Spotify: Starving Artists?

place for buying music was Tower Records on Broadway. Like It's spent an entire afternoon browsing for c ds, going into listening booze, admiring the album art in the little jewel cases. The experience, you know, it really brought music to life, and I certainly wasn't alone in CD revenue made up most of the fourteen point five billion dollar music industry. But of course change is the only constant, and in two thousand and six Tower filed for bankruptcy.

It was a sign of the times. Websites like Napster and you torrent ushered in a new way to discover and share music. Each song could be duplicated and passed along endlessly with no loss in quality. Physical music sales plummeted, and the music industry suffered a massive pay cut. Music

had moved to the Internet, where everything is free. Welcome to Calling bull Ship, the podcast about purpose washing, the gap between what an organization says they stand for and what they actually do, and what they would need to change to practice what they preach. I'm your host time onto you, and I've spent over a decade helping organizations define what they stand for, their purpose and then help

them to use that purpose to drive transformation throughout their business. Unfortunately, at a lot of institutions today, there's still a pretty wide gap between word and deed. That gap has a name bullshit. But, and this is important, bullshit is serious, but it's also a treatable condition. So when our bullshit detector lights up, we're going to explore everything the organization should do to fix it. The same year that Tower

wreck It's closed, Daniel Eck founded Spotify. He had been the CEO of u Torrent, a platform that allowed users to anonymously swap large media files. The program itself was legal, but it ended up mostly being used to pirate music. Pirate of music wasn't profitable, Labels and governments were cracking down, and X saw an opportunity. By working with labels and artists, he could charge listeners for access to a massive digital

library and reclaimed the value of music. And so he started Spotify with the mission to unlock the potential of human creativity by giving a million creative artists the opportunity to live off their art and billions of fans the

opportunity to enjoy and be inspired by it. Streaming now makes up about eight of the music industries revenue, and Spotify is the most popular streaming service in the world, with one eight million people paying for the premium subscription and hundreds of millions more listening for free on the ad supported tier. But is it actually possible for artists to make a living with Spotify? Spotify positions themselves as

artist friendly their platforms. Spotify for Artists helps musicians get stats on listeners and manage their profiles, and they launched the Loud and Clear campaign in one to quote give artists clarity about the economics of music streaming. How exactly do artists and songwriters get paid? Let's break it down first. It's important to know that Spotify does not pay artists or songwriters directly. Instead, Spotify pays the rights holders. So

who are they? These are typically record labels, distributors, aggregators, or collecting societies. Artists and songwriters choose their rights holders and make agreements on their music, including giving them permission to deliver it to Spotify. In return, Spotify pays these rights holders and they then pay the artists and songwriters.

As of Spotify has paid over twenty one billion euro and royalties to rights holders, including over one billion euro every quarter of for a total of five billion euro last year alone. That's a lot of cash, but in only three percent of artists on Spotify made more than a thousand bucks. In fact, most artists make fractions of a penny per stream, and people like backup singers and songwriters who aren't top build artists make even less. Back in the c D age, it was possible to make

a middle class living as a professional musician. Today that's a lot harder. So where does all that cash go? Is Spotify's purpose, which they say is to give a million creative artists the opportunity to live off their art actually a core principle or is that just a song and dance? To help me further understand the relationship between Spotify and artists. I called up musician, producer, label owner, and activist Blake Morrigan. Folks, I am very excited to

introduce entrepreneur, musician, activist, and all around busy person Blake Morgan. Blake, thanks for being here and welcome to calling bullshit. Hey, thanks for having me, um so for the folks at home as it were. Would you mind just telling us a little bit about your your background, how you got into music, and and some of your adventures in it. I'm a recording artist and songwriter and record producer and label owner here in New York City, my beloved hometown.

Grew up on the Lower East Side, and I've been making music my whole life. Both my parents are writers, and so I grew up in an artistic household. I think if I'd i'd grown up to be a tax attorney, that would have been more rebellious growing up to be a rock and roll musician as I have. So, you know,

you've gone on to have a very successful career. You've recorded several of your own records and also started your own label, E c R. What motivated you to make that leap to entrepreneurship, The cliche goes is a necessity is the mother of invention. But you know, so it's desperation. And I've had a huge record deal with with still Ramon and his label and two K, which is Sony Red, and it was it was a great artistic experience, but it was terrible label. And I had to fight my

way out of my seven album deal. And I was, you know, following sort of standard industry advice and showcasing to get other deals. And I was actually walking down street with my mother and I said to her, you know, if I had any guts, what I would deal is I would just start my own label. All these demos that I'm making and producing these EPs and pseudo records that I'm making, you know, they could actually be real records. I had any guts, you know that That's really what

I would do. And my mother turned to me and she was like, yeah, you know what, if you had any guts, that is what you would do. Um And I remember stopping in the middle of Fifth Avenue in the Weaven Street and just putting my hands on my knees and oh my god, this is now what I'm gonna have to do. And you know, John Milton said, it's it's better to rule in hell than serve in heaven. And it's turned out not to be hell at all. It's turned out to be a heaven of its own.

It was more desperation even the necessity. It's like I had simply gotten tired of handing music that I bled over, tired of handing it over to people who then invariably screwed it up. Um. And that still happens to this day. But now that they when they screw it up, they have to deal with me. He was the president that you see our music group. And along the way you you have become an activist. You've been a critic of of streaming platforms in particular like Pandora and and Spotify.

