Thom Yorke is starting to appear like some sort of prophet (not that he hasn't already taken on that role for those who swear by Radiohead). About a month ago we discussed how he famously pulled
all of Atoms for Peace's music from the popular music streaming platform Spotify. Both Yorke and long time Radiohead producer and Atoms for Peace member Nigel Godrich proceeded to bash Spotify via Twitter
, asserting that new artists discovered through Spotify will make nothing while share holders will be "rolling in it."
Well, it turns out the pair weren't just being pompous or selfish. There is definitely a problem and Daft Punk just got the brunt of it. Song of the Summer, "Get Lucky", just surpassed 100 million plays on Spotify. BOOM. While it seems safe to assume that accumulating that much traffic for the streaming service would yield great returns for the robots, reality is a very different story. 100 million plays yielded Daft Punk a measly $9,669.47. That's it! If a group as popular as Daft Punk can't even pull 10 grand from 100 million streams, how in the world can new artists expect to make a living from streaming services? There has to be an answer to this disparity between the streams and the payoff, or else we can look forward to a future where innovative and progressive new music dies off completely (read, no more robots!).
It's easy to point the finger at Spotify, of course. But it seems the problem that Yorke alluded too and Daft Punk just experienced first-hand doesn't start with the streaming Swedes. In fact, Spotify is barely getting by on their current business model. Every year since its inception the company has lost an increasing amount of money. Here are a few visuals courtesy of Digital Music News that will help breakdown Spotify's finances.
Nice, right? But look at the chunk the labels are hauling home.
Which helps to explain these types of losses.
Yet, Spotify is growing year over year in terms of its user base.
So on one side we have the artist who wants better compensation for their work. On the other we have an extremely popular service that makes just enough to keep the lights on. And in the middle of the spectrum are the [major] labels who appear to be raking in the dough, while shelling out less than $10,000 to the guys behind one of the most massive hits of the summer. It seems inevitable that Spotify will have to restructure their economics with the labels in order to survive (or sell to a greater fool to suffer the losses). Either way, the future appears bleak, no matter how much the company scales.
So, from our perch, it appears Spotify might not be taking it to artists like they are so often accused. Instead, the major labels have handcuffed the service by reaping the payments represented by the licensing costs in the graph above. The blame, it seems, needs to be redirected. Otherwise, a company with more than enough potential to help save a drowning industry will succumb to such destructive deals. The major labels aren't expendable either - the industry needs them. But we need artists and we need services like Spotify. Somehow the labels need to figure out how to support both.