The Hardships of Hipgnosis Songs Fund in Light of Phonorecords III

On January 24, Neil Young penned a letter to his label and manager regarding the spread of misinformation regarding Covid-19 perpetuated by America's number one podcast, The Joe Rogan Experience on Spotify. “They can have Rogan or Young. Not both.”1 The ultimatum posed to the streaming service became a call to action for artists everywhere. In the days that followed, many other artists, including Joni Mitchell, Nils Lofgren, and India.Arie, followed Young’s lead and planned to remove their catalogs from the platform. With each artist making statements about issues they take with the company, what started as a fight against misinformation quickly became a much larger exposé of Spotify's ethics and dominance over the streaming industry. Factors in Spotify’s Stance The Joe Rogan Experience has been on Spotify since September of 2020, with over 11 seasons worth of content. In its first month alone, the show accounted for 4.5% of all Spotify podcast listening or 14.9 million hours. Not to mention Spotify and Rogan's $100 million deal to have all of his episodes exclusively streamed on their platform.2 On the other hand, Neil Young regularly accumulated around six million monthly listeners, not even breaking into the most significant 500 artists on their service. From the numbers alone, Spotify clearly would have suffered a much more significant financial loss if they sided with Young, considering podcast ads becoming an essential source of revenue. Money aside, Spotify also has the numbers to reason that the rising concern over the “infodemic" Rogan perpetuates has never deterred users from the site. With no negative impact on their bottom line so far, Spotify seemingly has no reason to re-evaluate its stance on Rogan's podcast. In their 2021 Q4 report, Spotify boasted an 18% increase in Active Monthly Users (AMU), with Premium Subscribers increasing by 16%. Apart from an increase in users, Spotify cites that their "Ad-Supported Revenue reached a record 15% of total revenues," marking the first time that ad-revenue has exceeded one billion dollars in a single year for the company. This increase has been credited to the fact that "podcast revenue benefited from strong growth across existing Spotify studios and our exclusive licensing deals."3 Following Spotify’s recent podcast acquisitions, the company raised their Cost Per Thousand Listeners (CPM) to advertise on Spotify-exclusive shows to upwards of $60.4. With approximately 11 million listeners per episode and three to five episodes per week, The Joe Rogan Experience is likely the "exclusive licensing deal" Spotify credits their significant ad revenue too. With millions of dollars on the line and a contract to uphold, Spotify has to be extremely careful with handling Rogan's content. Their deal entails that Rogan maintains creative liberty over his show, but that is not to say that Spotify cannot disapprove of it. After the retaliation by artists on the platform, Spotify CEO Daniel Ek spoke with Rogan. The two agreed, resulting in the removal of 113 episodes from the platform.5 All but one of the now-deleted episodes were recorded prior to the Covid-19 pandemic and therefore remain unrelated to the issue of misinformation that sparked this controversy. However, it does present a step in the right direction of Spotify siding with artists by removing inappropriate and offensive language from the platform, something many cited as a primary reason for leaving. Artists Follow Young’s Example After Spotify doubled down on their defense of Rogan, Young’s actions have been followed by other prominent artists. Joni Mitchell was one of the first to take action, and writing "Irresponsible people are spreading lies that are costing people their lives" in her official statement.6 India.Arie posted a video to her Instagram announcing her departure by creating a compilation of times Joe Rogan has used slurs and other hateful languages on his show. She also went on to say that "artists are underpaid and Joe Rogan gets paid all this money, and it's hard for me to, these days, just sit back and go, 'Oh, well, that's how it goes.'"7 Spotify is no stranger to widespread backlash from the music community. For years, countless industry professionals have criticized the company's pitifully low royalty payments. The collective criticism of Joe Rogan cuts deeper, with many arguments rooted in the frustration that he should be paid millions more than the musicians whom Spotify was made for. For many, removing music from the platform stems from feelings of being wronged by the company, which regularly dishes out hundreds of millions of dollars to sign exclusive deals with podcasters while actively fighting to pay artists less. #CancelSpotify With many of their favorite artists leaving the platform, consumers also faced the dilemma of potentially moving to other streaming platforms, following the virtual location of their favorite artists’ music. On January 27th, 2022, Spotify was forced to restrict access to its online and