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Can a streaming platform that benefits artists actually exist?

It’s safe to assume that streaming music has become the most popular way of listening to music for a lot of consumers. We already have an entire generation of listeners who have never known another way, and those of us who grew up on iPods, CDs, Cassettes, or having MTV on all day hoping our favourite hit-du-jour come on, are also slowly realizing there’s only so long we can rant about the good ol’ days before we’re forced to pony up 10 bucks a month for the convenience of streaming anything anywhere. After all, even if you are aware of the damage platforms like Spotify do to the industry by underpaying artists, we ourselves are trapped within the capitalistic system, so chances are, if we can save a few bucks, we will…but what if there was a better way? What if there was a platform that offered the convenience of streaming, at the same price to the consumers, but one that actually benefits the artists, and not just line the pockets of people like Daniel Ek?

Daniel EK, CEO of Spotify and world-renowned clown.

While the name may not ring a bell for you, Ek is someone who has probably earned a good couple of hundred bucks peddling music to you or someone you know. While there are plenty of streaming platforms, Spotify is probably the most famous. Hell, Spotify has become its own verb, and what better indication that you’ve outrun your competition than having the name of your app become the verb to do the action your app is designed to do? We don’t search for articles, we Google them. We don’t call a ride-share service to our friends houses, we Uber there, and we don’t stream the latest Kendrick Lamar record, we Spotify it!

Ek has recently bolstered his notorious reputation, by borrowing a page off Elon Musk’s playbook and dropping over-generalized, uncorroborated statements in interviews to get a rise out of people, and a rise out of people he got, namely musicians!

In a recent interview, which I encourage you read here, EK basically defended the criminal underpaying of the artists that Spotify is notorious for, by blaming the musicians, saying “Some artists that used to do well in the past may not do well in this future landscape, where you can’t record music once every three to four years and think that’s going to be enough. The artists today that are making it realize that it’s about creating a continuous engagement with their fans. It is about putting the work in, about the storytelling around the album, and about keeping a continuous dialogue with your fans”.

"It’s quite interesting that while the overall pie is growing, and more and more people can partake in that pie, we tend to focus on a very limited set of artists," Ek said. "Even today on our marketplace, there’s literally millions and millions of artists. What tends to be reported are the people that are unhappy."

Ek wants Artists to churn out more content, to counter-balance how little each release makes them, which even in the realm of capitalism, is a strategy almost guaranteed to fail. In essence, not only he wants you to be underpaid, but overworked too. I can go all day about how also making music too quickly can hurt its quality, but again, that could distract from the heart of the issue and Ek thinking what he says makes any kind of sense.

Spotify's shady business model

Spotify pays whoever holds the rights to a song anywhere from $0.006 to $0.0084 per play. Let’s remember that the whole point EK is making is that people can make good money if they make more music, but that’s also untrue. A band like Gogo Penguin is already making about one album a year, probably more now that they can’t tour, but despite that they are getting paid peanuts from the platform, and making two albums a year won’t give them too much of a raise either. For starters with every new release your previous release plays go down, and let’s not forget that as a band making a niche blend of Electronic and Trip Hop with a traditionally Jazz instrumentation, it doesn’t matter so much how many albums you release, because there’s a non-negotiably small audience for you, and once you reach them all, that’s it!

We can do case studies of bands all day, going further down the food chain from Gogo Penguin to local bands, or all the way up to Mariah Carey in December when her streams shoot up, and to the likes of Taylor Swift whose new album broke the record for most streams in one day, and see that it works okay for those at the top, marginally livable for those in the middle, and an absolute joke for anyone below that. Spotify won't exist without artists. We are its product, but they don't wanna actually pay to acquire that product. I'm sure real companies making tangible products are jealous!

