Scott Borchetta, Daniel Ek Weigh In On Spotify Debate

spotifySpotify has been a hot topic following the removal of Taylor Swift’s music from the streaming service. More recently, Jason Aldean followed suit and pulled his latest album, Old Boots, New Dirt, from the service. 

Today (Nov. 11), Spotify CEO Daniel Ek responded with a blog post. Here is an excerpt:

Piracy doesn’t pay artists a penny – nothing, zilch, zero. Spotify has paid more than two billion dollars to labels, publishers and collecting societies for distribution to songwriters and recording artists.

Myth number one: free music for fans means artists don’t get paid…on Spotify, free music is supported by ads, and we pay for every play. Our free service drives our paid service. Today we have more than 50 million active users of whom 12.5 million are subscribers each paying $120 per year. But here’s the key fact: more than 80% of our subscribers started as free users.

Myth number two: Spotify pays, but it pays so little per play nobody could ever earn a living from it….If a song has been listened to 500 thousand times on Spotify, that’s the same as it having been played one time on a U.S. radio station with a moderate sized audience of 500 thousand people. Which would pay the recording artist precisely … nothing at all. But the equivalent of that one play and it’s 500 thousand listens on Spotify would pay out between three and four thousand dollars.

Ek is correct that recording artists are not paid by radio, unless they or their labels have entered into other revenue sharing agreements with radio corporations, such as the ones pioneered by Big Machine Label Group Pres. and CEO Scott Borchetta. It is worth noting that songwriters are paid for plays on terrestrial radio. 

Borchetta visited the national radio program Sixx Sense with Nikki Sixx and discussed pulling Swift’s music from Spotify. The full interview is available here. An excerpt is below:

If this fan went and purchased the record, CD, iTunes, wherever, and then their friends go, ‘why did you pay for it? It’s free on Spotify,’ we’re being completely disrespectful to that super fan who wants to invest, who believes in their favorite artist…

So, what we had done in the past with her records, is after that initial period, we put them up for streaming services. And for this album coming in to everything that’s going on in the business and how dramatic the streaming moment is and how it’s affecting sales, we determined that her fan base is so in on her, let’s pull everything off of Spotify, and any other service that doesn’t offer a premium service. Now if you are a premium subscriber to Beats or Rdio or any of the other services that don’t offer just a free-only, then you will find her catalogue. So the problem we have with Spotify is, they don’t allow you to do anything with your music. They take it, and they say we’re going to put it everywhere we want to put it, and we really don’t care about what you want to do. Give us everything that you have and we’re going to do what we want with it. And that doesn’t work for us.

Well, they have a very good player. It’s a good service. And they’re gonna just have to change their ways on how they do business. If you’re going to do an ad-supported free service, why would anybody pay for the premium service? The premium service that you pay for, which they do have a premium service, has to mean something. So, what we’re saying is it can’t be endless free. Give people a 30-day trial, and then make them convert. Music has never been free. It’s always cost something and it’s time to make a stand and this is the time to do it.

Meanwhile, Nashville techie Jay Frank has posted a new blog called “Understanding Spotify.”

Read more about legislation which seeks a higher royalty for digital music services in MusicRow’s Publisher Issue, which includes an interview with NSAI’s Bart Herbison.

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Sarah Skates has worked in the music business for more than a decade and is a longtime contributor to MusicRow.

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