So I wonder if we could pivot and start to talk about Spotify. Um. You know, they're a company who says their mission is to unlock the potential of human creativity by giving a million creative artists the opportunity to live off their art and billions of fans the opportunity to enjoy it and be inspired by it. So what, what, if anything, do you take issue with in that statement. I mean, it's just a statement that appears to have

words in English strung together. You know, thank God that that green logo and that company is here to unlock my creative potential because I didn't know what to do before. I just didn't know what to do. Thank God for Daniel k. Thank God for Daniel Eck, the CEO of you Torrents, which then became in bit torn he's a pirate. I mean, this statement would be like Philip Morris saying we're here to teach people to breathe more deeply. You know, I mean, like, where do you even start with a

sense like if it's so offensive? Yeah, so Hubris in that statement for sure. But the part that really gets my attention is the by giving a million creative RC opportunity to live off their art. How true or untrue is that? It's just it's nonsense. You know. The thing about Spotify, Their free tier means that when I release a record, my record is available for free on every phone in the world. Right, Okay, Now, this is not the case with Apple, This is not the case with Title,

it's not the case with Deezer. You know, I wrote an op ed you huff in the post. It's started with I love streaming and I do you know but there aren't all all all streaming platforms are not equal. Apple pays twice as much to artists as Spotify. They pay songwriters three times as much. They don't attack artists when artists criticize the platform, and they reform their platform. I don't work for Apple, and Apple is far from perfect. But the idea that all streaming services are the same

is absurd. So let's let's follow that thread for just second, and then I want to return to the money. You know, other more pro let's call them pro artists platforms have been launched, title among them. It doesn't feel like those platforms have gotten the traction that Spotify has though, you know, just in terms of sheer size and momentum. Why is that, Well, that's a narrative that Spotify has put out into the world. So let's be clear about a couple of things. Spotify

has a free tier. Apple does not. So this is where we run into a problem. Spotify has essentially a quote unquote legalized pirates platform, which is their free tier. Right, So that's the comparing Spotify to Apple titled Deezer and Amazon. It's not the same business model whatsoever. And the bind that Spotify is, and of course is that you know, Spotify actually thinks it's saved music. And I've dealt with

many executives of Spotify. One of the big parts of my music advocacy is actually about big radio and the music fairness at and so I deal with big radio broadcasters all the time, and I liken the bullshit and the big radio broadcasters. They're sort of like big oil or big tobacco in that they know that they're doing wrong and they almost kind of admit it, but they're basically able to get away with it. So they're gonna get away with it for however long they're going to

get away with it, and then they'll move on. Spotify is very different. When you talk to executives that Spotify, they are evangelistic about the platform. They really believe that they are saving music. So the bullshit in the statement that you read at the top of this part of the conversation isn't just offensive and ridiculous. They need it.

It's a really amazing phenomenon. I wonder if you could, just because most people, myself included, don't really understand this, can you explain the relationship between Spotify, record labels and musicians, like, how do the royalties work in streaming? So Spotify pays um sev of their revenue to right solders. Okay, this is a number that they tout constantly because they it sounds like an amazing number, Like, well, wait a minute, what's the problem like that They're they're paying seventy of

revenue out to right solders? Right right. But again, even if we forget about the free tier for a moment, and we remember that a subscription of Spotify its ten dollars a month, So ten dollars a month is a d twenty dollars a year, and over the course of that year, as a Spotify subscriber, you can listen to tens of thousands of songs, thousands of records. Right at the end of that year, all of those people who made all of those records are splitting sevent a hundred

and twenty dollars, which is eighty four dollars. So you just list into four thousand songs that year. All of the people, not just the artists, all the people who made those records, all the people who worked on all of the revenue that went into making all of those records, All of those people are splitting eighty four dollars, And that's fundamentally the problem with streaming. They fundamentally undermined the ability of musicians to make a living at their at

their music. So that's how the money works, plain and simple, and we can get granular about different parts of it. But seventy of a hundred and twenty dollars is eighty four dollars after a year. Where does the other Here are some important numbers when it comes to you know again, how this breaks down. Where does the money go? Where does spotifystent go? Right? So it takes an artist like me,

uh or any artist on Spotify. It takes four hundred thousand streams a month for me to earn minimum wage on Spotify four hundred thousand streams a month to earn minimum wage. So the money where does that percent go? It goes to paying coders, It goes towards paying for Spotify is five and fifty million dollar offices here in downtown Manhattan, year ground zero, and it goes towards paying Joe Rogan two hundred million dollars for his racist and

misogynistic and homophobic anti science podcast. So that's where your money is going that's where goes. So of all the artists on Spotify, how many of them get even four hundred thousand streams? I mean, four hundred thousand streams is not a superstar number, but it's a serious number because you'd have to do it every month, you know. So it's four million streams after ten months. That's a lot

of streams. I would imagine that the amount of artists getting four hundred thousand streams a month would be at least in the single digit percentages, if not in the like two percent, three percent, one percent kind of thing. It's very very it's very few. Yeah, crazy. Let's pivot to to just talk about some of the things that

you've been up to in terms of solutions. First of all, you started a movement called hashtag I Respect Music, and as a part of that, you know, you've said that you were against the way streaming companies treat musicians, but you're not against streaming itself, and I wonder if you could break that down for us. You know, I love streaming, I love its convenience, I love making playlists, I love I love lots of things about it. But you know, so how can I love streaming but be against the

