Rage Against the Digital Jukebox

What Spotify does with your money

[this article, originally published in the Oberlin Grape in early 2022, has been reuploaded to substack in response to the latest wave of Spotify Wrapped; art by Eva Sturm-Gross]

As was the case with pretty much everyone and everything, 2021 did not go too smoothly for musicians. While vaccines have created more opportunities for live shows, things are still too uncertain for touring to fully resume as it once did. Many musicians have still been doing live shows, out of will or more often than not out of necessity, but that has left musicians vulnerable to COVID, on top of the usual pressures of touring. To make matters worse, supply chain disruption has brought the vinyl industry to a halt. The vinyl manufacturing that has been able to move forward has been almost entirely taken up by mega pop stars and novelty picture discs, leaving no room for the musicians who often depend on record sales to make a livelihood.

Finally, as if to add insult to injury, musicians had to witness the corporation that made billions off of their stolen wages take over their social media feeds at the beginning of December as part of the annual phenomenon known as “Spotify Wrapped.” As Spotify Wrapped once again assumed a stranglehold over Instagram stories and memes, a twitter thread from Jewel Ham, a former Spotify intern, resurfaced. The thread detailed how Ham developed the idea for the now-ubiquitous iteration of Spotify Wrapped (which has been around since 2016, but not in the stylized Instagram story-tailored version that it is now synonymous with) as an intern in 2019, showing screenshots of her designs and ideas to make the year-end data more scrollable and adaptable to social media. Spotify representatives have denied taking this idea from Ham, but knowing what we know about how much Spotify pays its artists, this would fit in with Spotify’s business practices like a glove. At this point, everyone knows that Spotify doesn’t pay jack shit to the artists whose labor they depend on to make a profit. Countless musicians, from struggling independent artists to established names such as Prince and Taylor Swift, have pointed out this fact — as have I, on several occasions and in multiple articles for this very paper. But as evil as it is that a corporation such as Spotify can make billions almost entirely off of the exploited labor of musicians, this has been crystal clear from the beginning, and none of it has affected Spotify’s bottom line. What less people are aware of are the intricacies of how Spotify makes its money and how it exploits working musicians — which it astonishingly does in even more creative ways than simply not paying artists — and the potential for Spotify to turn into another Facebook; both of these dynamics directly tie into the Wrapped campaign.

For this article, I spoke with Joel Jerome, a musician, engineer, and organizer with the Union of Musicians and Allied Workers (or UMAW). UMAW originated early in the pandemic with the intent of expanding unemployment benefits for musicians and music workers, and has since grown exponentially. The union, which has nearly twenty thousand followers on Instagram, has coordinated an Instruments Into Prisons drive along with Die Jim Crow Records, provides resources for reading and understanding contracts on their website, and, as venues begin to open up, now has a list of demands for COVID-19 safety from venues. The most visible campaign they’ve led, however, is a campaign against Spotify that starts with that most basic fact: Spotify doesn’t pay their artists. The campaign is meant to push Spotify to pay artists a penny per stream, which seems like an absolutely miniscule amount but is actually three times what Spotify currently pays. “It’s meant to start the conversation [around streaming inequality] because there’s too much money going around that’s not going to the creators,” Jerome told me. “There’s billions being made with what consumers are paying now - and the billions are not going to the people making the music, who are the backbone of the industry.”

The penny per stream campaign has gotten the most attention of anything the group has done by a wide margin. Earlier this year, UMAW led a day of action, consisting of protests at 31 Spotify offices around the world, that received solidarity from Noname. More recently, representatives of UMAW sat down for a discussion with Rep. Rashida Tlaib, who has been criticizing Spotify even as Spotify Wrapped takes over social media. But the fact that Spotify’s payments per stream round to zero is just the tip of the iceberg. Not only does Spotify not pay artists, but as I alluded to earlier, they’ve found creative ways to make life even more difficult for working musicians, which often takes forms that seem completely insignificant but, in reality, make a huge difference for musicians. This is perhaps best understood by comparing Spotify to other streaming platforms. Bandcamp has a single button on artists page that allows listeners to subscribe to the artist’s email list and be told directly about upcoming releases and events. This is an extremely simple tool that makes a tremendous difference for artists, but Spotify has no such feature because subscribing to a mailing list - and encouraging basically any relationship with artists outside of passively scrolling through their discography on Spotify - would entail spending time off the app.

However, it isn’t just platforms like Bandcamp, which makes a point of going above and beyond to center the concerns of music workers themselves, that show that Spotify doesn’t have to be the way it is, and makes an active choice to fuck over musicians as much as possible every step of the way. Believe it or not, Tidal — the streaming service acquired by Jay Z in 2015 that was briefly a national punchline before quickly becoming memory-holed —- still exists, and while the platform is by no means perfect (it’s still more expensive than other streaming platforms and pays musicians $0.01 per stream) it provides a much better model than Spotify in very subtle ways. For one, Tidal, like Bandcamp, hires music journalists, who are often among the first to be fired when corporate entities buy up struggling local papers. But something that even I didn’t know about until recently is that, if you were to stream a song on Spotify, that precious $0.004 wouldn’t even go to the artists themselves. Rather than utilizing a fan-centered royalty system, as Tidal does, in which the profit made from one individual’s subscription is distributed to the musicians that they listen to, Spotify (and most other streaming services) distribute royalties to the artists that everyone listens to. In other words, if you stream mostly smaller, independent musicians on Spotify, the percentage of money you pay for a Spotify subscription that actually does go towards musicians is much more likely to go to John Mayer or Imagine Dragons than the musicians you actually listen to.

