“The Great Big Spotify Scam” exposed in Music Business Worldwide this week highlights one of the major problems with the music streaming licensing model – namely the risk of a disconnection between the artist and the fan who supports them. The MMF’s Dissecting the Digital Dollar report explains in detail how, under the current licensing model, the entirety of a listener’s subscription money goes into one central pot which is then divided up between the total number of listens and then paid out to the respective rights holders. Most music fans, I would wager, would be blissfully unaware of this. I’m sure they’d make the incredible assumption that their hard-earned subscription is being paid to the artists they listen to most.
This isn’t the case, the MBW article revealed, in quite dramatic circumstances, how the current model can effectively be gamed. In this instance, it appears that someone in Bulgaria had set up over 1,000 paid Spotify accounts and had them play on a loop a carefully-constructed playlist (“Soulful Music”) consisting of 467 “unknown” 0.31-second tracks. As a result, the playlist rose to number 11 on Spotify’s US playlist chart – enabling these “subscribers” to grab an inordinate share of the revenue pot. It seems illogical that you could actually make money in this way, but it highlights perfectly some of the perversities at heart of streaming revenue distribution.
Mark Mulligan of MIDiA Reseach wrote an article as far back as 2015 which discusses how a shift towards the model of “user-centric licensing” (quite a mouthful) could restore greater confidence in the economics of streaming, by ensuring that what the user/listener actually listens to determines where their monthly subscription goes. So, no longer would my streams be subsumed into a huge pot and divided equally amongst a number of listens. Instead, my individual payment of £9.99 or €9.99 a month (minus 30% deducted by the streaming service) would be apportioned only to the music (and the artist and songwriters) that I listen to. There is a compelling argument that such a model could improve the artist:fan connection and increase overall trust in the streaming model. It would also prevent scams such as ‘the great Spotify swindle’, as you could never get back more than you put in.
There are no doubt hidden complexities here – most notably, that the value of a stream would vary depending on the amount of listens; so if I only listen to 10 tracks a month then the streams would individually be worth 100 times more than if I had listened to 1000 tracks in the same month. Although this may in fact lead to a shift in payouts towards more specialist genres, where audiences are less likely to consume major label pop music. So maybe a small shift would go to Spiritualised from Taylor Swift, although not in sufficient numbers to seriously jeopardise Taylor’s wealth.
The Music Managers Forum has long debated this issue (I remember trying to get my head around it at my first Board meeting, over two years ago). Our members increasingly believe that, despite the complexities of introducing a user-centric model, it is inherently fairer to reconnect the fan to the artist along with the additional benefits of greater transparency and accountability throughout the streaming value chain. This seems like the perfect moment to open the debate. So, we call upon all streaming services and rights holders to consider looking at how this could be implemented, and we can prevent cases like great Bulgarian Spotify swindle occurring in future.