way streaming is affecting musicians. Just because I'm saying that we should be paid fairly and unscrupulous, you know, corporations like Spotify should be reformed. That doesn't mean that I think streaming is the problem. So who is getting it right? You've mentioned Apple? Is it sounds like better? Um? Are there other services that you feel like are are doing a better job. All of the major dreaming services are doing a better job than Spotify. Apple is better, far

from perfect, but they're better. Title far from perfect, better either, actually maybe one of the best. Right. I was very excited back in the day when Title launched, you know, because it seemed like they had real some some very famous artists backing and and the proposition appeared to be to create a service that was pro artist and try to get consumers of music to adopt that platform as a as a kind of rebellion against the way that musicians are treated in the industry. But it doesn't appear

that Title has has taken off. What what went wrong there? I think that they really had their hearts in the right place, and I think they still do. Um, that's the platform you want to be on as a subscriber if you really care about Audio's a really good example. But I think that they really bundled their press conference because the way that they came out is that they had all of these mega stars at their press conference at their launch, and they were all talking about how

they weren't paid enough. And it's true, they're not paid enough, But the problem with that tack is that then what listeners do is they see a press conference like like that, and they're like, why do I care if Madonna isn't getting enough money? She's got millions of dollars, Why don't care?

Fiance is not. And what I wish that they had done in their press conferences if they had had in a row on stage, if they'd had Madonna and to her left a music teacher, and to the music teachers left Jay Z and this is and the sound engineer and the carpenter who builds the recording student, and the guy who's driving the van, and the woman who's setting up merch because all of those people are funded as part of our music industry. So I think that's the

mistake that they made. Um it was a pr mistake, but I do think that their hearts are in the right place, just following the thread of changes that that need to be made. Are there legislative avenues to solve this problem? I think that legislation is one way to go. I think digislation is going to be much more helpful when it comes to the battle that we have with radio, which you know, some of your listeners may not even know that artists don't get paid anything for radio airplay

in the United States. The United States is the only democratic country in the world where artists don't get paid for radio air That just blows me away. Has that always been true? Always been true? The only countries in the world that share the distinction with the United States

or North Korea, Iran and China. Nice good company. You meant yes, you mentioned I respect music, which is something of an homage to Aretha Franklin, because Aretha Franklin never got paid one dime for for respect being on the radio United States, which is insane. That's insane, It's completely insane.

It's completely insane. And um That also impacts the streaming debate, and it impacts the struggle with Spotify, because what Spotify says to musicians is, hey, listen, we don't pay you a lot, but you know what, it's better than nothing, and you get nothing on radio. So if we can close the loophole that big, big radio has enjoyed for a hundred years, that's going to actually really effects how we're able to propressure on streaming services, which we want

to do. You know, it's interesting other parts of the media business went through this after the music business and seemed to have recovered. Like there was a period of time when there was a big there was a collapse of of many journalistic entities because people were getting their news for free and didn't want to pay, And it turns out that for the right outlet, people will pay for it. Have we trained people at this point that

music should be free and is the problem untraining them? Yeah, that's a big part of you know, a major problem that Spotify has that I've talked about often is Spotify doesn't make anything. Do you see the motion picture industry or the television industry or actor's equity up in arms about Netflix or HBO or Apple? No, you know why, because Netflix makes things, They make stranger things, which employs gaffers and carpenters and screenwriters and actually right, they make things.

Spotify doesn't make anything. So again, there are a distribution platform and they take thirty of revenue. Why why are they taking to upload my my music to the magical interweb? And there's another thing that Spotify I could do that would really change things, and in fact that this is something Apple could do. All of the major streaming services have a payment model outside of Deezer. Deezer is the one that's changed, and your listeners may not notice either.

But you may think that I get paid a certain fraction of a penny per stream when I'm streamed on Spotify or Apple, but I'm actually not. There's no streaming rate nor is Like if you have a ten dollar subscription to a streaming service Spotify, Apple, something like that, you'd think that the people you listen to are splitting the seven dollars of your ten dollars, like in other words, that your seven dollars is going to the people that you listen to. But that's not the way it works

at all. The major streaming come copanies outside of Deezer and SoundCloud has changed as well. They use a pro radar system where all of the streams are put into a pool divided by the amount of streams, and then you get paid by the amount of market share you have in that pool. Because Beyonce has a larger market share than I do, it means that she's actually getting paid more money from my streams than I am. It's

not a listener centric model, obviously. The way it should work the artist, the artist who gets listened to should get paid, should get that s exactly. And what that would do just the obvious thing of like, well, wait a minute, you don't even get paid for the streams that you're actually receiving. What that would do is that would shore up local artists, niche artists, niche genres as opposed to the constant gravity pool of mainstream gigantic pop music.