This is also problematic in that we are talking about musicians in a food chain, not by looking at the quality of their content, but by how much it was consumed. This immediately begins to favour some and screw over others. A pop band from Serbia is probably not making as much as a pop band in the UK, because Serbia has worse internet connections, so probably streaming is not as popular over there, not to mention the Serbian language is spoken by fewer people globally. Similarly, a jazz band is not making as much as a trap artist because trap is more popular among the generation that streams the most. Now, there’s no point in subjectively comparing artists from different countries or different genres, but what is surely indisputable for most, is that no genre is inherently more valuable than the other despite its popularity. Experimental Noise music may reach fewer people than Metal, but both have their place in the music realm and both bring the same amount of joy to their fans.

So instead of talk about all that and come up short against thousands of articles that have done so with better research teams than me, I thought I can talk about a platform that works, and actually encourages the fast turnarounds that Daniel EK correctly points out is possible in today’s world. This is not some unattainable utopic solution either. I think this system is possible to implement, and it can actually make good amount of money for the investors too. I have no problem with a well-run streaming platform that has revolutionized the way we consume music having a lucrative business. My problem is with greed, and taking more of the pie than you deserve, to use Ek's analogy, and then bully those you underpay. While I’d love to see the entire capitalist system toppled, that’s not the point of this short blog. I’m trying to imagine a platform that still works within the framework of capitalism.

A new business model

So, What would be an ideal streaming service for musicians that still can be very profitable?

It could be offering multiple tiers of subscription (free, 5 Dollars, 10 Dollars, 20 Dollars, 50 Dollars)

-Each month, any User can hear any track up to 3 times. After listening 3 times or downloading the track the Artist receives 5 cents.

-Users can do this with a 5 dollar membership for up to 50 tracks, this is more tracks than most people listen to actively every month. Sure you may have a 90s nostalgia night, or check out a new album, but after that, you’re probably only listening to about 50 tracks more than 3 times on a regular basis per month. Platforms like Spotify offer Unlimited downloads and unlimited tracks, but who really has unlimited space to download? How many user actually listen to a number of tracks anywhere near unlimited (Though this will also be addressed shortly!)? We need to understand that Unlimited is a marketing term. In reality, we don’t actually need unlimited downloads. Limits within reason benefits all parties involved.

-Each artist earns 5 cents per listening user per month. If they come back to you next month that’s another 5 cents. They can keep you in downloads and not have to pay unless they hear it 3 times in the new month. So no hidden charges or losing your monthly listening allowance if you forget to remove downloads.

-Higher memberships have the same exact perks as the 5 dollar tier, but get a higher track allowance, 10 dollars gets 100 tracks and 20 dollar gets 200 tracks. We’ll get to the 50 Dollars ‘Pro’ membership soon!

-You’d notice that this comes out to half the membership cost. The streaming platform keeps the other half! When they run promotions or offer student discounts, 80% comes out of their profit (the second half of the membership) and 20 percent from the artist. (so if students get 20 percent discount on the 5 dollar tier, artists get 4 cents from them and the platform makes 50 cents less money per month from that user.

So, hypothetically, At one million active users paying the 5 dollar tier, actively listening to 10,000 bands the platform makes 2.5 million dollars and each of the ten thousand bands make 250 per month from the platform (assuming they each have one good track). Of course with more avid users the platform gets more, and bands on average may not see a huge pay rise, but probably more bands will make money, and on release months, most bands with a new release probably make a good amount of money (5 dollars per user on a 10-track release, which amounts to 500 bucks for 100 users, a number even smaller bands can easily hit and make some good money from!). Of course in reality hitting a million users and 10,000 bands wouldn’t be too hard, and the platform can easily expand. They can spend about 2 percent of their monthly profits to promote bands and the platform, even offer free monthly trials. A mere 5 percent of their monthly profits can get 200 bands the same amount of money and offer 10,000 new members a month free. Both bands and users are financially incentivized to join the platform over time.

-For higher-tiered memberships, (for example the 10 dollar tier) if they listen to fewer than 100 tracks, at the end of the month, they are given the choice to either donate half the remainder to artists of their choosing, or get extra ‘credit’ applied to their next month’s allowance so they can hear more tracks. In both cases, the platform gets the extra other half to add to its profits, thus the users that listen to music sporadically make the platform more money!

