The Spotify conundrum

Troy Wilkinson

Is Spotify poisonous to the music industry? The Black Keys, Coldplay and a multitude of other bands seem to think so. The Black Keys are one of the bands who most strongly oppose Spotify, pulling their last two albums from the service. The reason musicians often criticize Spotify is usually due to seemingly ridiculous low royalties. Thom Yorke, the lead singer for Radiohead, has famously ridiculed Spotify for being the “last fart of a dying corpse.”

However, the founder of Spotify, Daniel Elk, has been adamant that Spotify will be extremely profitable in the coming years and that already Spotify has paid out a large amount of royalties to musicians. Who’s right though? Contrary to many complaints made by anti-Spotify musicians, Spotify is possibly the saving grace for the industry.

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Let’s say that Spotify isn’t a very profitable avenue for musicians to make money with; is it still making a positive impact on the industry? It seems to be the case that Spotify is not only good for the music industry, but one of its few hopes. Streaming services are transforming the pirating culture that has plagued the music industry for so long. Spotify has revived legal acquisition of music in places like Sweden and Norway where pirated music has dropped substantially.

Spotify seems to be more profitable than most bands think, though. Tim Worstall, a writer for Forbes, discovered that royalties by Spotify are much higher than other avenues of music sharing, such as royalties from radio. Royalties from Spotify seem to be 16 times the royalties from UK radio, which pays more than most other radio systems. Thom Yorke may dismiss claims that Spotify is actually a successful model for music distribution, but Dave Stewart, a man with four decades of experience in the music industry, says otherwise. He reversed his stance on Spotify, from claiming that he’d be better off selling albums out of a car, to supporting Spotify and its future.

It’s clear to see that Spotify is a controversial topic in the music industry. Musicians are split on whether Spotify works. I take the stance that Spotify is positive for the industry; for many it has revitalized paying for music and has made music extremely accessible. Spotify needs to be more transparent with their finances though that’s the real issue. While Spotify claims to pay out 70 percent of their revenue in royalties, many artists and industry insiders are vehement that Spotify just isn’t paying enough. It’s imperative to recognize that the royalties are paid out to the rights-holders, so the artists aren’t receiving all of those royalties.

So do musicians have a warped perception of how much money is Spotify is making them? Are musicians just being underpaid by rights-holders? Spotify needs be more transparent with their finances. They’ve got the right idea, though. Spotify is an unmatched service for listening and sharing music that will only lead to a better future for the music industry.

Collegian Columnist Troy Wilkinson can be reached at letters@collegian.com