In this economy, how many worthwhile things can you buy for $11.99 or less? A couple of cans of unhealthy soda, maybe a quarter tank of gas, a slice of pizza, four rides on the New York City subway, an extortionately priced cup of fancy coffee… or a month-long subscription to the biggest (licensed) music library in the world.
Which is the best deal by far? Music might not prevent you from starving from hunger, but it will keep you alive in other ways. And the long-rumored news that Spotify will soon raise subscription prices in the U.S. by a whopping dollar per month to $12.99 could not be more welcome for the music economy — as long as that estimated $500 million lift in annual revenue is being used in a way that helps musicians and songwriters as well as music companies, Spotify and its investors.
The gramophone, the transistor radio, the cassette player, MTV, the Walkman and discman, the iPod and Spotify — those are the greatest inventions in the past century of music listening, because they revolutionized how and where we listen and they enabled us to customize our experience. And in the case of Spotify, it was the consummation of music geeks’ wildest dream: a literally unlimited supply of nearly everything (everything legal, anyway) you could possibly want to listen to. Back when you had to pay for music, $11.99 bought an old, discounted CD, and if you didn’t like it, you had to try to find something wrong with it so you could (hopefully) exchange it for something else, or just suck it up. I can remember being a kid, fantasizing about being able to listen to every record in my local record store.
And suddenly, in 2011, I could.
Spotify’s true genius wasn’t only in ubiquity and providing a nearly limitless library of music — it convinced a generation that was used to getting music for free, via illegal downloading, that it was worth paying for. It singlehandedly saved a music industry that had been in freefall — that literally lost half of its value, falling from $14 billion to $7 billion in a handful of years — and within three years, profits were rising again. Musicians and songwriters who had been losing money by releasing music began making at least something rather than nothing, even if it was literally a fraction of what they’d been making from CD or vinyl sales — but the major music companies and Spotify were living off the fat of the land again.
And therein lies the problem with streaming: With an average of $0.003 to $0.004 generated per stream, only the top-streamed artists can make a living; and with approximately 25% of that $0.003 to $0.004 going to the song’s (usually) multiple songwriters and publishers, they make dramatically less. So where is your $11.99 going?
If you look at Spotify, it’s easy to think that it’s going into the pockets of investors and the purported evil genius behind the company, co-founder and chairman Daniel Ek, whose estimated net worth is $8.5 billion. The company throws lavish parties with lots of free stuff, it has grandiose offices, it inexplicably spent $300 million on sponsoring Barcelona’s soccer team (claiming that there was value in having its logo and artists’ names on the players’ uniforms and other signage), it even spends exorbitant sums on things that are extremely cool but fiscally indefensible, like renting out all of the advertising space in the Broadway-Lafayette subway station in New York to create a month-long mini-David Bowie museum. Ek’s Silicon Valley mentality, obsession with market share and frequent foot-in-mouth statements have contributed vastly to the company’s image problems.
Yet much of what people consider “evil” about Spotify is actually the fault of the major music companies. In most cases, that’s who Spotify actually pays, and that’s who determines just how much of that $0.003 to $0.004 the artists are getting. In an even more flawed system, publishing and songwriter earnings are set by the government. And although the National Music Publishers Association and pro-songwriter organizations like Songwriters of North America and Nashville Songwriters Assn. International have done a herculean job of lobbying to raise the paltry rates that songwriters receive, it’s still nowhere near enough.
Despite its size and might, Spotify has little leverage over music companies — Ek had to give them shares in the company in order to launch in the U.S. (resulting in a massive profit when the Spotify went public in 2018 that some majors eventually, grudgingly shared with artists once they got called out), and they own or distribute most of the music that Spotify is nothing without.
So despite Spotify’s flamboyant spending and efforts to save money through bait-and-switch tactics like automatically granting audiobook access that few people want in an effort to diminish the royalties they pay to music companies and musicians, this terminally unfair streaming economy is not its fault, although the company is rarely making it better. After all, Spotify paid out $10 billion to the music industry in 2024, and $60 billion since 2008. Musicians and songwriters may well be wondering where their share of that $60 billion went.
The entire streaming economy needs to be reinvented.
Streaming payments, including Spotify’s, are based on an artist or song’s percentage of Spotify’s total global streams, which is why it favors superstars so disproportionately. Countless alternate methods have been proposed — most often, the “per user” model, whereby you pay only for what you listen to — but have not been adopted, because they’re flawed or impractical or too easy to game, as if the current system isn’t rife with scammers. (These are vast oversimplifications, but largely accurate.) Something has to change.
The music companies claim, often convincingly, that they’re working on a more equitable solution for musicians, songwriters and themselves, and point to the streaming companies or the government as the culprit. But the current system is too weighted in their favor for them to work hard to make it more equitable who make the product — yes, product — that they sell.
Meanwhile, Spotify itself fights to prove that it can be a profitable business. The other top services, Apple, Amazon and YouTube, have core non-music core businesses that generate unimaginable profits, so they can afford to lose money on music. Spotify doesn’t have anything else except podcasts and audiobooks.
So Spotify, please raise subscription prices in the U.S. Just make sure that as much of that extra revenue as possible is going to the people without whom you are nothing — musicians and songwriters.