Let's keep it real here: Taylor Swift is almost surely set for life. Between the 1.2 million copies of 1989 that blew out the door last week, her sold-out tours and more than 100 million combined sales for albums and digital singles to date, TSwizzle is good.
But, honestly, who couldn't use another $6 million? That's the question Spotify boss Daniel Ek asked in an impassioned essay on Tuesday (November 11), in which he tried to explain to Swift why her recent decision to pull all her music from the streaming service was a mistake, while also attempting to demystify some commonly held beliefs about his company.
"Taylor Swift is absolutely right: music is art, art has real value, and artists deserve to be paid for it," wrote Ek in the essay titled "$2 Billion and Counting." "We started Spotify because we love music and piracy was killing it. So all the talk swirling around lately about how Spotify is making money on the backs of artists upsets me big time. Our whole reason for existence is to help fans find music and help artists connect with fans through a platform that protects them from piracy and pays them for their amazing work."
Ek based his argument on two numbers: Zero and Two Billion. The first is how much piracy pays artists. The second is the figure he says Spotify has paid to labels, publishers and collecting societies for distribution to songwriters and recording artists since 2008. Half of that, he said, was paid in just the past year.
"And that’s two billion dollars’ worth of listening that would have happened with zero or little compensation to artists and songwriters through piracy or practically equivalent services if there was no Spotify – we’re working day and night to recover money for artists and the music business that piracy was stealing away."
Do The Right Thing
Ek believes it is his company's job to do right by musicians, songwriters and publishers, claiming that Spotify is "the single biggest driver of growth in the music industry, the number one source of increasing revenue, and the first or second biggest source of overall music revenue in many places."
He proved it with three data points you don't have to be a number nerd to understand:
1) Free music on Spotify is supported by ads. Unlike the previous two models for streaming services: paid-only (which users rejected because why pay for something you can get free?) and free-only (which paid almost nothing to artists and labels), Spotify's 'freemium' system encourages users in by offering an ad-suported free service that pays artists and rights holders every time, as well as a Premium one, which allows you to pick genres, but not specific songs.
"We believed that as fans invested in Spotify with time, listening to their favorite music, discovering new music and sharing it with their friends, they would eventually want the full freedom offered by our premium tier, and they’d be willing to pay for it," he said.
2) Spotify doesn't pay artists very much. He said 500,000 listens on Spotify is like one spin on a moderately popular U.S. radio station... which would pay an artist nothing. "But the equivalent of that one play and its 500 thousand listens on Spotify would pay out between three and four thousand dollars," he said. "The Spotify equivalent of ten plays on that radio station – once a day for a week and a half – would be worth thirty to forty thousand dollars."
3) Spotify hurts digital and physical sales. Ek said, nope. "People see that downloads are down and streaming is up, so they assume the latter is causing the former," he said. Except downloads are dropping just as quickly in markets where Spotify didn't exist until recently, like Canada, he said. "Spotify launched in Canada a few weeks ago. In the first half of 2014, downloads declined just as dramatically in Canada – without Spotify – as they did everywhere else. If Spotify is cannibalising downloads, who’s cannibalising Canada?"
He pointed to artists who used Spotify to promote their music who had great sales and streams -- like Ed Sheeran, Ariana Grande, Lana Del Rey, Daft Punk and Eminem.
This is the second time Spotify has begged Taylor to come back. Right after her decision they posted a personal plea and, of course, a playlist of songs to inspire her return.
What About That $6 Million Again?
Right, the $6 million. Ek said before Swift pulled her music from Spotify, she was on track to pull down that much a year, or more. "We expect that number to double again in a year," he said. "Any way you cut it, one thing is clear – we’re paying an enormous amount of money to labels and publishers for distribution to artists and songwriters, and significantly more than any other streaming service."
Then again, he also named a bunch of services where you can find her songs where she isn't getting paid at all. "Here’s the thing I really want artists to understand: Our interests are totally aligned with yours. Even if you don’t believe that’s our goal, look at our business. Our whole business is to maximize the value of your music," he said. "We don’t use music to drive sales of hardware or software. We use music to get people to pay for music. The more we grow, the more we’ll pay you."