The Conspiracy Against Spotify (and Music Streaming in General)

Remember when Taylor Swift pulled her music from Spotify in late 2014, but is (probably) back on Spotify in late 2016?  (Sorry, I don’t have Spotify in my country, Thailand, yet, so I can’t crosscheck.)  Or how about Adele withholding her ’25’ album from Spotify in late 2015, but then it became available 7 months later in June 2016?  And how about Radiohead‘s frontman, Thom Yorke, who publicly called Spotify ‘the last desperate fart of a dying corpse’ in 2013, but their latest album ‘A Moon Shaped Pool’ is now on Spotify since June 2016?

I’ve been observing for quite a while now about the hatred towards Spotify and music streaming in general, and found that there are some questionable information that convinces me to believe that there is a conspiracy hiding somewhere.  I hope this article will let you see what I mean.

Remarks: I’m mainly using Spotify for this article as it is one of the most well know and also the most controversial, meaning there is more information to find online compared to others.  So, I’m sorry that I didn’t include other services.

Same guys who own Spotify say they hate Spotify?

Here’s a list of major shareholders in Spotify by Techcrunch in 2009 (sorry I couldn’t find newer information than 2009).

Shareholders in Spotify on 10/7 2009

  • Bolag Andel
  • Rosello (Lorentzon) 28.6%
  • Instructus (Ek) 23.3%
  • Northzone Ventures 11.9%
  • Enzymix Systems (F. Hagnö) 5.8%
  • Sony BMG 5.8%
  • Universal Music 4.8%
  • Warner Music 3.8%
  • Wellington IV Tech 3.8%
  • Creandum II LP 3.5%
  • Swiftic (Strigéus) 2.6%
  • Creandum II KB 2.4%
  • EMI 1.9%
  • Merlin 1.0%
  • SBH Capital (B. Hagnö) 0.8%

*Remarks: EMI defunct in 2014.

As you can see, all the major labels (bolded) have a stake in Spotify, so why do they and their artists love giving Spotify a hard time?

Simple reason I can think of – increase sales.  Here’s my reasoning: apart from earning money from their back catalogs that they normally wouldn’t get because they don’t get money from second-hand sales (unless they produce some new issues or remasters); with ingenious marketing tactics, they can use music streaming as tool to make more money.

Let’s look at this case: Adele’s ’25’ album sold 3.38 million copies in the first week, is the world’s best-selling album of 2015 with 17.4 million copies sold, and has sold a total of 20 million copies as of June 2016 (check out IFPI’s report, too).  I think you can probably speculate that one of the reasons behind the massive sales numbers is that the album was not available on music streaming services, so Adele’s hardcore fans had to go out and buy the CDs.  And then within 7 months after its release, the album is available on Spotify to possibly earn money from the more casual fans who didn’t go out to buy the CDs in the first place.

Here’s another interesting case: Conspiracy theorists thinks Taylor Swift’s Apple beef was a publicity stunt.  When Apple launched Apple Music, they offered users a 3-month free trial, but refused to pay artists or labels for that time period.  So, Taylor Swift came out protesting Apple with an open letter that made Apple to quickly change their mind and pay the royalties.

Swift received a lot of praise from fans and other artists, and more people know about Apple Music (and maybe Swift also received some kind of payment, I really don’t know).  Sounds like a win-win, right?

Well, not only did Swift help publicize the fact that Apple Music will be offering said free trial (which a large number of Internet users seemed unaware of), but the end result also serves to make all parties involved look good.  Swift gets to cement her image as America’s sweetheart, while Apple shows its caring side by doing what its rivals wouldn’t by admitting it was wrong and pledging to change its stance.
Source: Cult of Mac

I hope I have convinced some of you to think that there’s something weird about why major labels who have stakes in Spotify want to attack their investment.  Now, let’s have a look further…

Spotify doesn’t pay artists enough!

I’m sure many of you have heard or read about how artists and labels complain about how little Spotify and music streaming services pay them, but have you ever thought about where the money comes from?

