September 25, 2022

Unitranche

Supportive Business Potential

Artists should take a principled stance against Spotify for songwriters

The following MBW Op/ed comes from David Israelite, the President and CEO of the National Music Publishers’ Association. The NMPA is the trade association representing American music publishers and their songwriting partners.


Neil Young recently pulled his music from Spotify prompting a conversation about Joe Rogan, and what started as a boycott over a podcaster has launched a closer examination of the platform’s ethics on several fronts.

Whether it’s payments to musicians, its podcast hosts, or its founder’s investment in military AI technology, let’s not forget its treatment of songwriters. Right now, Spotify is trying aggressively to devalue the very people it relies on, and this should compel even more artists with power to protest.

Since the dawn of streaming, Spotify has fought to pay songwriters as little as legally possible. Four years ago, the court that determines streaming royalty rates decided Spotify must increase what it pays writers and music publishers by over 44 percent, to around 15 percent of its revenue. While this is still too low, this was a huge step forward for music creators.

Unfortunately, soon after this decision, Spotify took the unprecedented step of leading the charge to appeal that royalty increase, along with Amazon, Google and Pandora. This was a devastating blow to the same creators that it simultaneously celebrated on billboards and in parties far from the courtrooms of Washington, D.C.

This appeal threatens the bedrock of the entire music industry. If Spotify and Amazon are successful, songwriters could go back to being paid around 10 percent of revenue, adjusted for inflation, by far the lowest royalty rates in history.

Many artists don’t know this is happening because their record labels are able to negotiate with Spotify in the free market and often those same labels share equity in the platform. The reason they can do this and songwriters cannot, goes back to a complex legal framework from 1909 that puts songwriters under a compulsory license, meaning any artist can record and any platform can play a piece a of music for a nominal fee dictated by the government.

Copyright law is complex, but in short, Mr. Young, like most artists, or performers of songs, has the legal right through his label to take his music off of any digital platform. However, songwriters have no such right. As one would imagine, this makes pressuring Spotify to do better extremely difficult.

Taylor Swift famously pulled her music from Spotify over it being offered on its free tier. This started a global dialog about the depreciation of music by streaming. This was proof that artists have influence. The law has left writers with so little leverage that the only way to win some financial fairness against the biggest streaming service in the world is for big name artists to take principled stances as their allies against the brutal backroom tactics being used by Spotify.

“The old model of songwriters thriving off of terrestrial radio play is long gone as streaming platforms have understandably cut into how much time listeners spend on AM/FM stations”

It is extremely unfortunate that it has come to this. The devastation of the industry by piracy in the early 2000s has led us to often celebrate the ‘recovery’ brought about by streaming platforms. But in reality, these platforms have created a whole new problem for the songwriting class. While record labels have experienced a renaissance, songwriting has been spun into a depression.

Don’t let the headlines about billions in catalog sales fool you. These are the one percent, and those rights deals are bets being made on exploitation over many decades, largely for the biggest artists in the business who also write music. The average successful songwriter, whose name you may not know but who writes the hits you know by heart, is barely making a living off of streaming.

The old model of songwriters thriving off of terrestrial radio play is long gone as streaming platforms have understandably cut into how much time listeners spend on AM/FM stations. So without touring, merchandise and big endorsement deals, streaming income will dictate the future of the songwriting business, or lack thereof.

The money is there. Spotify will respond by saying that it already pays out a great deal for music rights. What it won’t clarify is that the vast majority of this goes to record labels and artists. Record labels and artists shouldn’t be asked to take less.  Spotify should pay more. The split between what performers are paid versus songwriters is around 5:1. The company, which has a market cap of over 30 billion, has the ability to expand the pie and pay fairly, and bring the songwriting community in by doing so. Instead, they fight on, devastating the creatives they should be investing in.

Neil Young, Joni Mitchell, India Arie and others have raised concerns and taken action based on their beliefs, and we know that many – if not most – artists also feel strongly about fairness towards songwriters. A reckoning must be forced in regards to how Spotify has systematically worked against them. Similar to other industries – from agriculture to fashion – where the exploitation of workers has been exposed – Spotify must deal with the fact that its tactics have consequences.

Imagine what could happen if many other artists of their caliber shed the same light on what Spotify is doing to undermine songwriters and consequently, users also insisted on fairness. A music ecosystem with integrity is possible, if enough people demand it.Music Business Worldwide