I’d like to start by saying this: I am an honest-to-goodness Taylor Swift fan. I’ve purchased each of her albums, I’ve seen her live, I cheer when she succeeds and find myself, almost inexplicably, personally insulted when people are unkind to her in the media. I wanted to be clear that I’m not bashing this artist whom I admire a great deal. She and I are interested in the same ends. I believe that I have a unique perspective on streaming and it’s role in the contemporary music industry, so I thought I’d take a moment to participate in this discussion while there seems to be so much interest in it.
Simply put, I believe that Taylor Swift and Scott Borchetta (president of her label, Big Machine Records) are misinformed about what streaming services are doing for emerging artists. Additionally, I feel that they are off-base in terms of what these sites mean for the future of our industry as a whole. The value of services like Spotify and Pandora within the music industry of today, and tomorrow, simply cannot be overstated. Also, it is of the utmost necessity for the continued growth of digital revenue generation that established artists participate in the building of audiences for services that pay out money for streams. For me, the explosion of streaming has proven to be yet another brick in the path towards a more democratic recording industry. I do agree that per stream royalty rates across the board are absurdly low. However, established acts removing their music from individual streaming services is not helping this fact. The media coverage on this issue has presented many of the facts regarding streaming in convoluted, confusing ways; I’m going to do my best to break down the streaming argument and explain how the music industry works for those readers who aren’t involved in the business.
Obviously, I’m not getting access to radio in the way that major label artists are. For instance, Jason Aldean (who pulled his new album Old Boots, New Dirt from Spotify) recently had a radio audience of 36.9 million listeners via 5,764 spins on US radio in one week. I haven’t had 5,000 spins on radio worldwide over the course of my entire twelve year, ten album career. Why? I’m not working with any of the large corporations, who have the power to help an artist make a real impact at radio. Over the past twelve months, I’ve had 44,560,048 spins on Spotify. In addition to allowing millions of people all over the world to access my music, those streams generated $250,867.86 (if you’re keeping score at home, that’s $0.0056 per spin). Promoting music on a global scale is overwhelmingly expensive; I’ve poured every cent of that money back into trying to share my music with new fans the world over. Since I do not have access to radio, it’s important for me to be able to reach new listeners via these more democratic channels of music consumption. Here’s an example of how this works for me; Megan likes my song “One Grain Of Sand” and says to her friend James, “Check this song out on Spotify!” There’s very little barrier to entry; James doesn’t have to pay for a download or for a subscription in order to hear my song. He clicks a button and boom, my entire catalog is available at his fingertips. If he listens to “One Grain Of Sand” and enjoys it, he can then listen to any and all of my albums. Now, instead of becoming a fan of a song, James is on his way to becoming a fan of me as an artist. While he’s doing this, he’s generating revenue (Spotify pays for every spin, even streams by users of the free, ad-supported service). For artists like myself, who lack access to traditional avenues of promotion such as radio, situations like the one I just described are an absolute boon. I’ve built a worldwide network of ravenous, devoted fans through these more grassroots channels.
In my mind, this is not an argument about Spotify, or even about the impact of streaming as a whole; it’s about the “old music industry” versus the “new music industry.” If an artist wants the worldwide promotional strength of a major label and a big time publisher, those super powerful companies are going to take a great big cut of your pie, as they always have. It’s expensive to promote a huge album on a global scale, so it’s understandable that a label wants to be compensated for making that investment. Universal (the label who distributes Swift’s music) most likely takes a cut from her streaming revenue. Her publisher also probably gets a cut. In a conventional record deal, an artist makes between 12 and 18 percent of profits. As an independent artist, I own 100% of my masters -- the recordings of my songs -- and 100% of my publishing -- the rights to the songs themselves. When I finish a new album, I give it to Tunecore (my distributor) and they send it out to Spotify, iTunes, Deezer, and many other digital marketplaces. Tunecore distributes each of my albums for $29.99 up front, with a $49.99 yearly renewal charge. Since they don’t take a single cent on the back end, when Spotify, iTunes, or any other store owes me a dollar, I get the whole dollar. There isn’t a label or a publisher between the retailers and I. The upside of this sort of business model is obvious; I keep all the money I generate, and can use it to continue creating and promoting my music. The downside is that I simply do not have access to major, mainstream media. If Swift and Borchetta are concerned that they aren’t receiving a large enough piece of the streaming revenue that her catalog is generating, I think the first discussion that needs to be had is with her label and publisher. In a tweet earlier this year, Bette Midler said that she received $114.11 for 4,175,149 plays on Pandora. Based on what I’ve seen in my own SoundExchange reports, one million spins on Pandora generate over $1,000 for the rights holders. This means that somewhere between Pandora paying out over $4,000 and Bette Midler getting a check for $114.11, someone took a pretty sizable chunk of that money. Recording and publishing deals need to evolve with the times. I’d love to hear exactly what percentage of the two million dollars that Spotify has paid out to Swift’s team over the past twelve months actually made it’s way into Taylor’s hands.