And it wouldn't cost them anything. It's the same seven dollars. It's just going to the right people. So what what's it going to take? I saw that a bill has been introduced uh the American Music Fairness Act. What's the status of that? Would that begin to level the playing field for artists? American Music Fairness Act would actually finally close the loophole and and American broadcast radio would have to pay artists for radio play. Yes, just just like

the rest of the world. Is it going to pass? Well, we're really hopeful, and it was just introduced into the United States Senate, so it has a lot of momentum um and we find like this is the farthest that this bill has ever gotten. There's been versions of this bill earlier, but there's a different kind of ground swell now. I think that listeners, music lovers, and music makers have really come together with this bill and said, well, wait a minute, there's a lot of things that we can't fix,

and this is not one of those. This is easy to fix. To one, how does Spotify think about this? Um? You were you were part of a meeting with Spotify execs uh with some artists a few years back, and it ended in a debate. But can you talk about your experience in that meeting? Sure? So I was invited to this so called artists only meeting with Spotify about artists, and uh. It turned out that it was kind of

a trojan horse. They had several artists that nobody had heard of on a panel, all just touting how wonderful Spotify is. And then people in the audience started raising their hand and saying, excuse me, what the hell is going on here? What what we were supposed to have a dialogue here, you're preaching to us about what your

whole platform is about. So it became very contentious, and as you would imagine, I was a vocal participant in the meeting and uh and afterwards, um, a bunch of exects from the company sort of you know, surrounded me and we were talking and they're like, Blake, I just don't understand where why do you say these things like our product is so fantastic, it's the best product there is. And another guy would say, Blake, I think if you understood more about our product, like you realize that it's

just the greatest thing that's ever happened. But they get really emotional, and I said, Fellas, you know, you keep using this word product and I'm just curious, what do you think your product is? And the executives said, what do you mean Our product is Spotify? And I said, no, Fellas, it's not Spotify. Your product is music. You're confusing the word product with the word brand. And the guy I was talking to you went, you know, man, you're crazy. Man, it's crazy. It is our product is. And I had

to say, like, you know, while we're at it. By the way, stop calling people users. They're not users their listeners. You're the user. You're using our music to monetize our little listeners for your profit. That's what you're doing. And you really looked at me like I shot Santa Clause in the face. You know, But that's I think it's an important story. It's it's it's funny, but you know,

that's not what happens when you talk to broadcasters. It's very specific with Spotify, and it's a really like religious atmosphere over there where you feel like you're talking to creepy, weird cult people. And I'm not having a go just to like be mean. It really just is like that, and that story kind of illustrates them. Yeah. Um, so I want to wrap up with with two questions. First of all, um, if you were Daniel Eck, what are

the things that you would do to change Spotify. I'll give you three, all of which he could do by the end of the day today. The first is he could do away with his free tier. Music should not be free. Okay, it's morally wrong, it's it's uh, it's a bad business practice. So he should do away with the free treat free tier number one, number two. As I outlined before, the people who get strained are the people who should be paid. I should be paid for

the streams eye garner. Other people shouldn't be paid for them. It would save UM niche artists, It would save UH fringe artists, It would it would be would be a huge boon to jazz music, classical music, big band music, blue ask music, and on and on and on. So that's the other thing. Switching to the listener centric model. He could do that by sundown doesn't cost Spotify anything. It's the same seven dollars just going to the right people.

And the third thing he could do he could do away with the counter, the number next to all of the songs on Spotify that tell you how many times it's been streams. Interesting, what's the virtue of this number? I get that Tom Waits's music is not less valuable because it's been listened to less than Nickelback. Right, So that's the third that's the third thing he could do, And there are many others, but those three things he could do by midnight tonight. Man, Yeah, I love that.

I love all three of those. Okay, last question on this show, Blake, we have a tool called the b S Scale. It goes from zero to one hundred, zero being the best zero bs, one hundred being the worst total BS. So on that scale, what score would you give Spotify? Okay, that was definitive, Blake. This has been a fantastic and illuminating conversation. I want to thank you for coming on the show today. Well, thanks so much for having me, folks. At this point, my BS detector

is playing highway to the danger zone. The bottom line here is that Spotify spends a lot of money on their brand, but they don't fairly compensate the people who actually create their product. After speaking with Blake, it's clear that the b S and the music industry extends way beyond Spotify. Blake was so demoralized by record labels that he was compelled to start his own. I also cannot believe that every single radio station in the US plays

music without paying for it. I really can't believe that that's insane. The good news is there are real opportunities here for Spotify to change their tune and better support the artists who's support them. So we've assembled a panel of industry experts to help them make that shift right after the break clip the record check on the B side. Folks, I am very excited to introduce two industry experts who are going to help us help Spotify better live their

stated purpose. Our first guest is two time Grammy winning artist and executive producer Cadence. Cadence, Thanks for being here and welcome to calling bullshit. I'm happy to be here. Thank you for having me so, Cadence. I'd love it if you could just tell us a little bit about yourself. I started off as an artist and then I fell in love with songwriting. Once I decided to move out to l A. Um was when really things changed for me. I would say like it was a very creative, but

I wasn't thinking so much business. Uh So when I came out to l A I really got uh slapped in the face with the reality of business. You know. I've had some some really big records, thank You, Next Seven Rings, Black Parade, Um, to name a few, and you would think that I would be well off. Um. So, you know, while they had a budget for this in the past before streaming really hit, there's not that now. Now. It's almost like they expect these songwriters to just do

it for free. So I hopped into executive producing. I saw that you were on the board of an organization called the Hundred per Centers. Can you talk more about what theer is all about. Sure, Yeah, we're all about advocating for creative rights, UM, just sustainable income. We're just advocating for change all over the board. UM even to this day, like people, active listeners, consumers don't just don't

understand how music or streaming works. But I think if people were more aware of the effects and you know, the the issues, that there would be a shift because it's it's more than just the artists. Like, yes, of course the artist is a very major part of this, but the the collaborators, the creatives behind the music, UM are the ones that are are hurting even more. Thank you. And we'll return to that theme a little bit later in the show as well, Cadence, because we want to

dig into all of that. UM. But but I want to introduce our our next guest. Next up, we have David Turner, who is the writer of a widely read newsletter on music streaming called Penny Fractions. David, welcome to the show. I'm gonna say hey, hey, everybody, thank you for having me on today. So, David, could you tell us a little bit about yourself in your background? Yeah, totally so. Yeah. So my day job is I a strategy manager of SoundCloud, or i've been the last four years.

