Neil Young’s Spotify Exodus Is a Test Case For Artists Who Dare Question Music Industry Dogma, reports MBW.
Spotify revenue
Spotify revenue will now dry up for Young, because Warner has requested, on behalf of the artist, that Spotify remove his music from its platform. Spotify has duly obliged.
The now-infamous impetus for this fallout: Young’s belief that Spotify is permitting podcasting’s golden boy, Joe Rogan, to spread untruths about Covid vaccinations.
There can be no doubt that Neil Young has yanked his music from Spotify on a point of principle. Nor that he’s fully prepared to sacrifice his earnings as a result.
The consequences
Yet he has just laid the groundwork to shatter erroneous music biz dogma that’s lain unquestioned for too many years. Young might even grow his own business as a result.
In fact, Neil Young may be about to prove that a swathe of established artists – namely prestige catalog artists – really don’t need Spotify to survive anymore.
In an open letter published this week, Young called on his fellow stars to “move off the Spotify platform”.
Taylor Swift’s protest
The last time we saw an artist of Young’s profile publicly wrench their catalog from Spotify – with a similar level of mainstream media furore – it was Taylor Swift, back in November 2014.
Swift’s protest wasn’t political, it was economic: she pulled her catalog in protest at Spotify’s free tier which, she suggested, was devaluing music’s worth in the eyes of fans.
“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,” Swift wrote in an op/ed a couple of months before her Spotify exodus. “I hope they don’t underestimate themselves or undervalue their art.”
It took three years for Swift to U-turn on this decision, when her catalog re-emerged on Spotify in summer 2017.
She characterized that U-turn as a kind of special celebration for her fans; in truth, it obviously had more to do with Spotify’s blossoming dominance of the record business.
Profit and loss
According to RIAA data, in 2014 – when Swift initially pulled her music – US record industry revenue from paid streaming subscriptions made up just 11.5% of the market.
By 2017, when Swift re-uploaded her music to Spotify, paid subscription had grown to nearly 40% of the US market; more than CD, download, and vinyl sales combined.
Spotify logo
Spotify, with help from the major labels, also managed to slam the lid back on another existential threat at this time: streaming’s surprisingly brief exclusivity wars.
Apple Music, aware that it was losing ground on Spotify, began to pay big money to artists in order to obtain fortnightly ‘windowing’ exclusives – meaning Spotify couldn’t host these records until Apple had run down the clock on crucial new-release consumer excitement.
Orchestrated lobbying campaign
The most repeated trope of all?“ Every time an artist hurts Spotify in this way, they risk permanently damaging the fragile growth of music’s subscription streaming ecosystem… and pushing us back into piracy.”
It all felt suspiciously like an orchestrated lobbying campaign. Probably because it was.
Spotify’s statement
Sachin Doshi, who was VP of Content at Spotify during its ‘exclusives war’ with Apple, confirmed on our latest MBW podcast: “Spotify was able to convince the industry that this [trend of exclusives] was going to destroy the golden goose.”
Added Doshi: “The labels are effectively mediators, collective bargaining, for the artist community – they’re the ones who are going to see that risk more than anyone. Spotify in particular, probably worked with them to see that end-game and say, ‘You need to back off of this, this is just going to hurt everybody.’”
You have to face the truth
It was an argument noisily amplified by the likes of music biz commentator Bob Lefsetz, who memorably said in 2016 that any artist who decided to pick a fight with Spotify was “so f*cking dumb”.
“You have to face the truth,” Lefsetz told the Recode Media podcast. “The game changed.”
Thing is, now the game has changed again – dramatically so. We are in another new chapter of music’s commercial evolution, and Spotify is heavily under the cosh.
The fragile growth
That “fragile growth” worry for music streaming subscriptions is long in the rearview mirror. Paying for music on a monthly basis today is as hardwired into our collective brains as refreshing Insta or ordering Uber Eats.
Comfortably more than 500 million people worldwide now pay for a music streaming service. Goldman Sachs reckons we’ll easily be at over a billion by 2030.
Yet in Q2 2021, just 31% of these 500 million-plus global music subscribers were paying for Spotify, according to Midia Research – down from 33% in the prior year quarter.
Three-quarters of worldwide streaming music subscribers will be using a platform that isn’t Spotify by summer 2024.
Youtube Music
Another big problem for Spotify: it isn’t the world’s fastest-growing western music streaming service anymore. YouTube Music is.
According to Midia, YouTube Music saw subscription growth of over 50% in the 12 months leading up to Q2 2021.
And while Spotify is maintaining its importance to the major record companies, recent filings show that it still contributed just 18% of Warner Music Group‘s total revenues in FY 2021. (That’s a long way from 60%!)
The buzzword
And because no music business column these days is complete without buzzword bingo, here’s a few more exciting things for artists that have bubbled up in the pandemic era: Live-streaming! BandCamp! Home fitness! The metaverse! XR! etc. etc.
This long-running, flawed music business dogma that to turn your back on Spotify is to turn your back on progress – and likely your own career – is now probably defunct.
Young’s protest
In October 2019, the Neil Young Archive – the online destination where Young presents his full music catalog and other digital trinkets for a $1.99 per month subscription – had 25,000-plus subscribers.
That’s an annual take of over $600,000, roughly equivalent to 150 million Spotify plays, every 12 months.
With the PR momentum his latest Spotify walkout has given him, these numbers could easily be tugged upwards, striking a meaningful blow for the D2C monthly fan subscription model versus the 60,000-additional-tracks-a-day morass of Spotify’s song soup.
Issue with spotify
Plenty of big-name musicians today have major problems (publicly espoused or otherwise) with Spotify – whether those problems are political, ethical, or economic.
Spotify, remember, is currently appealing against a landmark pay rise for songwriters in the US. A pay-rise that’s already been approved by the Copyright Royalty Board.
Additionally, Spotify has also proposed measly terms for US songwriter pay for the next five years – terms that the NMPA characterizes as “the lowest royalty rates in history”.
One intriguing new factor that may bear influence on this prospect: the music industry’s heavyweight investors are no longer confined to the three major music companies. Hipgnosis Songs Fund paid somewhere close to $150 million to buy 50% of Young’s publishing in 2021.
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Source: MBW