Music streaming services usually earn money from paid subscriptions and advertisements, then they share that money to the artists and labels.  But the fact is that they are losing money every year – Spotify losing up to $188.7 million in 2015.  The reason why they are still in business is because they have a lot of investment money to run their business.  But if you know anything about investors, you know that they’re hoping that their investments pay off, meaning that they hope music streaming will start making money someday.

Talking about where the money comes from, ideally, it should be coming from the fans who consume the music, right?  But if you’ve noticed, the willingness to pay for music has dropped way down – probably since Napster and file sharing websites came around in 1999.  The Internet allowed people to access music for free, causing a widespread behavior of not wanting to pay for it; so when music streaming became available, the price point couldn’t be set so high.  If artists and labels force the services and their investors to pay more to the them, they can only do it for so long until people’s willingness to pay become high enough or go bankrupt first.

So, is it because of us – the fans – who don’t pay enough for music?

Have we ever thought that we as a fan is the source of the problem why artists are aren’t getting paid enough?  Here’s an interesting article about that: “Spotify’s Year in Music shows just how little we pay artists for their music“.

Or is it because the money ends up more in the hands of labels than artists?

Music streaming services normally pay up to 70% to rights holders.  This money goes through music aggregators first, then enters the label, then shared to the artist.  Maybe another reason why artists get so little money is because their labels don’t share enough of their revenue?

The labels made a significant amount of money from Spotify.  It’s just not finding its way into the hands of the artists. – Troy Carter, Artist Manager of John Legend, Meghan Trainor, and previously Lady Gaga – Atom Factory
Source: Techcrunch

What if music streaming fails altogether?  Who wins?

If you think about it, let’s say Spotify and all other music streaming services fail, what good can come out of it?

I could guess that the major labels can possibly gain back some control over the market – being the gatekeeper, like they used to – restricting access to music to maintain a higher price for it.

In my opinion, I doubt that this would happen, because the Internet allows the freedom of thought and the chance of innovation to be born.  In the end, people will find new ways to access music they want to listen to, and also spread their own music out to the world – bypassing the distribution channels controlled by the major labels.

However, if music streaming succeeds while the major labels own a big portion of it, then they also succeed in gatekeeping the music industry.  So, they win however the outcome.

Why so much hate towards Spotify?

One of the quickest ways to unite people is to find a common enemy, and lies can spread faster with hatred as its catalyst.  You can see these tactics in war – for example the Nazis in WWII, or the US vs. communism and terrorism, etc.

Hatred is an extremely effective tool.  Combine it with the fact that humans are social animals and we tend to have biases favoring the ones we love, it makes it easy for people to hate someone or something their loved ones also hate.  Using the same logic, a popular artist can really get their fans to hate the same things they hate, which might be the simple reason why many people also hate Spotify and music streaming.  

Here’s an article you should read: “Myth Dispensing: The Whole ‘Spotify Barely Pays Artists’ Story Is Bunk“.

Final Words

Music streaming can be bad or good as it depends on who is using it and why, which I hope you can really focus on the ‘why’ part of it.  In this article, I am not only trying to present you some information I gathered to support my conspiracy theory, but I’d also want to point out that we should not let hate cloud our minds and allow bias to affect our judgement.

Full disclosure:

My name is Piyapong Muenprasertdee.  I am the Co-founder and Community Director of Fungjai Co, Ltd.  Apart from our music streaming web app and mobile apps (iOS, Android), we also organize concerts, music seminars and musician meet-ups, have an online music magazine, have an artist management division, and partnered with a musician booking platform – Lensod.com.

We see music streaming as a tool to connect the artist and the fan – to get them to discover each other.  Then we try to educate both the fan and the artist about mutual respect – not to pirate music and how they can improve their craft, and provide various tools and platforms to help make the musician a more respectable and sustainable career.

Featured image from https://brandleadership.wordpress.com/2015/09/

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