In case you hadn’t heard, Thom Yorke (of Radiohead) and Nigel Godrich have a beef with Spotify, the international music streaming service. Together, the pair comprise a side project called Atoms For Peace, and this past weekend, as Pitchfork reports, they pulled all their Atoms For Peace material from Spotify in protest of the streaming services alleged unfair payout practices. Godrich put it this way on his Twitter account: “New artists get paid f**k all with this model. It’s an equation that just doesn’t work.”
On Monday, the beef continued with a no-doubt lawyer-informed statement from Spotify via Pitchfork that essentially says, in a non-committal way, “We’re working on it.” Specifically, the statement references the “early stages of a long-term project” set to benefit new artists and new music, and boasts over $500 million paid in royalties to license holders thus far.
Determined not to let Spotify off the hook that easily, Godrich retorted that the current pay structure pays equal amounts to old back catalogue songs and to new releases by new artists, so that the lion’s share of royalties go to large labels with big catalogues while new artists get next to nothing. In his words, “Big labels have massive back catalogues so their 40-year-old record by a dead artist earns them the same slice of the pie as a brand new track by a new artist.”
What do we make of all this? Yorke and Godrich do have a relatively unique perspective for looking at this; since Atoms For Peace is a new band, and Radiohead is well-established with a “catalogue”, they can see the difference in payouts between the two. (Incidentally, Radiohead’s content is still available on Spotify.) However, not knowing the exact pay structure does make it difficult to understand Godrich’s point. After all, if all songs are paid the same royalty, it makes sense that a label with a large catalogue gets a bigger piece of the pie; it’s a simple matter of how much playable content is owned by the artist and/or label. The more songs you own that get played, the more money you make. Simple math. So yes, an indie artist with one album on Spotify will generate less income than a label with 200 titles. But that’s nothing new; the royalty payouts from established performance rights organizations like ASCAP or BMI are affected in much the same way. More content equals more pay.
So unless there’s something we’re missing, it appears the real reason for the beef would be more along the lines of Spotify not paying enough per streaming song. And therein lies the rub, because online streaming is such a new concept that it is difficult to discern the balance between what is fair to the artist and what will keep streaming services from going bankrupt.
Here’s the issue: when you hear a song played on the radio, royalties are paid on that song based on how many approximate ears it reaches at one time. A high powered station in a big city, for example, will pay a higher royalty than a rural station with low power, because it is assumed more people heard that song. But with Internet streaming and radio, while there are many more “plays” possible, it is assumed that only one person hears the song at a time. Thus, it is financially impossible for a streaming service to pay the same royalty rate per play as a broadcasting facility does, or even close to it.
So while streaming music via the Internet is rapidly becoming the venue of choice for music fans, many questions remain as to how to make sure artists can be sustained by this new delivery system, and while things get figured out, more artists like Yorke and Godrich are likely to complain, and rightly so. My take on it is pretty much what it has been from the beginning: it will get sorted out in time. Streaming media isn’t likely to go away anytime soon, and more and more listeners will be foregoing the purchase of CDs to listen to their favorite artists via the web. Whether it amounts to increased subscription rates or the streaming services and/or music corporations agreeing to more modest profit margins, the situation will force them to figure out a way for the system to be sustainable. Supply and demand in the music market will eventually find a balance.
They always have.