Amidst COVID-19 and economic crises, Spotify continues to thrive. The streaming service has now 138M subscribers and 299M monthly active users, adding 13M respectively for Q2. The company’s stock value hit all-the time highs in the middle of 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.
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 or otherwise they become a victim of 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.
“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.”
“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.
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.”