Spotify, surveillance, and the price of music

It’s that time of the year again, it’s Spotify Wrapped Season. Mine was very unsurprising, I listen to a lot of Depeche Mode, The Cure, and Soda Stereo, who knew? Social media was filled with people sharing their musical tastes for a couple of days, which was fun, I always appreciate seeing other’s peoples playlists, even if it’s to quietly judge them (that means you, reggaeton fans, what were you thinking?). But an interesting thing has happened this year, I noticed a new category of posts scolding all of us who were sharing our Wrapped results. I won’t link to examples as I don’t like to even hint at anything that could lead to a dogpile, but the messages went something like this (heavy paraphrasing):

“It’s time to share your allegiance to surveillance capitalism”

“I don’t share my Spotify Wrapped because I don’t support exploitative business models!”

“If you want a tech corporation knowing everything you do, be my guest, but don’t pollute my timeline!”

You get the idea.

I’ll be honest, I like Spotify, I like creating and curating lists, I like the convenience, and I like that I can listen to what I like whenever I want to without having to get up to put a record. I do still listen to physical music, and I also still own my trusty iPod Classic for different occasions, but Spotify has become an important part of my daily music routine. So while I understand why some people do not like the business model, I think that some of the arguments against it need to understand that the music industry nowadays is a very different beast to what it was in its heyday.

For most of the 20th century, music was one of the core creative industries, it not only dominated economically, but also culturally. Everybody likes music in some shape or form, and this was reflected in making superstars. Radio, vinyl, tapes, music videos, CDs, an industry where making it big in the charts meant millions. But of course physical media had limitations, record players were big, clunky, so sales reflected that. Music collections amounted to a handful of records. Tape made music more approachable, in particular inventions like the Sony Walkman, which allowed us to walk around listening to music tapes, sometimes recorded directly from the radio. What really changed music was the digital revolution with the CD, and music sales really take off. I love this chart from the RIAA on US music sales (and here are the international stats). You can see the impact that the CD (in orange) had. These are figures adjusted to inflation:

The most profitable year for music was 1999, not only in the US, but globally. That year, 600 million people around the world bought music, mostly on CD, and the average spend per person was $64. This figure will become important later. Sales start declining, and while streaming has been picking up more revenue, the music industry will probably never reach again the figures of the golden era of the CD.

This chart pretty much follows my own musical journey, as a kid my parents owned a record player, but only a handful of LPs. I remember when they bought me my first two albums in 1977, a Beatles collection, and Chuck Mangione’s ‘Feels So Good’ (what can I say, I was a weird kid). After that I bought only singles, some Billy Idol, KISS, and Alan Parson’s Project (did I mention that I was a weird kid?). Then some 80s staples such as Michael Jackson’s Thriller, Cindy Lauper, and Madonna. But during the 80s I got most of my music off the radio into cassettes (Home Taping is Killing Music). I started buying tapes only when my musical taste improved with the Holy Trinity of The Smiths, Depeche Mode, and The Cure. Then I had to re-purchase everything when CDs hit, digital music was such a revelation!  Even in the post-Napster era I was still buying CDs, even just to burn them into MP3s. I haven’t purchased a CD in over 10 years however, but I have re-started my vinyl collection (120 LPs and counting).

These personal trends can be seen in the data, while I was still buying CDs well into the 2000’s, nobody else was. People stopped buying music and started downloading MP3s, or getting them from friends. Digital music allowed for perfect copies, and you could just share your collection with friends, or burn CDs for them as well. The drop in sales is staggering. Legal downloads became a thing, but they never offset the demise of physical medium. Even the latest revival of the vinyl record has just been a blip.

What the data shows is that there’s a substitution in media from physical to digital downloads, and then to subscription services. RIAA figures place revenues in the music industry in 2022 for the first time over the 1999 watershed, but still revenues are under accounting for inflation. So we’re spending a lot of money on subscription fees, but it still may not be enough. Are those fees getting to musicians and performers?

With a Spotify subscription I’m paying £132 GBP. That probably tracks with my spending during the CD heyday, I checked some of my old Amazon receipts and I was paying anything between £8 and £20 per CD, and I was buying at least 20 per year between 1997 and 2002, so my expenditure could have easily been over £200 GBP, maybe more. Considering the earlier figure of $64 per person, I was definitely doing my part. The average spend in Europe at the time was around €17 EUR, while while the average in the US was around $15 USD. CDs cost 50p to be produced at the time, so most of that money went to profits, and artists could expect to receive 10-15% of those sales. Let’s go back to the figure of $64 USD per person, and artists could have received around $9 USD per person. How does that compare to the subscription era?

Royalties are calculated per play with $0.005 per play on average going to the artist. My Spotify wrapped says that I listened to 1618 songs, that is around $9 paid in royalties, same as with CDs, but I listened to 650 artists, that is $0.01 per artist (someone check my maths). Any way you look at it, musicians are receiving less money. By some calculations, a musician needs to receive 280,000 plays to receive $1,000 USD. This is why most musicians are supplementing their income in other ways, with presence in other streaming services, or by touring more and selling merch.

But after the pandemic, gigs dried up, audiences dwindled, so unless you’re Taylor Swift, chances are you’re not making money. ETA: It has to be said however that live performance figures have recovered during the last year, but it may be difficult to know if this is again the Swift Effect. Anecdotally I’ve seen emptier gigs where I live.

So we should force Spotify to pay more per stream, and problem solved, right? The problem is that while subscription numbers have been increasing, subscription fees haven’t, most people still pay around $10 USD per subscription, this is despite inflation. So there’s less money to go around. Spotify could increase fees, and lose customers, which translates into less money again.

This is where the surveillance aspect of music comes in. Subscription services are complimenting their income with some surveillance capitalism, I’ve written about this before, so there is no need to repeat most of it, but subscription services keep track of consumers in something called an inferences file, which collates data gathered about your from themselves and other sources. But this isn’t where Wrapped, and in general your music playlists, actually come in. From what I could see, Spotify doesn’t really seem to care what I listen to, or when, or where. They collect inferences from other services in a Web of Surveillance. “But hey, that’s bad!” I hear you say. Yes, but that’s the same for all of your other apps. I for one do not care that they know I like games, that’s hardly a secret. Besides, surveillance capitalism of this magnitude isn’t enough to pay the bills and cover the diminishing returns.

Something has to change if prices won’t increase. There is some talk that there could be regulation incoming in Europe. Last week the Culture Committee of the European Parliament issued a report on the state of music streaming in the EU. The report asks for a new EU Bill on the subject that will require “oblige platforms to make their algorithms and recommendation tools transparent”, it will force platforms to “identify right-holders via the correct allocation of metadata to help their works to be discovered”, and to foster investment in European music.

I don’t know if this will be enough, but musicians aren’t making enough. ETA: This preprint by Meredith Rose contains some excellent statistics. Also it is worth considering that Spotify has been recently criticised for not paying money for artists with less than 1000 streams.

Now let me help by listening to some Depeche Mode, I feel like some ‘Music for the Masses’ tonight.