Prior to that, I was a music journalist where I sort of covered different parts of the music industry, did a lot of reviews, interviews, features, covered a lot of like viral trends. So, I mean, I've been a fan of music for most of my life. I like playing guitar. I like thought about maybe could I DJ, but never really took it that seriously, don't have the talent, but

I feel like I'm pretty good at writing. So that's one thing I sort of kept up, which I do be in my news letter of Penny Fractions, which I've been doing for almost five years, which yes, like you said, covered streaming, but also many parts of the music. This sometimes we get a little bit of history of of different music companies. So yeah, it's something that I've been really passionate about the last few years and been really excited to like see where it's gone to take great well,

I feel really lucky to have you both on the show. Uh, let's get right into it. Cadence, I'm gonna ask you to lead us off in two minute are less. What would you tell CEO Daniel Eck to change at Spotify to better live their purpose, which, just to remind folks, is to unlock the potential of human creativity by giving a million creative artists the ability to live off their art and billions of fans the opportunity to enjoy and

be inspired by it. I would say, for one, I think right now the Spotify premium is um I think that can for one, be increased, as well as just having transparency about where this money is going. I feel like they kind of just wipe their hands and say, hey, um, you know it's the label's fault. And I just think that in order for everyone to feel like this is fair and uh just understand how this is being distributed,

that we just need transparency, we need we need receipts. Right. Yeah, So can you talk a little bit more about the transparency part of your idea because that feels important to me. If your purpose is to help artists live off live off their art, right, fans need to know how the system actually works. And I don't think a lot of fans really do. Right for right now, we know UH that we get penny's worth of a dollar for UH for streaming, but we don't necessarily as far as transparency.

We don't know what the agreements are between the labels and Spotify, Spotify or any streaming platform for for that matter. And because of that, we don't know where half of these funds are going to and like what we're actually getting paid. It just feels messy, it feels secretive, and so I think if we have a better understanding of

how that's that's happening. I mean, I'm looking at like, remember over the pandemic, I'm trying to think it was billions of dollars that went to the labels that they proudly spoke about openly, And I'm sitting here looking at my statements and I'm like, whoa that it just doesn't add up. Um, you know, like, how how is it that I have these songs and and my b and my statements even over the pandemic, Like I I could not even make rent for the next two months, Like

that's that doesn't make sense. Yeah, that's crazy. David, do you have any thoughts on on what Cadence has been talking about totally. So I'm going to say I think the first idea about increasing the amount of money that subscription costs makes a lot of sense. That's an idea that I think many folks across the music industry. What's the part and it's something that I know many folks

have been wanting to sort of get behind. I think the biggest issue is I think many people aren't sure customers are willing to take that sort of increase on their subscriptions, especially when there are a number of streaming services out here. But it certainly I understand that the need and sort of the import of increasing how much the subscription goes needs more money can go to songwriters and recording artists, So that totally makes a lot of

sense to me. And then around the issue of transparency, just to be real quick, is uh, I think that one is also another one where like, yeah, a little bit more transparency and clarity around how money move and money pay payments go I think would be helpful. I do think that is something broadly speaking, is that like every part of the industry sort of needs like step up to sort of help with that. Not always all

on the DSP. It's not always I mean, I guess it's a lot quite a bit on the labels and the contracts you actually end up signing, so that actually is where a lot of that ends up resting. But it is something where like their needs to be some kind of sort of agreed upon way to try to clear up some of this confusion. Yeah, I was reading

an article just on the price raies. Point like Rhapsody charged ten bucks a month in two thousand and two and Spotify charges ten bucks a month in two and if you just adjust for inflation, Spotify should be charging this article said fifteen fifty and that's just just to break, you know, to stay even. And in that time Netflix has gone from eight bucks to fifteen fifty a month. And you know, another thing that they do that I wasn't aware of is they do a lot of discounting.

So they have a student plan that's like five bucks a month, and they have a family plan, and all of that cuts into the amount of money that they come they bring in and and therefore can distribute to artists. And so cleaning that up would be another aspect of of raising their price right to to help get more money to the artists. Okay, David, your turn in two minutes or less? What advice would you give Daniel ac Oh?

