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Spotify meets face-to-face with vocal artist critics Stateside

By | Published on Tuesday 14 October 2014

Spotify

There were some fiery exchanges at three artist-only forums organised by Spotify in the US last week, even though the streaming service had allied with the Featured Artists Coalition on its sessions in New York, Nashville, and Los Angeles. Though it seems that most of the fire was coming from a very small number of the artists in attendance.

Media weren’t invited to the events, though both Billboard and entertainment lawyer / Music Tech Policy blogger Chris Castle have spoken to some people who attended.

The latter writes of the Nashville session: “It involved many raised voices and frustrating arguments between those who drank the Kool-Aid and those who did not. It’s important to understand that when someone is watching their livelihood slip away, telling them they just have to have faith in people whose own livelihood has more to do with venture capital and IPOs than selling music is not a good look”.

Meanwhile artist Blake Morgan, a prominent critic of Pandora in the past, told Billboard of the session he attended, “Spotify reached out to me earlier and made it very clear they don’t want to be the next Pandora. Unfortunately, that’s not from a policy perspective; that’s from a PR perspective. The meeting was very disappointing”.

However, others in attendance were more positive about the sessions, which involved both pro-Spotify artists and reps from the streaming service itself explaining how the company’s business and revenue-share licensing model work.

As CMU’s survey of the UK artist community earlier this year revealed, while some highly vocal artists are outright opposed to the business model of streaming companies like Pandora and Spotify, the majority are just utterly confused about how royalties are calculated and paid, and confusion in the music business tends to result in artists suspecting they are being ripped off.

To be fair to Spotify, it has gone much further than any of its competitors to explain its model to artists, and last week’s sessions Stateside were part of that initiative. As the company’s artist relations chief Mark Williamson told Billboard: “We’re aware discussion can get passionate and emotive, that’s part of the reason we’re doing it. Ultimately, the goal of why we’re over here and doing this isn’t to whitewash any concerns or leave the room with any artist being in love with Spotify. We’re here to talk. If you disagree, let’s discuss”.

Meanwhile, explaining FAC’s support for Spotify’s artist meetings, the group’s Paul Pacifico told reporters: “Historically, artists have been excluded from almost all discussions about the structure and functioning of the music industry and we very much welcome Spotify’s willingness to engage directly with our community, to explain their business model and address artist concerns. We don’t expect to achieve consensus on the first encounter, but rather to get the conversation started and to ensure that the artist’s voice is heard”.

And one of the artists in attendance at the New York event, Alan Wilkis, reckoned the get-together was a worthwhile experience. He said: “The rise of streaming music presents a range of opportunity for the music industry but it comes with a host of difficult and sensitive challenges, financial and otherwise. The FAC event really felt like it opened up a dialogue between parties that might often consider themselves at odds with a sense that we are all navigating the shift in the distribution model together. Perhaps no one left the room with a changed mind but there was healthy and animated discourse and it definitely felt like a step in the right direction”.

All that said, the Spotify artist relations team isn’t really empowered to overhaul the firm’s entire business plan, which has been put together with the corporate rights owners and is unlikely to change this side of any IPO.

Williamson’s task, therefore, is to inform artists how royalties are calculated before the money hits their labels and publishers (where the real jiggery-pokery can occur), and to convince the artist community that rather than pushing for an increase in the 70% share of revenue that already goes to the music industry, they should be helping Spotify et al grow the streaming market, so the music community gets 70% of a much bigger pot.

A few high profile critics aside, Williamson’s team has been pretty successful in placating the European artist community (even if more work is arguably needed with the non-performing songwriters). In the US, that team enters a much longer running debate where most artist-anger has traditionally been directed at Pandora, but where Spotify will come under increased pressure as it moves towards the IPO which will make millions for its founders, early investors and the major labels.

Spotify has an advantage over Pandora, in that the labels are generally on its side, whereas its already floated US-based rival has critics across the music industry. Though that said, Spotify has some different challenges to tackle too.

First, having the labels on your side doesn’t necessarily help with artist relations, and means you can’t wheel out the “actually it’s the labels who are really ripping you off on streaming royalties” line. And secondly, because Spotify has to licence from the labels direct – whereas Pandora relies in the US on the statutory blanket licence available via SoundExchange – any artists with the right veto clauses in their record contract could stop their music from reaching the streaming platform even where label deals are in place, and some do.

The “let’s grow the pot together so your 70% is worth more” argument works to a point. Though there’s another message for artists too, which is trickier to deliver. Because while Spotify needs Wall Street to think on-demand streaming “is the future of music” to maximise the mega-bucks IPO that will occur in the next couple of years, artists need to be told Spotify “is part of the future of music”, and that direct-to-fan and other digital opportunities are all significant parts of the future artist business model too.



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