phone support systems due to an influx of cancellation requests and complaints, which caused an overload in its system.8 It is unclear how many subscriptions have been lost to date due to this controversy. However, the inability to handle the volume of the requests and the removal of specific episodes of the podcast could suggest that it was a significant loss. For now, Spotify remains the largest platform for music streaming, holding 31% of the market share, compared to Apple Music’s 15%, in second place.9 As for podcast streaming, Spotify has gradually been cutting into Apple Music's lead. Although Spotify did not report listener numbers, their AMU growth rate during Q3 2021 suggested they were on the verge of taking over the number one spot. As the largest site for music streaming, Spotify is also the most important place for artists to upload their music. With such a firm hold on the market, Spotify offers the best chance for independent musicians to connect to their target audience. The streaming giant is invaluable to the high-profile artists for this reason, and to take down Spotify would undoubtedly have negative repercussions for up-and-coming artists everywhere: a perspective that the eminent artists who are leaving the platform might not realize. Not All Artists are Multi-Millionaires Waging a battle against Spotify’s allowance of misinformation is a privilege that only certain well-established, considerably wealthy artists have. Neil Young accumulated a net worth of over $200 million through his decades of live performance, as well as the sale of physical records and merchandise. It is the same case for the other prominent names that have followed suit: Joni Mitchell, $100 million; Nils Lofgren, $20 million; India.Arie, $6 million. Independent artists do not have the same privilege as these stars to remove their songs from a platform for moral reasoning. The majority of independent artists do not have lucrative enough careers to justify doing music full-time. Therefore, alternate revenue streams are a must for indie musicians, more often than not in the form of working a job outside of their artistry, something the current Spotify deserters do not have to worry about. A survey by MIDiA Research in combination with Amuse found that “About three-quarters of independent artists earned less than $10,000 a year from music.”10 Until small artists can be discovered, build a fanbase, and have support to tour and manufacture merchandise, streaming will most likely be their primary source of music-related income. Since Spotify doubles the size of its closest competitor, to “cancel” Spotify would be to take away the greatest (albeit, poor paying) opportunity these artists have to share their songs with the largest possible audience. Furthermore, if an artist is signed, the decision to remove songs is at the discretion of their label. Most artist-label contracts maintain the right of the label to distribute songs where they see fit, meaning the most profitable spaces. Therefore, it is not surprising that high-profile artists, such as Young, convinced their labels to remove their catalogs from Spotify. Smaller artists who bring in less revenue will not have as big a voice within their label, meaning less control over where their music goes. The primary mission of the record label and artist management is to see their clients grow. As demonstrated above, Spotify is the dominant force of the streaming industry. Removing works from Spotify by unestablished artists would severely limit their future growth capabilities, therefore disincentivizing these labels from taking action. Conclusion A conclusion has yet to be realized in this case, making it difficult to tell where Spotify will land. Even as more artists join the cause, it is hard to imagine that Spotify will take serious actions to appease its user base. The company has repeatedly demonstrated that they are entirely market-driven, and their financial reports may very well indicate that they are too big to fail. Of course, there is always a chance that enough users grow tired of Spotify's constant mistreatment of artists and questionable morals and abandon the platform. However, if history should be any indicator, Spotify could just as well shake off this controversy just like any other and, in a matter of weeks, go back to their fight to under-pay musicians out of the spotlight once again. Sources Andrews, Travis M. “For Many Musicians, Their Grudge against Spotify Runs Deeper than Joe Rogan.” The Washington Post. WP Company, February 2, 2022. https://www.washingtonpost.com/arts-entertainment/2022/02/02/young-rogan-belly-delete-spotify/. Ortiz, Nicole. “Joe Rogan Isn't Spotify's Only Problem.” Adweek. February 8, 2022. https://www.adweek.com/brand-marketing/spotify-joe-rogan-problem-identity-crisis/. Spotify Technology S.A “Spotify Technology S.A. Announces Financial Results for Fourth Quarter 2021.” Spotify...

Author: Vincent Williams

The Hardships of Hipgnosis Songs Fund in Light of Phonorecords III

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