Taylor Swift v. Spotify: Internet Killed the Video Star

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In case you missed it last week, pop megastar Taylor Swift created a minor controversy last week by pulling her songs off the popular streaming service Spotify, on the basis that Spotify underpaid artists for their work. As Mark Hemingway noted, the economics of Spotify do not make a tremendous amount of sense from the perspective of musicians:

But if you care about music, ultimately you have to care about musicians, and musicians have value. Taylor Swift may be incapable of writing an introspective lyric to save her life, but she’s figured out this much. In an article in the Wall Street Journallast year she wrote:

Music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for. It’s my opinion that music should not be free, and my prediction is that individual artists and their labels will someday decide what an album’s price point is. I hope they don’t underestimate themselves or undervalue their art.

Undervaluing artists is exactly what streaming services do. Spotify pays a royalty rate of .006 to .0086 per song that’s streamed. If a band or artist streams a million songs on Spotify, that’s only $6,000 to $8,600—around what you’d earn if you sold just 500 albums at $15 a pop.

Many of the people who are criticizing Taylor Swift for this are raising a number of red herrings, such as the fact that unlike the artists that Swift is purporting to stick up for, Swift does not need the money from Spotify which (in their mind) makes her a poor vehicle for carrying this message. However, as with the fight over Napster, it absolutely has to be an artist with the clout of Swift to force changes in the system – a marginal artist pulling his music from Spotify hurts only himself and forces no change to the system. Until and unless a musician becomes a megastar, they can no more afford to refuse to participate in Spotify these days than they could refuse to allow radio stations to play their music in days gone past, as Spotify and similar streaming services now serve as the primary drivers of market introduction that are the lifeblood of finding and disseminating new music talent to the public.

It might be worth asking at this point how musicians allowed themselves to be place in this predicament. The answer (sadly and simply) …read more    

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