-Free subscribers can hear any song up to 3 times, but can’t download or listen to it more than 3 times. They also get ads, with the revenue from the ads going to the platform.

-The 50 Dollars membership is the ‘Pro’ membership. They do get unlimited listens and unlimited downloads, and every month get to choose which artist(s) to donate a minimum of 5 cents and a maximum of 25 dollars to. They can also distribute their 25 dollar donations in any way between any number of artists. This is appropriate for venues, label workers, bloggers, etc. This also creates a symbiotic relationship between industry professionals and bands. While bands sometimes pay to submit to influencers, bloggers, venues, bars, now those industry professional get a chance to give some back to the band if they choose to. Of course they can choose not to, or donate to any other artist, but really, who would choose to give more to bands they don’t like?

This system is clearly not perfect, nor is it the most profitable for the platform, compared to the corrupt system of Spotify, but it would actually incentivize the bands to make more music and release more music more frequently, rather than whatever bullshit Daniel Ek suggests, and when artists actually make money from their record, they then have more capital to spend on the new record, use better studios, hire more engineers and producers, and so on. The money they earn at least partially goes back into the industry, creating work, buying gear from manufacturers, making higher-quality products for the users, and while at the beginning probably more users would opt for Spotify for its larger selection, hopefully after a certain point the bands would see the incentive to make more money by driving their fanbase to this platform, because it makes them more money!

With feature tracks, it will be up to the main songwriter and the featuring artist to negotiate a split, but again the high profits would incentivize more collaboration, especially even for bigger artists to collab with less known artists, if the negotiation takes their influence into account and makes them more money on the side. They essentially show up and lend their talents to the track, the main band/artist does all the work, mixing, etc. and they get exposure from the collaboration and a little money, while the more influential artist makes more money for less work.

The bands are more happy, more motivated to do more music, and the platform is still making a good chunk of change. Once distributors are on board, the platform can just spend money on maintenance, server space and promotion, and keep the rest of the profits. Users will hopefully be motivated to choose the platform that benefits their favourite artists more (again, this is where my cynicism think the foreseeable issue with this system is) and hopefully see that they are essentially spending about the same amount of money but helping the artist more. (Currently a Spotify membership runs from about 5-15 dollars per month so we’re not too far above the mark with this system, which works for more users, and individuals who have higher usage are paying more but justifiably and not at the expense of the artists.) Artists can also offer extra perks for fans who download more than three tracks per month from them, like meet-and-greets, exclusive remixes and releases, stuff like that. Users will also always have the chance to donate an extra 5 cents to any artist at any time (to be charged on their next cycle, or they can buy ‘tokens’ in advance a la Twitch) and again the platform takes half of whatever extra donations each band makes with the token approach.

Of course, since this system is not the most profitable for a streaming platform from a capitalistic point of view, users are also given the chance to become investors themselves. Any donation of any size gets you the same perks as any paying user for the amount you paid at no additional cost and larger donations can provide extra perks, like meet and greets, curated playlists, Physical copies of records, etc.

So instead of having a few large corporate sponsors, the platform can work with micro-investments from users, on top of what they make from regular members. This micro-investment system hopefully saves the platform from ultimately becoming as evil as Spotify, and has worked for platforms like Wikipedia, which provide a free open-source service to all users. Now, is Wikipedia perfect? No. Is there misinformation there? Yes, but not tons of it, and if you’ve ever attempted to contribute to Wikipedia you’d know it’s not super easy, it’s still pretty decently supervised (especially for more searched terms) and a lot of the information there is accurate, well-sourced and reliable.

Of course, this whole system has been thought up by me, a single entity in the industry. I’m excited to hear your thoughts. How do you use Spotify? Are there more than 50 tracks per month you listen to more than 3 times? Would you do this? What would you add or take away from the system? Would you invest in something like this? What are some other ways to incentivize users and band to join? What can be done for lesser artists to get more exposure and level the playing field between them and more well-known artists? Let me know your thoughts in the comments. Thanks for reading!