But even the money that is going to those larger musicians doesn’t make up most of the picture. Obviously, the people profiting the most from Spotify aren’t the people who make the music that they benefit from, but the Spotify corporation itself. And as for what that money goes towards, no one fully knows, but the money is indisputably there. The music industry, contrary to public perception, is more profitable than ever in the streaming era. “It’s not just revenue from their subscriptions and their ads,” Jerome told me, “but they’re also a massive data collection agency which sells that information to third party collectors. That’s so much of what they make their money on, and they get that data from users who listen to music made by us.” This speaks to one of the creepier dynamics of Spotify Wrapped; the program is meant to be seen as something wholesome, conveying a degree of interest in the music people listen to in their day-to-day lives and making them feel special by giving them a way to aestheticize their music taste, regardless of how shitty they or others think it is. But behind the endorphin rush of seeing your music taste reflected in shimmering digital graphics is the cold artifice of Silicon Valley overreach.

“They have this amazing collection of people’s information and what their tastes are musically and other things that people do, and they just commute that data to sell to other entities that pay good money for it,” Jerome told me. “And that’s just one revenue stream where we have no idea what they do, how much they make, what kind of deals they make, and along with their stock evaluation, which is where most of their billions are coming from, all of this is still built on the back of musicians and our work. We’re the ones bringing in that information through our music. They’re just a digital jukebox, but they’re collecting all these other sources of revenue,” he said, adding that transparency is a key issue that UMAW is focused on. Consumers have no idea how much control the music industry exerts over what does and doesn’t get onto playlists, which is the main way to get exposure on the platform. “We feel that that’s where the problem is, that people don’t really understand streaming, and don’t understand where the money goes or how it works. It just works for them. It’s their new version of radio, but tech companies get to hide behind people not knowing how it works, so that they can make backroom deals with data collection industries and make more money than Paul McCartney in his whole career.”

Consumers certainly don’t know which third parties are purchasing this data from Spotify, but based on where we know for sure that Spotify is funneling its profits, it’s fair to assume the worst. Spotify CEO and general mistake of a human being Daniel Ek recently announced that he had invested 100 million euros into Helsing, a defense company that sells digital surveillance technology to militaries, and had also joined their board. And of course, Spotify dumped 100 million dollars into acquiring the Joe Rogan podcast, where Rogan promotes COVID-19 conspiracism on a regular basis and mobilizes his gigantic following towards prolonging the pandemic. To put this in perspective, in order to make the amount of money Spotify has dumped into these respective late capitalist sideshows exclusively through Spotify streams, a musician would have to get 6.6 trillion fucking streams. And this isn’t even taking into account the amount of money that has gone towards podcast deals for Kim Kardashian, Addison Rae, and the Obamas.

In conclusion, as a response to criticism of Spotify, people often use the classic “musicians are getting paid in exposure” line. This is complete bullshit; as I’ve mentioned before, the main way to get exposure on Spotify is through inclusion on playlists, and the lack of transparency surrounding the process of what does and doesn’t get on playlists means there could very easily be payola and other industry fuckery determining what does and doesn’t succeed. Additionally, the algorithms that fully determine what music people hear on Spotify prove more often than not to be a barrier to discovery themself. When someone’s music taste is determined by a computer program that suggests more music that sounds like whatever the person is listening to, that may help them discover some new music, but it also keeps listeners from seeking out music outside of that particular box. Daniel Ek has repeatedly stated his desire to see music function entirely as background for restaurants, laundry, and social media scrolling, preferably on Spotify, and the algorithms are what makes this dismal vision look more and more like reality. But more and more, I’ve seen people who won’t argue with criticism of Spotify, but will rather chalk up their problems with systemic concerns. I’ve specifically seen people respond to the data concerns by claiming that this form of overreach is just a fact of life. I sympathize with these arguments much more than the crock of shit “paid in exposure” line; I do believe that there should no financial barriers of access to music (although it’s worth mentioning there’s plenty of music available for name-your-price on Bandcamp), and Spotify is in many ways a product of dynamics created by YouTube, which has been many people’s main source of music for more than a decade and (not considering its own music streaming platform) pays artists even less than Spotify. I can’t blame people for getting excited about having so much music available to them at such a low cost, and I also can’t blame people for viewing the surveillance empire propped up by Silicon Valley as an unavoidable fact of life not worthy of anxiety. However, “there is no ethical consumption under capitalism” has its limits, and comparing Spotify to platforms like Facebook, Google, and Amazon, which are even more sinister than Spotify but also near-impossible to fully cut out of daily life, is a complete false equivalency.

Those companies are all monopolies that are much too big to fail - we’ve seen this in action when Facebook and its parent companies went offline a couple months ago and left huge chunks of the world without any way to communicate. Spotify leads the streaming market but has plenty of competitors, all of whom share the same systemic issues inherent in streaming and in the music industry as a whole. But while Spotify may not be a monopoly like Facebook or Amazon, it certainly wants to be, and as we’ve seen from their investments in Joe Rogan and Helsing, they clearly have no more concern for the human debris picked up along the way to becoming a tech monopoly than Mark Zuckerberg did. In short, we may be living in a very brief period of time where Spotify is actually capable of being held accountable, and yet many still seem to genuinely think of them as a more benevolent tech overlord. If canceling subscriptions is too much to ask of people (though in all seriousness, if one can’t afford to actually pay artists on Bandcamp you’d be better off spending your time on soulseek), then it’s perfectly reasonable to say that this yearly torrent of free advertising has to stop.