verge apparently has a hard-on for Sony.

Now I have to admit to some schadenfreude when I heard about the Spotify contract leak.  For the last three years we’ve taken significant pushback from the recording industry over our criticism of Spotify.   Major labels have strongly defended Spotify against criticism from artists like myself.  Meanwhile Sony went so far as to replace its own streaming service on the playstation with Spotify.  So yes,  I have to admit it was kind of awesome to see Sony get stabbed in the back by their “partner” Spotify with the contract leak.  On behalf of artists everywhere I must issue a pro forma “We told you so!”

And yes it’s abundantly clear  that it was Spotify that leaked the contract.  Who else beside Sony and Spotify had paper copies of this contract?  The leak helped Spotify and clearly hurt Sony.  Spotify had motive, Sony did not.

Plus it was excellent timing for Spotify.   Let’s review timeline of the kabuki so far:

1. Tuesday Spotify-Sony contract leaks to Sony hater The Verge.  The Verge doesn’t really understand the contract but eviscerates Sony anyway.   Internets go crazy.

2) Wednesday Spotify has press conference (live streamed by The Verge ) announcing new Spotify features. Internets go “meh.”

3) Thursday Daniel Ek does interview with NY Post which results in a convenient headline that reads: “Spotify CEO Says Middlemen Gobble Cash”

So what Spotify and their publicity flacks would have you believe is that this whole problem with artists being fairly compensated has nothing to do with them. It is all the fault of the record labels.   In the NY Post Ek goes pseudo diplomatic and says “I don’t want to point fingers, it’s a systemic thing.”  Meanwhile the  little green men over at The Verge do all his finger pointing for him.

And this is why I say Ek and Spotify are dissembling on artist compensation.  While the major labels like Sony or WMG are contributing to the problem of low compensation by treating revenue as sales (10-20%)  not licensing (50%), the problem still starts with Spotify.  And specifically it starts with the free tier.  Spotify and Ek know this.

We didn’t need a leaked Sony contract to know this.   We have access to digital revenue reports for a moderately sized indie label catalogue and we have diligently reported on the payouts for the last 18 months.  These are the rates paid FROM Spotify TO the labels.  No middlemen involved.  The rate on the free tier in the US is abysmal.

 It takes 7,000 spins (not 1,500 as Billboard magazine would have you believe) to generate the same revenue as a digital album download.

StreamingRatesandPercentagesUSA

Spotify pays out at seven different rates with the free tier being the majority of spins. 

 Artists would make SEVEN times as much if consumers could be converted from the free streaming tier to the paid tiers.   One way to do this would be to have exclusive content on the paid tier right?  An incentive to subscribe to the service.  But Spotify refuses to do this.   Spotify insists there be no exclusives and all music on the service is also available for free.  This specifically led  to Taylor Swift’s album not being available on the service.

Ek does not get it. Why would anybody in their right mind switch to the paid service if they can get the same service for free?

Ek and Spotify need to come clean.  They need to stop playing games and admit they have as much to do with bad pay to artists as the major labels.

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