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Penny Fractions: Spotify Gives Up on Distribution, No Big Surprise

Welcome back, I’m excited to return to the newsletter after taking last week off. I want to make two
Penny Fractions
Penny Fractions: Spotify Gives Up on Distribution, No Big Surprise
By David Turner • Issue #93 • View online
Welcome back, I’m excited to return to the newsletter after taking last week off. I want to make two quick notes: The topic of this week’s newsletter shifted due to scheduling mistakes on my part, so Patreon supporters know this week’s originally intended topic will arrive soon. I also wanted to say that researcher Nancy Baym, author of Playing to the Crowd, is conducting an online survey of music industry workers. Baym is one of my favorite thinkers in this space, so I was excited to help contribute towards her work. Now, let’s hop into some Spotify news!

Last Monday, Spotify, much to the surprise of the music industry, announced an end to its beta of allowing artists to directly upload music to its platform. Even if a bit sudden, the news made sense on its face value. Distribution isn’t actually a good way to make money, high profile artists kept seeing song leaks, other platforms already offer the same features with built-in communities, and major labels, who according to industry reporting are back in licensing contracts with Spotify, clearly didn’t like it. All of that is to say: if this was an obviously bad idea, why did anyone think it’d work?! 
For example, here are a few headlines from last fall that greeted the original news: “A New Spotify Initiative Makes the Big Record Labels Nervous” (The New York Times), “Spotify Gives Artists Another Way to Circumvent Record Labels” (Bloomberg), and “A new Spotify initiative could spell trouble for record labels (or kill Spotify)” (The Next Web). The media narrative around Spotify is so skewed in favor of the company that any sign of the company challenging the established record label is greeted with bated breath. Even when the company’s business proposition is clearly ill-advised and under thought. Headlines and the initial framing of stories assume Spotify’s new business model will work and leaves any critique for the closing paragraphs. 
This way of reporting so tightly mirrors the company’s own self-told narrative spin it glosses over any potential concern of workers. Spotify’s employees that are needed to make this new program work are unheard of and musicians, who are both labor and consumers, are frequently underheard unless it comes attached to a Spotify press release, like the Chicago rapper Noname who was frequently cited in the original press run. Last September, in my short-lived paid newsletter Dollar Fractions—the name was bad, yes—I explored why direct uploads from an artist’s point-of-view offered very little. So, I wanted to include an excerpt of that newsletter with a bit of light editing: 
Amy Wang of Rolling Stone showed one of my frustrations with how people cover the role of music labels by writing (emphasis mine):
Now, with a self-upload feature, Spotify is cutting out more of the label’s traditional middleman role and giving some artists more control and transparency over their work (and money gained from it since they don’t have to split royalties with other parties) than a label can provide. But of course, choosing to go that route as an emerging artist still means foregoing the vast resources and backing of a label — which may be too much of a risk for most to take.
The word “choosing” here is working overtime. One issue in music industry coverage is this idea that if artists can just put out their music freely, then why would they need a label in the first place? The assumption is that all labels do is put out music and collect checks. This both undervalues the monopoly that major labels hold on the industry in terms of promotion and also how little power artists with zero industry connections hold in terms of being able to be heard. A state doesn’t promote a lottery with highlights of scratch-off losers. 
I don’t say this as an endorsement of the traditional exploitative major label system. A label in this instance could be Atlantic Records, Rough Trade, or even just a dude who happens to know a couple of curators and understand the basics of music distribution. None of those businesses will shift due to this Spotify for Artists update. If an artist wants to get on the radio, they need a label or at least a team that can work radio stations, which is something that a single person can’t do. If an artist wants to get consistent press coverage they’ll need to hire public relations support. If a band wants to go on tour… I think you get the idea. None of that changed.
My question is this: Who is the winner in a world where labels don’t exist? Eventually, all artists will be able to upload their music to Spotify…then what? How does that music find an audience? How does an artist build and sustain a fan base? Who is footing the bill to record their music? All of these are things that labels, big or small, provide on top of any other connections in terms of live touring, licensing deals, etc. Never underestimate music industry middlemen, they’ll always find a new home.
Wait, Isn’t Spotify An Audio Company Now?
