Billionaire Spotify CEO Wants Musicians to Work Harder, Stop Complaining About Streaming Royalties

Despite the economic ramifications of the ongoing coronavirus pandemic, Spotify continues to thrive. The streaming service revealed its latest quarterly financial results, announcing 138 million subscribers and 299 million monthly active users, adding 13 million respectively for Q2. The company’s stock value hit all-time highs in the middle of the current financial crisis too, skyrocketing to $50 billion USD. Spotify CEO Daniel Ek (net worth $4.5 billion USD) joined Music Ally for a recent interview to talk about the company’s success and their plans for the future.

The economic model streaming services rely upon has been maligned by artists the world over, especially by songwriters. Bigger artists backed by the major label system dominate these streaming services, especially on Spotify. They get priority placement on the company’s curated playlists while smaller, independent artists have to find creative ways to get their music discovered without falling victim to the algorithm. Royalties on Spotify operate through a “pro-rata” format. Each song’s earnings are based on how much that song is played but in comparison with the streaming service’s most popular tracks. “It is clear that the pro rata model favors the few top-tier artists who get the biggest amounts of [plays],” Digital Media Finland shared with Rolling Stone in 2018.

“Even today on our marketplace, there’s literally millions and millions of artists. What tends to be reported are the people that are unhappy, but we very rarely see anyone who’s talking about… In the entire existence [of Spotify] I don’t think I’ve ever seen a single artist saying ‘I’m happy with all the money I’m getting from streaming,’” Ek said to Music Ally. “Stating that publicly. In private [musicians] have done that many times, but in public they have no incentive to do it. But unequivocally, from the data, there are more and more artists that are able to live off streaming income in itself.

Ek continued, “There is a narrative fallacy here, combined with the fact that, obviously, 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.”

Daniel Ek does have a way to solve the problem though, and it doesn’t include providing further financial assistant to artists through increased royalty rates. “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.” Translation: never stop making music.

“There are two different trends here worth picking apart. We realize that a lot of artists are impacted in the short term by COVID and the impact it has on the live industry. As you very well know, a lot of the income today that artists are getting [pre-COVID-19] is from touring and live performances. A lot of artists are struggling because of that,” Ek said.

Other platforms like Bandcamp have since made changes during COVID-19 to help artists currently missing out on profits from touring and the festival circuit, extending its Bandcamp Friday initiative until the end of the year. The website waives its revenue share giving all profits to the artists. Bandcamp’s community spent 15 times the normal amount during these days. Ultimately Ek wants you to believe that the onus falls on musicians to record more, work harder and continue to pull up on those collective bootstraps until they’re able to start touring again. Until then, he says, “I feel, really, that the ones that aren’t doing well in streaming are predominantly people who want to release music the way it used to be released.”

In the meantime you can discover a number of up-and-coming artists who deserve some additional streams via our latest installment of our HYPEBEAST SOUNDS playlist below.