They advice that out and kept act. I think would be maybe a little bit less of advice and more of a question that I think could be sort of turned into sort of broader advice. My question would be that if you're going to have a million artists sort of make a living on your platform, how do you plan to actually sort of like support those million artists. How many people are gonna be working at Spotify? How many more tens of thousands of people do you need

to like handle all of that? Are you gonna be helping out with healthcare? It's all like there's a lot of like questions to me that when I sort of see here that mission statement, I think and it's very grandiose and and and aspires to a lot and on one part of it, the sense of having a million a billion fans like Spotify as like hundreds of millions of listeners, so like they are like well on their way to that, But as far as like a million artists that are making a living, they're certainly not on

the on the way to that. In the same in the same sort of subjectory. Just to what David said, I think that is a very strong question, especially for artists that aren't signed to major labels, because major labels are, you know, technically the biggest shareholders of Spotify, so they control most of it. They control those playlists, they control you know, their artists getting more plays in these indie artists. You know, I don't see these indie artists invited to

these Spotify branches. I see major label a major artist. Um, so how are you really leveling the playing field so that you give these indie artists an equal chance? Yeah, And I've heard that the way that that Spotify pays artists, and and this is I'm still trying to get my head around this. Like I, as I understand it, you're not actually paid per stream even on Spotify as an artist.

The money goes to the rights owners, and then that money then goes to the artists, and it's a portion based on essentially averages, you know, the percentage of streams on the platform that belonged to Beyonce. Then Beyonce gets uh that percentage of money. But it means that Beyonce in one way, as I understand it, Beyonce is getting a percentage on lots of indie artists streams as well

because of the way that they do the accounting. And so I've seen people advocate for a more direct model there that like you actually pay your money as a listener because they know who you are and they know what you're paying them, that your money goes directly to the artists that that you're listening to. What do you think about that? Yeah, so I'll just speak on the

recording side. Yes, what you said is correct, where it's like all the money is sort of accrudance is sort of a big pot they said in the industry is called sort of the pro rottle model. So, for example, with Beyonce dropped her like this album and she had seven percent of total streams that week, she would she and the rest of the folks on the album will be seven percent of over of the overall pot of

revenue generating in that period of time. So yeah, so it does sort of work out where if you were paying a Spotify subscription or an Apple Music or Amazon subscription and you do not listen to Beyonce, you're some seven some part of your money would still be going towards Beyonce and the work, the work that she did

on that on that release. And yes, the other thing that you're sort of hinting at with this thing called the use a centric model, which I guess it's been sort of mentioned by a number of companies like Deezer, which is a French music fiom so can also title I think of maybe years ago. And also it's SoundCloud.

Actually in summer, SoundCloud announced a partnership with one Er Music Group where we actually we're now playing out artists on one or one of the big three major labels on the eccentric model along with artist that directly distribute through through the platform. So but again that is all just on the recording side. On the publishing on the songwriter side is slightly different, like the way that's handled

very yeah, very different. Uh, our money goes through the publishers, so we get what we get and yeah, we have no control over over it. We feel like the powerless m hmm. Yeah, and so somebody needs to take the artist's side. So why don't we use that as a moment to pivot to my my idea and again be savage.

I'm a total rookie here. So what I take away is that Spotify actually is in like a vice or you know, another to four would be between a rock and a hard place, because all of their competitors also charged ten bucks a month, and so Spotify as a service is basically an undifferentiated commodity, and commodities have trouble raising their prices to make matters worse. You know, two of their competitors are Apple and Amazon, and Apple and Amazon can afford to lose money forever in music just

because uh, music isn't their main job. It's a side hustle to them. And so to get out of this vice, Spotify has to innovate. And you've seen them trying, like they tried video and that didn't work. They've tried actually going around the rights holders by by you know, cutting direct distribution deals with some artists, and that didn't work because the labels pushed back. Now they're trying podcasting and

that led to the Joe Rogan debacle. And so as I thought about, like what they do have, they have two things. They have a great artist centric purpose, this idea that they want to take a million artists and make it so they can live off their art, which I love and they have scale. They're big, um I think four hundred and six million monthly actives currently. So my idea is for Spotify to become a laboratory for

artists centric innovation, to continue to innovate themselves. But also, and maybe this will be controversial, I don't know, but also to look across the industry for other really good ideas that that other platforms are trying but maybe don't have Spotify scale like Title, and adopt it to scale it. So to use their scale for good is the essence of my idea. And I'll continue to use Title because I was reading an article in a in a thing called louder Sound, and I'll just read from this article.

Title recently unveiled their direct artist pay up plan and which sees ten percent of your subscription going directly to the artists that you listen to most. This initiative is based on actual streaming activity of the fans versus the industry accepted method of aggregating streams and allocating it to the most popular artists. According to Title, uh so this

is a move. This is now the writer of this article saying this is a move away from some other payment plans and could cause a shift in the streaming industry. And so what I'm advocating for is, let's use it to cause a shift in the industry. Let's Spotify adopt this as well as well as any other great artists centric ideas across the industry and really deploy them at scale to help fans support artists directly and take on the mantle of artists centricity, which is, you know, sits

at the center of their purpose. What do we think about that pipe dream possibility? In many ways, I think what you're sort of describing as kinds of me like Instagram. Soon It's like on Snatchat they took on the story feature of Snapchat, and people are like, oh wait, Snapchat. I love Snapchat. But now all of a sudden, it's it is it is what I'm describing. Yeah, but I'm trying to say for good because that that practice I

think of as evil, like the whole Facebook empire. He Zuckerberg does this to put other companies out of business. And what I'm saying is, since Spotify has skill, maybe they could use it for good. Maybe Yeah, I don't know, Yeah, no, I guess I guess the reason why that immediately jumped to me with because I think of the perception of the users is that perception of users would probably immediately

go towards that doing this thing. I think because because if you say that you're doing this because you want to help, but if it's just topping someone else, you're like, oh, well wait, why are you helping by copy it didn't

have any of your own ideas. I think that maybe I think that maybe sort of especially as like a user of different platforms, and when all of a sudden, every platform to your point had the same price point and all of a sudden are the same features set, you get a little less excited to hop between them because you're like, oh, what if they're doubely different shape, So you kind of need for the bigger company to kind of have more actual innovation in an actual different differentiation.