Spotify’s big 2019 story is podcasts. The end goal mirrors the desire to become a “record label” that is to gain leverage over major labels by shrinking how much audio content on the platform is owned by those three companies. Anna Nicolaou, at the Financial Times, in a typically astute write-up, got a number of good quotes from people who were a bit bewildered at Spotify’s sudden turn. Yet, it was her mention of Mark Manhaney, an RBC analyst, that made me chuckle. 
Manhaney said that Spotify could expect $500 million in revenue from podcasts by 2022. For context, last year Anchor, a podcast company recently bought by Spotify, pegged the company with only about 20% market share of podcasts. Even if the company owned the entire medium last year’s podcast advertising revenue was $479 million with growth slowing and an expectation of hitting one billion dollars in advertising revenue by 2021. The company’s change retriggered my questions about what will be the company’s next shift when/if podcasts don’t reap the monetary outcome that the company desires. The dry ogling of Spotify executives toward radio advertising money on investor calls will sound less enticing when those quarterly profits are climbing an exponential curve upward. 
Spotify’s clear desperation around finding new ways of making money presents an odd contradiction for major labels, the streaming company’s most organized rival, while music labor continues to be effectively atomized. The survival of Spotify does prevent music from being solely owned by Amazon, Apple, and Google, which is good for all workers in the music industry. However, since labels crave more money, that’ll become harder to achieve while Spotify continues to survive, as the company isn’t just a money-losing arm of a larger multinational company. Neither outcome is ideal for average workers in the industry; however, the power shift does impact the bank accounts of music’s 1%, or you know, the people that are championed in the trade press and that care about pesky media narratives.
Unheard Labor
On the local front of where I call home, New York City, Local 802 of the American Federation of Musicians scored a new union contract with the Broadway League that included higher wages, healthcare contributions, and a new 401(k) plan! The union also announced a via social media that they will have a union drive with musicians at the Distinguished Concerts International New York. In less uplifting news, Baltimore Symphony musicians remain locked out, while Maryland governor Larry Hogan refuses to provide state funding that would go directly to supporting the symphony and other local programs. The Baltimore Sun reported that musicians could potentially lose $20,000 due to the lack of summer work and, despite that, the symphony still put on a holiday concert last week. Thanks for nothing, Larry!
6 Links 2 Read
My controversial opinion is that exclusive music streaming services are fine if only to heighten the ridiculousness of the current streaming paradigm. Just imagine if music catalogs were split apart like video streaming services :) 
Honestly, this reads a bit like nonsense only because it’s not at all clear on how this data could be used in any meaningful way. Yet, the impulse to question how much data a billion-dollar technology company collects is more than reasonable. 
I’ve written about this topic before but again: If ‘user-centric’ streaming payouts are on the table, that must come with the government’s ability to audit streaming numbers by labels and streaming services, the elimination of for-profit royalty groups, more rights given to artists, and tighter regulations around advertising and consumer data in this space. Ultimately, these are baby steps towards addressing deeper issues within the music streaming ecosystem. 
This should be the norm. 
This is the second part of a series that examines the effects of social media on the electronic music community specifically. I found it refreshing to read about social media and music in a way that centered on musicians and not on the company, thus offering a deeper range of opinions.
Despite everything that I was told as a child, everything that’s online isn’t there forever and so the preservation of digital music culture should continue to remain on the forefront of our collective minds for those that care about the culture of music.
My name is David Turner and I started Penny Fractions back in November 2017, as a way to think through various topics within the world of music streaming. Since then, the newsletter, which is delivered every Wednesday morning (EST), has grown to reach over two thousand subscribers with an archive that can be found right here. I’m currently a Curation Analyst at SoundCloud, so all thoughts here represent me, not my employer. Prior I wrote for Music Business Worldwide, Pitchfork (who just unionized!), the New Yorker, Noisey, Rolling Stone, and Spin. I also create content on Patreon to help cover email billing costs and to compensate my copy editors, Mariana Carvalho and Taylor Curry. The artwork is by graphic designer Kurt Woerpel whose work can be found here. My personal website is davidturner.work. Any comments or concerns can be sent to pennyfractions@gmail.com.
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