Spotify CEO shoots back at Taylor Swift, and he has a point

Spotify responded on Tuesday to a high-profile diss from Taylor Swift, who last week yanked her entire catalog from the streaming music service, saying she didn’t want to to perpetuate the idea that “music has no value and should be free.”

In a blog post, CEO Daniel Ek pointed out that the company has already paid out more than $2 billion in royalties to artists, and says that the alternative to services like Spotify is piracy and “zero” dollars for musicians. Ek also took issue with what he called “myths” about streaming music, and made a good case for why services like Pandora and Spotify are scapegoats rather than the sources of the music industry’s problems.

Here’s a short summary of the “3 myths” Ek described:

  • Myth 1: Free music means no money for musicians. Ek said that “free” services like Spotify actually earn large amounts of money through ads, which are passed along to artists. He also claims that the ad-supported free services lead listeners, including many young people, to pay for subscription versions too.
  • Myth 2: Spotify pays such a pittance that no musician could make a living from it. On this point, Ek took aim at those who make apples-to-oranges comparison between individual streams — which reach one person — versus AM/FM radio plays that reach thousands of people at a time. In other words, the rate per song play is low on streaming services, but the number of plays is infinitely higher. He also pointed out that digital music services pay performers (in addition to song writers) while traditional radio pays them nothing.
  • Myth 3: Spotify is killing downloads and CD sales. Ek pushed back against the idea that Spotify is causing sales from iTunes and retailers to decline. He claimed that sales will decline with or without Spotify, and pointed out the similar declines are taking place in Canada, where Spotify was not available until a few weeks ago.

In my view, Ek is right and Taylor Swift is wrong. Services like Spotify aren’t to blame for the struggles that musicians are facing, but instead represent a potential lifeline. The fundamental problem facing the the traditional music industry is that labels are no longer able to control the distribution of songs and command premium prices through physical media like CDs. As long as the internet is here, their old business model is not going to return.

Ek put this unpopular truth another way when he wrote, “In the old days, multiple artists sold multiple millions every year. That just doesn’t happen any more; people’s listening habits have changed – and they’re not going to change back.”

While a handful of artists like Swift can sell millions, they are an exception because they possess a unique star power that lets them do things like pull their catalogs off Spotify. While any other musicians can, of course, do the same, it would mean forsaking money and exposure — without attracting the same media attention that Swift’s decision received. (As it turns out, Swift’s stunt was likely less a point of principle than a marketing coup and a way to inflate the value of her music label.)

None of this is to say that musicians don’t deserve more money — I feel for the local bands I see in Brooklyn, who not only have little hope for making a living from their music, but are also tethered to crummy jobs without health insurance.

But the “solutions” proposed by the music industry, such as imposing an oldies tax to give windfalls to the likes of the Turtles, won’t do anything to help those young musicians. A better way forward might be to find a way to allocate Spotify’s $2 billion directly to musicians, with fewer lawyers and middlemen, and to encourage services like Pandora’s “data dashboard” that make it easier for musicians to find their fans.

If you care about music, don’t worry about Taylor Swift — hope instead that Spotify can stick around.