Guest post by Monica Corton (@momusing), Executive Vice President, Creative Affairs & Licensing Next Decade Entertainment, Inc.
If you have any connection to the music biz, it’s been hard to ignore story after story of the pull out of Taylor Swift’s catalog from Spotify. As a music publisher, I have to say that I too share all of the frustrations that both Swift and Big Machine’s, Scott Borchetta have with the bad royalty structure that exists with regard to streaming music. Spotify is not alone in this and certainly not the worst player by far (some could point to Pandora for that). However, I feel that Borchetta and Taylor missed a watershed moment in helping themselves and the industry find a solution to this difficult problem. If Swift and Borchetta have an issue with the amount of royalties they are receiving from Spotify, why didn’t they negotiate for a special extra tier of payment (an increased price to customers of Spotify) for Swift’s catalog so that they could obtain extra income and still satisfy all of her fans who would rather stream her music hundreds of thousands of times than digitally download her album? We need tiered fees in streaming to become a reality if the streaming business is ever going to work from a royalty standpoint. We also need a higher royalty for masters and publishing and to reduce the amount of time that people have free access, but both of these probably could have been achieved with the popularity of Swift’s album, 1989. In fact, few albums could get a digital service to make such a radical change, but I think, Swift’s could have gotten it done.
This whole incident feels like Napster Part II. We all know that streaming is where people are going. It’s not a theory anymore; we are all seeing the change on our royalty statements. Album sales via physical and digital downloads are significantly down and the reams of pages of streaming royalties increase every accounting period. They don’t add up to anything of significance, but they are definitely taking up lots of space on statements. However, if we know our customers are trending this way, we have to find a business model that supports that trend or we risk pissing them off again ala Napster. In fact, the minute I read this story, I went on to the Internet to see the backlash and many were writing that if they couldn’t stream Swift’s music on Spotify, they planned on going to a Bit Torrent site to rip their own free copy. Is that what we really want here?
It’s hard for me to believe Spotify wouldn’t entertain a special royalty tier for Swift’s music and find a way to lock it in the paid only side. They had to know the backlash and bad publicity would be very harmful when it came to Taylor Swift. If a tiered streaming fee had been done, Swift/Borchetta would have gotten more money, probably not as much as selling physical copies and digital downloads, but more than the $500,000 she has been averaging from Spotify, and she would not have upset her fans. More importantly, she would have helped thousands of artists and songwriters who don’t have the juice to get this kind of change done. She would have really made a statement for changing the business model for all, in a much more positive direction which is what she discussed in an article several months ago.
We need Spotify to succeed. If the industry has a problem with the business model of Spotify (which we do), the goal needs to be to fix the business model through negotiation, not to destroy another potentially viable business. To clarify, I’m saying this without owning any equity in Spotify. I am all for fighting for songwriter and artist’s rights, in fact, I do that all the time, but I am also for finding a business solution to keeping the music echo system viable.
We need to be much more strategic as an industry in finding solutions to these complicated problems. When the digital services go out there and say they paid millions to the labels and publishers, they did do that with the majors, but they were in the form of advances against a sub par royalty structure. That money is sitting in unrecouped advance accounts, being very slowly released to songwriters and artists as the poultry royalty uses click in each quarterly accounting period. Everyone is telling the truth here, but the way the system has been set up is doing serious damage to the livelihood of creative people. I hope that all of the hubbub over this actually leads to some much more inventive business solutions, rather than a continued pull out from Spotify by other artists and songwriters.
Photo Credit: Shutterstock
Spotify, Taylor Swift and The Music Industry’s Missed Opportunity
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