Radiohead’s Thom Yorke Leaves Spotify. Will Others Follow?

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David Wolff Patrick / WireImage / Getty Images

Thom Yorke from Radiohead performs at Palais Omnisports de Bercy on Oct. 11, 2012 in Paris.

The fast-growing music-streaming service Spotify received a very public put-down on Sunday when singer Thom Yorke and producer Nigel Godrich, members of the band Atoms for Peace, announced via Twitter that their music would be pulled from the platform. Yorke, most famous for being the front man of Radiohead, also removed his solo work from Spotify. The move reignited a long-running debate over whether music-streaming services will ever be able to support an industry desperately looking for new revenue streams.

On Twitter, Godrich wrote that while streaming services can help established artists generate money from their past work, new artists are being stifled because of low payouts. “New artists get paid f–k all with this model. It’s an equation that just doesn’t work,” he wrote.

Spotify has always been silent about the details of its deals with various record labels, but a growing number of individual artists are divulging their financial information to shed light on how much money actually ends up in musicians’ hands. Reports from acts like Damon Krukowski of Damon and Naomi, folk artist Erin McKeown and cellist Zoe Keating indicate that independent acts make around half a cent per song stream on Spotify. That’s a pittance compared with the 7¢ to 10¢ an artist can expect to earn from a song download on iTunes and even further removed from what artists earn from physical CD sales.

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So far, there hasn’t been much money for tech companies in streaming either. Spotify pays out almost 70% of its revenue to rights holders and is not even focusing on profitability right now, according to recent statements by CEO Daniel Ek. Internet radio service Pandora, which has lobbied Congress and even bought a conventional radio station in an effort to pay lower royalty rates to artists, has yet to have a fully profitable year, posting a net loss of $38 million for the 2013 fiscal year.

These companies promise that as they grow in scale, they’ll generate profits both for their shareholders and for the artists whose music stock the services. Spotify responds to gripes about its royalty rates by pointing out that it has paid out about $500 million to rights holders since it launched. But as Yorke’s frustration demonstrates, some artists are getting impatient waiting for these theoretical future earnings. “The problem is that it’s unproven timewise,” says Catherine Moore, an associate professor of music business at the Steinhardt School of Culture, Education and Human Development at New York University. “No one knows what the long-term benefit is going to be, and artists in general are looking at shorter and shorter career spans.”

Despite these issues, more competitors are entering the streaming fray this year. Google rolled out a Spotify competitor in May and Apple announced that iTunes Radio, a service more akin to Pandora, would launch in the fall. Beats Electronics, the company behind the popular Dr. Dre–branded headphones, is also launching a streaming service code-named Daisy later this year.

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Though the tech world has made the shift to streaming services seem inevitable, many artists besides Yorke and Godrich have spoken out against the streaming business model. The Black Keys’ latest album isn’t available on Spotify, and band drummer Patrick Carney has said the service is fairer to labels than to artists. Alt-country star Jason Isbell called Spotify “evil” in a May interview with the New York Times. Last fall indie rock band Grizzly Bear tweeted that fans streaming songs through Spotify is about as helpful to a band as downloading music illegally through the now defunct piracy haven LimeWire. And many big artists of decades past, from Led Zeppelin to The Beatles to Garth Brooks, have never allowed their music on the service.

In many cases, though, it’s not up to artists to decide where their music ends up. Record labels often retain ownership of an artist’s music and can distribute it as they please. Revenue from streaming services like Spotify are distributed to record labels, which then pay artists. The three major record labels actually own a minority stake in Spotify, which means they will be earning profits from the company’s overall future success whether or not it benefits individual artists.

Though there have been some outspoken critics of Spotify’s approach to music distribution, most of the biggest contemporary acts remain available on the big streaming services. Perhaps it’s because they don’t know of a viable alternative. “It’s up to streaming providers to come back with a better way of supporting new music producers,” Godrich wrote on Twitter. “It’s not for us to think up how it could work. That’s your department.”

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The alternative before streaming was rampant piracy. A fear of returning to the days of Napster — along with a complacency on the part of record labels who can win with Spotify without necessarily having their artists win too — may keep most musicians locked into the streaming services, whether they really want to be or not.

Artists “feel that for the past 15 years, they’ve had a situation where they’ve seen their music go out of their control,” Moore says. “That’s a situation that has led them to a feeling of lack of control, of helplessness, in the face of the changes of the industry. Some artists feel that they should be the ones that make a stand and say ‘Our music does have value.’”

