Spotify decides who gets to be an artist

Big changes are coming to Spotify. The company has been criticized for being too lax on streaming fraud, spending too much on splashy initiatives (*cough* podcasts), and, of course, not paying music artists enough. After years of being the platform for, as one audio executive said to me, “the unwashed masses,” company leaders touted a new focus on “efficiency” on its earnings call this week. Then, news leaked of a revamp of its royalty model that benefits more popular artists. It is apparent that, under pressure from investors and labels, Spotify is trying to grow up. And not everyone is happy about it.

A quick recap: MBW reported Tuesday that Spotify, after basically treating every track the same, whether it’s a Taylor Swift hit or a short clip of an airplane engine, will raise the bar to monetize certain audio starting early next year. Normally, 30 seconds of streaming of a track counts as a play. But for noise tracks (white noise, pink noise, etc.), that threshold will be higher. The more controversial change, however, is that tracks that earn less than $0.05 per month (or about 17 plays, as estimated by MBW) won’t earn royalties at all.

Reaction to this news from the music community was swift, positioning it as a play to appease the major labels and their superstar artists. And while they are not wrong, the actual effects of this change are going to be really minimal on an artist-by-artist basis. Being denied a sub-$0.60 sum per year from streaming is not going to make a dent in an indie artist’s income. And as the Spotify argument goes, a lot of this money never sees the light of day anyway because the payment is worth less than the effort to process it. The impact for the major labels will be relatively small as well. MBW reports that Spotify expects these low-play tracks to generate $40 million annually, which, once divvied up, is a rounding error for the big labels: Universal Music Group reported recorded music revenue of more than $8 billion last year, Warner Music Group took in $5 billion, and Sony Music made $4 billion.

But if the individual monetary impact is pretty small, the shift in Spotify’s perspective is not. What I am hearing from people in the industry is that once Spotify uses its corporate power to define what is music, who is an artist, and what art deserves to make money, it sends the message that not everybody can or should participate in music creation.

On one hand, music has always had a hierarchy of worth — you pay $500 to see Drake at a stadium and $5 to see your friend Steve at a bar. When you would go to Tower Records in the days of yore, you were not going to pay the same for a hit record as you would for an up-and-comer’s LP. But Spotify was supposed to be different — it was built on the promise of being a home for all kinds of music creators. This shift, while perhaps more pragmatic, is antithetical to that ethos.

Low-play independent artists, known in the industry as the “long tail,” may get the message that Spotify is not for them and focus their efforts on social networks like TikTok. “If you suddenly have all of these artists spending more time and energy on platforms that are not [Digital Service Providers] and taking their fans with them, that could become a problem for these major streaming platforms because that cultural capital is important,” says MIDiA music analyst Tatiana Cirisano.

And even if none of those artists are making that much money, they are not a small group. MIDiA Research estimates that long-tail artists will account for 10 percent of all music streaming by 2025.

They could also choose to focus on indie-friendly streamers like SoundCloud, which has a user-centric royalty system. The way that works is instead of all subscription money going into a pool and then getting divvied up by an artist’s share of the overall streams, an individual’s subscription money gets portioned out to the artists they listen to the most. While it does sound kind of gimmicky, a study this summer found that a good chunk of indie artists could see a significant increase in streaming payments under the system.

On the other end of the spectrum is UMG’s partnership with Deezer, in which popular tracks get double (or even quadruple) the amount per stream than less popular tracks. “There is no other industry where all content is valued the same, and it should be obvious to everyone that the sound of rain or a washing machine is not as valuable as a song from your favorite artist,” Deezer CEO Jeronimo Folgueira said when the partnership was announced last month.

Streaming royalty changes have been a long time coming, according to SoundExchange CEO Michael Huppe. “I don’t know anyone who thinks the current pro rata streaming model is perfect,” he said. “Anytime you switch stuff around, some people are going to make more, some people are going to make less, and you have to be on the lookout for what that means. And none of this, by the way, grows the pie.”

As it stands, 100,000 new tracks are uploaded to streamers every day, in no small part because Spotify disrupted the way music is distributed. Of course, some sorting is necessary. But in making it harder for long-tail artists and noise creators to make money off the platform, Spotify is siding with the higher-end of the industry that doesn’t want to be associated with — or paid the same — as the riffraff. In shifting away from its democratic vision of what an audio platform should be, Spotify is proving that, as it matures, it may not be so different from other music companies after all.