But to the specifics I will actually say, I do like that Tyle was saying this to someone yesterday, that title actually has a number of really great features, Like they actually highlight songwriters. They actually highlight producers of tracks, so you can actually search for a producer, starch first songwriter. There are a lot of things that title does that

other platforms don't do. So I do think there is quite a bit actually there that that others could sort of take from sort of and sort of I and sort of maybe poke poke poke away. But I yeah, sorry, I just want to rid a little because yeah, I didn't know. It's it's it's it's a great I I agree, yeah, you know, I think I think that would be great. Um, I do think that it would be scary, uh, too scary for the labels. So while I love love that idea and hope that they do it, I think it's

far fetched right now because it's just they're making so much. Yeah, absolutely, oh yeah, I mean they pretty much make the call on if anything changes. I think they think that they're doing enough, at least for the songwriters. I mean, I know you've seen they had secret genius before. Um they have notable now where they post your picture as a songwriter or producer on a billboard and say, wow, look at this person. Um. But and while that's great because

it gets you exposure, it still isn't enough. And I mean to think of how much money they're spending to do that, where that can really go towards other things are helping helping us in a different way, like pay our rent. That's the other thing about this that I find hard to get my head around, and I assume most casual music fans find they're hard to get their

head around, is just how complex the environment is. It's really hard to figure out how people get paid and why they get paid, and even people in it are confused by it, and people on the outside just I think glaze over a little bit um, which is a shame because I think, honestly, if fans really knew what was going on, they would do you know, if they knew that they could directly support the artists that they love, I think they would do it. You know, I I

really knew um. In this podcast, we do a single guest up front for a kind of facts of the case, and then we do this roundtable, and our first guest was an artist named Blake Morgan. Blake had an idea that I wanted to run by both of you, which is essentially get rid of the free layer at Spotify, because his perspective was, you can't say that you're trying to help artists make a living and give their music away for free. Those two things just don't go together. Yeah, yeah,

you agree with that. Oh yeah, yeah, I definitely understand the sort of economic need for getting rid of the free layer. As a consumer, I guess I started to feel a little like, oh man, I kind of like being able to like just go find a song, but I won't listen to for free. But that's also something that like, hey, I remember before YouTube, so I do remember what it was like before that was the case,

and like it was fine. I don't know, there is something to be said about like music not being always at once aingo tip, where the songs can sometimes have a sort of different life and a different residency in your life rather than it's like, oh I always have immediate access to this thing. So yeah, I feel like that. Um that era, the Lime Wire era, where it was

like we were just able to download anything at any time. Um, we kind of got caught into that mindset of like, well I could just listen to it somewhere else for free, and um, we're just not taking into consideration like the the people that it affects effects, you know, It's it's a hard thing. Once once a habit has taken hold with people and that and like a habit, like oh yeah, music is free. It's really really hard to break that habit. Again.

That's happening sort of throughout the world. Not to get too philosophical, but we live in the modern world in a way in which things are convenient and we do them because they're convenient and they're easy, and we're starting to learn that things that are convenient and easy aren't

necessarily good for the world. It's like, oh, I threw away my water bottle because it was easy, but it wound up in the middle of the Pacific Ocean, and so paying artists for music should fall into the same category. It's like, free music has an impact on people's lives,

you know. Maybe one thing that Spotify could do is just do a better job of educating people about that and really take an artist centric point of view on making sure that people understand that there are implications for artists, you know, and what those implications are. I mean, one of the other questions I had for both of you, I was looking on there's a service called Music Gateway, and it allows you to compare what you would make for a set number of streams as an artist on Spotify,

on a title on Pandora, on Amazon and Apple. So I did this math right? The bottom edge of what we consider to be the middle class in America is thirty thousand dollars a year. I would say that's a little stingy, but let's say thirty thousand dollars a year. To make thirty thousand dollars a year on Spotify, you would have to get about seven and a half million streams. Right now, fifty two thousand, six hundred artists are making ten thousand dollars or more on the platform, so it's

not even thirty thousand. So they've got a long way to go to help. You know, a million artists make a living off the platform. But the other interesting thing was for the same number of stream on Apple, I would make thirty seven thousand, five hundred dollars on Amazon the same on Title I would make ninety thousand bucks off of seven million, five hundred thousand streams. So Title stands out. So I guess the question there is why

didn't Title do better? Uh? One, there's already the amount of conversation when titled, so to enter the space I think it entered around um so Spotify had already existed. YouTube YouTube have been around since the mid two thousands. Spotify had sort of come into the United States and in the early and it into the mobile platform in the mis um Apple Music it was also launching around then.