13 comments
Fugazied
Fugazied

..and just how much does a new artist get paid when someone downloads their album from the pirate bay or listens to it for free on a streaming service elsewhere or simple copies the MP3s from a friends computer?  At least this way they receive something and fans will go see them live, where they can make a lot more money.  

IMO a donation model would work well with some of these new bands.   I listen to some relatively obscure indie bands who I'd love to donate money to directly.  "Pay what you think it's worth" could be very profitable for good young bands.

aanaway
aanaway

Okay I am a little slow here. I pay 9.99 a month for Spotify. I just download Counting Crows. So What do they get paid? Do they get paid each time I listen? Sometimes I do not listen to the same song for a long time...I add songs that my son sends me, and right now I am listening to Lana Del Rey from a friend...Who is getting paid and how much? I get most of my recommendations from Facebook, then I download them to a playlist. I admit that I do not know a lot about this, however I know what I like and I search for more great artists all the time. I am a fan of Radiohead and while I an not a big fan of Thom Yorke solo or Atoms for Peace I wish them well and I am really sad that they have chosen to leave. I really hope others do not follow but I will tell you, I am in my mid 50's and I have continued to discover a wealth of music out there. I am here for anyone that wants me to hear!

markfp123
markfp123

why don't people just buy straight from the artist ?

HezekiahGoode
HezekiahGoode

Like quite a few others here in Colorado, I play music that sounds awful dated to most folks' ears. No autotune, no "beats" - just regular people pickin, bowin' and singin'. This music has what you might call limited commercial appeal. So I'm real glad that I don't have to hope for a record company with a financial death wish to come along and put this music out. Spotify gives independents like me global reach unlike anything we could have had a few decades back. So I like it. A lot. And speaking as a fan of music (which all musicians are first and foremost), it's fantastic.

TylerPietz
TylerPietz

something like 85% of spotify's revenues come from premium subscriptions (from less than a quarter of their users, by last tally). they have succeeded in building an amazing product (which is an excellent value, by the way) but have failed thus far to monetize it effectively. they need to drastically ramp up user acquisition -- and either considerably bolster their ad sales operation OR ditch it all together and make their conversion funnel much more aggressive (paywalls or even eliminate their free product altogether)

and let's be honest; it may be more difficult than ever to become rich as a recording artist, but that's not spotify's fault

Realworldnonfantasyland
Realworldnonfantasyland

I'm guessing without streaming music that nobody would know who 90% of the bands are. I certainly wouldn't know who the majority of the people are on my playlist are and wouldn't ever purchase there music. Guessing the majority of the bands would be garage bands maybe making a couple hundred per Bar Show they do. Instead people are able to go watch them in bigger venues because they actually know who they are. Quit going through record labels, tour and make your own money. Best way to be known is to get your product out there.  The Fans who care will purchase all your songs and will support you financially.  The ones who don't know who you are will come across you on streaming.  God Forbid they actually end up liking your music and end up purchasing other songs of yours because they are interested in hearing all of your songs. 

wrathbrow
wrathbrow

" independent acts make around half a cent per song stream on Spotify. That’s a pittance compared with the 7¢ to 10¢ an artist can expect to earn from a song download"

That would seem to imply that they get paid each time the song is streamed, which means if people like the song it will get streamed multiple times over a month to the same persons.

Why is that hard to understand. It would be like Ford complaining their lease versus buy program. Both end up making money long term.

bobbutts
bobbutts

Maybe making music wasn't meant to make everyone involved filthy rich.

karmamule
karmamule

At first it sounds like an artist getting 7 to 10 cents for a purchased song on iTunes is a much better deal than half a cent per stream on Spotify.  However, isn't it true that they'll get that half a cent for EACH time EACH user streams the song?  

To put it another way, if a person purchased a song on iTunes and listened to it 50 times over the course of a few months, the artist would get the original 7 to 10 cents only, whereas if a person streams that same song 50 tiems on Spotify over a few months the artist would get 25 cents.  In the case of often-listened to songs, isn't Spotify better for them?

cjh2nd
cjh2nd

@bobbutts 

no, but you can't blame artists for wanting to make money.  as a kid do you dream of being a rock star or of being a starving musician with integrity?