Spotify’s New Payola Scheme

The Swedish audio-streaming giant Spotify announced on the 2nd of November that they would be trialling a new ‘service’ that allows artists to boost their music in exchange for reduced royalties. This is a severe attack on both the livelihoods of all musicians and the music of the world’s cultures in general.

According to the company, under the “experiment, artists and labels can identify music that’s a priority for them, and our system will add that signal to the algorithm that determines personalized listening sessions.” The centrepiece of Spotify’s technology is its algorithm, which uses an incredibly diverse array of information gathered on the listening habits of every user to ‘personalise’ their experience. Under this new scheme, participating artists can have the algorithm tweaked to amplify some of their songs.

But there’s a catch. Artists currently receive $0.0047 (USD 0.0032) per stream, meaning that even with 100,000 plays they only receive around $470. If they try to get more streams through this new option, they will be paid even less than this per stream, or as Spotify calls it, a “promotional recording royalty rate.”

This is effectively a ‘payola’ scheme, where large recording corporations will be able to pay their way into dominating even more of the algorithm, against the merits and popularity of independent artists and labels that need royalties to survive. The issue of monopolisation is incredibly important when trying to understand Spotify’s role in the world.

Though it was founded in 2006, it wasn’t until late last year that Spotify first turned a small profit. At first glance running at a loss for 13 years seems nonsensical, but the profit was being made elsewhere. The rise of the internet in the early 2000s saw the rapid decline of CD sales in most Western countries, as sites like Napster and Limewire allowed people to (illegally) download music for free. In fact Spotify started out as one of these websites, originally getting most of its music from the torrenting site Pirate Bay. 

Larger than this however, was the very real possibility this posed for independent artists and labels to distribute and sell music outside of those means owned by the US entertainment monopolies. They realised it wasn’t enough to own the pressing plants, distribution lines and stores when files could be freely exchanged on the internet. Through investing heavily in Spotify and forcing its legal status, they set about dominating the entire world of recorded music. Accordingly, over 85% of music streamed on Spotify belongs to just four labels: Universal, Sony, Warner and Merlin.

This has been responsible for double-digit growth in the US music industry in the last four years as Spotify continues to expand into more and more countries. Music is one of the greatest human inventions and is central to all the world’s civilisations. Spotify and other streaming monopolies pose a unique challenge to musicians in Aotearoa, threatening their ability to both feed themselves and develop an independent musical culture. The future of our distinct sounds and traditions in this country, and those of the rest of the world, are increasingly smothered by the cultural arms of US hegemony. Let us fight US imperialism on all the fronts that exist, even that of music.