Everyone has heard the hullabaloo raised by Taylor Swift pulling her music off of Spotify. While pop’s current superstar removing her catalog from the world’s #1 music streaming service is news itself, Swift’s action also raises interesting questions about why she chose to reject the service and what implications her actions might have for the music industry at large.
Switft’s newest album, “1989,” has been smashing success, selling 1.287 million copies in its first week according to Nielson SoundScan. With such success, Taylor can afford to brush off what she referred to in a recent Yahoo interview as the “grand experiment” of streaming, explaining that she doesn’t feel that the model “fairly compensates the writers, producers, artists, and creators of this music.” She went on to say, “I just don’t agree with perpetuating the perception that music has no value and should be free.”
At a basic level, Swift is simply wrong when she says that streaming services provide music for free, if by free she means free of compensation to the artists and songwriters. Copyright law requires streaming services like Spotify obtain licenses for these works. Furthermore, streaming provides royalties not only to songwriters and publishers, like radio, but also to recording artists and record labels.
It is easy to take the impossibly charming Swift’s words at face value, but even a quick examination reveals that she has not put her money where her mouth is. A cursory search on Youtube.com reveals that the songs from her new album are available on the site to stream, for free. Some have suggested that she pulled her music off Spotify to boost album sales rather than because of some ideological stance against streaming itself. On the other hand, Swift’s camp may have decided to throw their lot in with another streaming service. In addition to Youtube itself (the world’s #1 music streaming site), the tech news has recently featured stories about upstart streaming services such as Youtube Music Key and Beats Music that have entered the space and pose serious competition to industry veteran Spotify.
Whatever her true motivation, Swift’s position at its core is that music should sell itself, that people should pay money for individual recordings rather than music being sold as a bundle of content or as a tool that is used to sell other things. In 2014, mega-hits like Swift’s new release are few and far between. What Swift is really saying is that she does not believe that “music sells everything but music,” (an oft-quoted phrase that some argue best describes the music industry in the digital aftermath). Taylor’s vision is an admirable sentiment, but one that may not fit the current reality of the industry. While we all may feel nostalgic for the days of flipping through CD and record collections carefully curated by their owners, those days are probably gone forever.
The reality is that music now is consumed as and consists of small pieces of data. Of course, the internet enables people to share this information so easily that it is really hard to stop piracy, and there enter the streaming services, which have tried to fill the gap by essentially making it easier to stream than it is to steal.
This is not a bad strategy. If music industry professionals look to their cousins in the movie business, they will see that the streaming model is not all doom and gloom and can be very profitable if done right. Take Netflix for example, a company that collects ten bucks a month from so many people that it has started to produce some of the most well-respected content out there.
According to Spotify CEO Daniel Ek, the company is positioned to become the Netflix of music streaming. Ek explained in a blog post “Spotify has paid more than two billion dollars to labels, publishers and collecting societies for distribution to songwriters and recording artists. A billion dollars from the time we started Spotify in 2008 to last year and another billion dollars since then.” (Emphasis in original). The two billion dollar number is impressive, but that the company has paid a billion dollars in royalties over the past year shows exciting exponential growth.
Swift was right that streaming is a grand experiment, but the streaming experiment is probably the music industry’s biggest hope—that over the long run streaming companies become profitable and provide substantial royalties to songwriters, artists, publishers, and record labels. As a matter of principle, Swift should be getting behind streaming instead of in front of it. My proposed solution: Spotify should give Taylor Swift a fat advance and she should get back on the service. Obviously a huge number of people listen to her music, and a rising tide floats all boats.