You still had people that are using Pandora and higher amounts, and when titled only real again differentiation factor or more like sort of like aesthetic things of like again like twenty out producers and songwriters and stuff like that, that just wasn't not to differentiate it when it's overall content with the same content, it's basically every other platform and title did try to have this clues an album for like a very brief good of time in early and

I think maybe in sen but they kind of moved away from that when artists realized that putting your music only on one platform really limits the audience potentially, right makes sense. One of the other observations that I have is like I have no context for what artist should be paid per play. It's like minimum wage raising the

minimum wage. Everybody knows roughly what that means, and so like, do either of you have an opinion about, like what is the right number per stream that artists should be paid in order to create a more fair deal for them. So I would love to know, um, what the labels are getting per per stream um. And that's what makes it hard. If if I could see those those receipts, yeah, I would be right. And back to this transparency issue, right,

it's all a big secret, like what's go went on? Um, Maybe that would be a thing that Spotify could advocate for that everybody know what everybody's making. Like that would be a huge step forward, wouldn't it. Yeah, it was the only issue because I remember talking some about this very recently, is that, like it wouldn't behoove the labels to have that that knowledge out there because then your conversation undercut you or sort of undermine some of the

stuff that you're trying to do. Yeah, no, it's hard, right, they would definitely resist that. But but if there was just like I like I've been saying, and even playing field where the artists get what they get and it's not it doesn't have to be a private negotiation, well maybe it could be. Yeah, it could be aggregated and anonymised. Right, So you don't know exactly what the deal between Sony and and X is, but you know that ultimately Sony

is getting about this amount. Okay, my last question for for both of you. Spotify says its purpose is to give a million artists the opportunity to live off their art. And as I said before, the fact is only fifty two thousand, six hundred artists generated ten thousand or more last year on Spotify, so they've got a ways to

go before they get to a million artists. We have a tool on this show called the BS index, which measures the gap between word indeed, and it goes from zero to one hundred, zero being the best, zero bs one being the worst total BS. What score would each of you give to Spotify? David, I'm gonna ask you

to go first on this one. I think my answer to the original question on public I put slight into what I'm about to say, but it would have to be one D because having a million a million people also ten thousand is not also like, that's not like, I mean, that's not no, that's not making a living. That's no, no, no, that's not I also want to like to be like I think it's kind of said as earlier that like even thirty or party thousand, if

you're living in a major that's minimum ways. Yeah, yeah, that is more than likely a lot lot lower, so I would go, like a hundred. Okay, alright, I'm a hundred percent with you. It's it's on a hundred. I think they have plenty of ways to change this model, and I think they know their power and they're using the well what if what if we lose listeners? What if we do this? I mean everyone I know uses Spotify, So, um, I think they know their power. I don't think the

consumers are going anywhere. I think using the fact that they can put more awareness out there and essentially become an ally and if they can really be a voice for us, I think that would also translate into even more consumers and more listeners and more supporters. Um so yeah, m hm. This has been a fantastic conversation at David Cadence. I want to thank you both for being here today.

It was wonderful to have you on the show. Thank you for having us, Thank you, thanks so much for inviting Alright, folks, it's time to rate Spotify on the B S scale. Spotify is certainly not giving a million artists the opportunity to live off their work. All three of our guests gave really high scores because of this, and to one hundreds and that perspective totally makes sense.

Spotify has done little to provide artists with a living wage, and there is so much more they might do to support artists in a meaningful way, for instance getting rid of their free tier or redistributing payment based on individuals actual listening habits. However, their tools do provide artists with valuable audience metrics, and they have created a great platform to get traction if you're a musician. That's not nothing

far from it. So today I'm giving Spotify a seventy two and Spotify CEO Daniel Eck if you'd like to come on the show to talk about anything we've touched on today, Please know that you have an open invitation. If you're thinking about starting a purpose led business or beginning the journey of transformation to become one, here are three things you should take away from this episode. One, make sure your purpose and your business model are aligned.

Free is never free. I feel like I've said this before, it's still true. When you sign up for Spotify's free level, somebody pays, even if it's not you. In Spotify's case, it's the artists who you love and who Spotify claims to want to help make a living who paid the price. If you are going to make your product free, make sure you're transparent about your business model and that it aligns with your purpose. Two. Your purpose must drive action.

If you can't make meaningful strides towards delivering on it, then it's not your real purpose. If Spotify's hands are actually tied by the record labels, as it seems like they may be, they need to figure out how to advocate on behalf of the musicians they claim to care about to change that situation or change their purpose to accurately reflect what they really stand for. Three. Become a force for transparency in your chosen industry. Transparency about your

own businesses table stakes. If your purpose led but purpose led businesses are actually trying to make the whole world a better place, and better things happen in light than in shadow. In Spotify's case, it's actually super hard to know how to help them help artists because it's very hard to understand where the money is going in the

music industry. They should try to fix that. And if this episode made you want to sing our praises, subscribe to the Calling Bullshit podcasts on the I Heart Radio, app, Apple Podcasts, or wherever you listen to people speaking to your ears and friends. I'd like to ask for your help. If you enjoy the Calling Bullshit Podcast, please take a second to rate us on Apple Podcasts or on your

preferred platform. It helps more people find the show. Thank you to our guests today, Blake Morgan, Cadence and David Turner. Learn more about the I Respect Music campaign, the Centers and David's newsletter Penny Fractions in our show notes or at our website Calling Bullshit podcast dot com. And thanks to our production team Hannah Beale, Amanda Ginsburg, d s Moss, Hailey, Pascalites,

Parker Silzer and Basil Soaper. A little bit of good news, we recently learned that we are now the eleventh most popular business podcast in the world. Kick Ass Job Team. Calling Bullshit was created by co Collective and it's hosted by me Time Montague. Thanks for listening.