I also want to point out that we need to be comparing apples to apples. Borchetta told Time that Big Machine received $494,044 for domestic Spotify streams of Taylor Swift’s catalog in the last 12 months. Spotify countered by saying that they have paid out over $2,000,000 to Swift’s label and publisher over the past twelve months worldwide. We have no way of knowing who took what piece along the way, because Borchetta is talking about domestic numbers and Spotify is talking about worldwide numbers.
71 million people “like” Taylor Swift on Facebook. So far, her new album, 1989, has sold around two million copies. I’d imagine that more than three percent of those people who liked her on Facebook are listening to her new record. Some people who love her have purchased the album, of course (I’m one of them). So what about those other 69 million people? Fans are illegally downloading, they’re streaming on YouTube and they’re listening on radio. These are places that generate little to no revenue. My digital sales have declined in the past twelve months much as everyone else’s have across the industry, but my overall revenue is growing, because I’m making more via Spotify and SoundExchange (my SoundExchange royalties grow as Pandora’s user base does; I’m generating 15 million streams per month through their service). Borchetta told Time that taking Swift’s music off of Spotify was meant to make a larger point. He stated that the “music industry was better off before Spotify.” He’s right in saying that the music industry was better off in 2007; I’d counter by saying that seven years before that, in 2000, the music industry was incredible! Just like we can’t go back to the year 2000, when the tenth-best-selling album of the year (the Oh Brother, Where Art Thou? soundtrack, which moved 7.9 million records, according to Nielsen SoundScan) sold more than the number-one-selling album of 2013 (Justin Timberlake’s The 20/20 Experience, at 2.5 million copies sold, according to Nielsen SoundScan).
We can’t go back to 2007. We have to deal with the music industry that we work in today. Fans under 25 have grown up in a world where music has always been completely free. I’d much rather my fans consume music via a service that will pay me, like Spotify, as opposed to downloading it illegally or streaming it somewhere that pays me nothing. Yes, modifying people’s behavior is challenging -- but I’m excited that a large percentage of the current paid subscriber base of Spotify began as free users. That means Spotify is, in fact, modifying the behavior of their users. Their service is taking people who are used to paying nothing for music and getting them to change their minds and spend money on art. That’s exciting news in my book.
Taylor Swift told Time that she believes her music should only be available via the “paid” portion of streaming sites, an option that Spotify doesn’t offer. I honestly believe that Spotify’s “freemium” model -- where users are offered a free service and then allowed to upgrade to a “premium” paid service -- has been working. This model is getting some people, who weren’t paying for music to, eventually, pay $120 a year for music via Spotify Premium’s $10 per month fee. Spotify also generates revenue for artists, through ads, from listeners who aren’t spending any of their own money on music. Spotify co-founder and CEO stated in a blog post that 80% of their premium users started using the service via it’s free option. These new subscribers are essentially being recruited from the base of music fans that didn’t want to pay for music. Why would any Taylor Swift fan want to sign up for that free service in the first place if they can’t access her music? By limiting access to your music to those fans who use the paid portion of a streaming service, you’re virtually guaranteeing that none of your listeners will sign up for the free service, thus negating the possibility that any of those fans might one day upgrade to a paid service. Why do I care if fans are paying for the service versus using the free option? The per stream royalty rate is higher for paid users versus ad-supported, free users. It’s in everyone’s best interest to grow the paid subscriber base of a service like Spotify.
I am honestly worried about the future of the music industry; as a result, I want nothing more than for my fans, many of whom are not accustomed to paying for music, to listen to my music in a place that may help them modify their behavior so that one day, they might pay for music. In my mind, on some small level, that’s a contribution I’m making to the future of the music business. I’m watching Spotify grow; I’ve had nearly 100 million overall plays since I put my music on their site in 2010 and nearly forty-five percent of those have come in the past twelve months.
I believe this is an important discussion and I’m excited that it is being had on the national stage. I’d love to have people who are in positions of power at Spotify, Pandora, Rhapsody, iTunes and all the other digital retailers sit down with artists and have an open, honest dialogue about what we all want and how we can get there together. I also hope that labels and publishers can be open and honest with their artists about just how much revenue is being generated via streaming. Many artists seem to be in the dark about how much money their music is creating in the digital marketplace, and just whose pockets that money is ending up in. That is a tale as old as recorded music, and it is my prayer that one day we might get past the “us versus them” ethos of the old school label-artist relationship.
Do I think that every artist should do what I’ve done and stay completely independent in an attempt to run their entire career on their own? Of course not. We’ve never seen an artist promote their own career without the assistance of a major label and/or publisher and still become a Super Bowl halftime headliner. If you want to climb that mountain, you need assistance. I am, however, extremely proud that my team and I have been proving each and every day that success is no longer an impossibility for people who are game for the challenges of true independence. The future of the music industry is being shaped as we speak; I think artists should step up and make their voices heard.