The Unflattering Spotify Light

With the first month of 2015 under our belts, things continue on in the music industry that hearken back to the last quarter of 2014 in almost predictable ways. YouTube and Apple are trying new paths forward for their music services (which I will cover in later posts), but perhaps the most telling of dynamics is what’s going on with Spotify right now.

Most anyone who paid any bit of attention in October-November of last year will remember the meltdown between artist Taylor Swift and music streaming service Spotify so cleverly termed Swiftgate. Purportedly over compensation (or lack thereof) for music streaming royalties, the spat between the pop star and the streaming service was a true story with legs, continuing for weeks on end. As each side released statements following Swift’s pulling of her entire catalogue from the service, Spotify CEO Daniel Ek and Swift’s management engaged in a series of statements, each seeking to portray themselves in a positive light.

Many of us within the music industry suspected that Taylor Swift’s underlying motive was a PR move enacted to boost numbers of Swift’s upcoming album release (and one which absolutely worked). Swift’s October release of her album 1989 blew well past one million in sales by 2014’s end, and has now been certified 4x Platinum (in excess of four million copies shipped). [1]

At the time I predicted that the dance was not over—that things would continue to evolve in 2015—and they have: last week, Spotify released a statement noting the termination of its contract with PR agency M&C Saatchi PR, originally tasked with heading up the music service’s accounts in the consumer, corporate, and b2b arenas. The dropping of M&C is telling in more ways than either company appears ready to admit.

It is impossible to avoid the conclusion that Spotify dropped M&C because the latter botched Swiftgate. Whether originating initially from M&C itself, or from Spotify CEO Daniel Ek, it is clear that their subsequent comments on Spotify’s royalty rates and on the questions of fairness were neither well-timed nor well-received within the music community. Instead of resolving the Swiftgate debacle for the music service, it managed to stir up even more questions. What Spotify should have done (or had done on its behalf by M&C) in the course of Swift’s scathing comments is essentially recuse itself of the whole situation; their response only made matters worse. In the end, Swift got all the publicity she (most likely) wanted, and her album blew through the roof with record numbers for the year. Spotify, on the other hand, was cast, yet again, in the same light that has proved unflattering and awkward for other services like Pandora and Rdio.

Though it might be too much to assert that M&C had any control over those events, it is clear that whatever work it did in the wake of Swiftgate was at the very least misguided. In the music industry, he said/she said battles are fought out in the trenches of the fanbases, not in conference rooms, and not in statements released to the media. Though I think Swift’s move was intended more to benefit herself than her fans, a great many of those fans felt the opposite, and will migrate away from Spotify to find her music elsewhere. Swift achieved her goal by spinning the argument as being about her fans and about fairness for artists. Though the truth may be debatable, what is indisputable is that Swift came off to many as having taken proactive action for the sake of her art and fans.

Spotify (and M&C by extension), would have been well advised to spin Swiftgate as a pop star being presumptuous and out of touch with her fanbase. Instead, Spotify/M&C’s purely reactive response allowed Swift to spin the debate as being about royalty rates and artist compensation. Thus, in “commenting on Swift’s departure,” Ek ended up obliged to defend his company’s compensation policy as a whole. A simple statement by Ek that Spotify was disappointed to lose Swift’s catalogue, but that he respected her decision, would have taken the legs out of Swiftgate. Instead, his ineffective efforts to justify Spotify’s compensation policy gave Swiftgate legs, made Swift into the David fighting Goliath, and left Spotify with enough lasting bad press to make it look around for a different PR agency.

Spotify’s dance with Taylor Swift may now becoming to an end with its dropping of M&C as its PR agency, but Swiftgate opened the door for other artists to take shots at the company. Royalty rates are not about to get any better, and life for the Spotify camp is not about to get any easier concerning artist compensation. The streaming music wars have only just begun; hopefully Spotify’s next PR firm will find the right ammunition to fight them.

 

Thanks to Dad, Charles Jo, Scott Menor, and Terrence Yang for reading drafts of this.

 

Notes

[1] It is important to note that RIAA certifications such as gold and platinum do not always mean copies sold. Over the last few decades, certifications have extended to sometimes include multiple discs within one album (a double-album, for example), or simply albums shipped by the record labels to retail outlets. More information on RIAA certification qualifications can be found here.

Navigating Swift Currents

As we come to the end of 2014, things seem quiet in the music-tech arena—at least for now. Yet it wasn’t too long ago that things were blowing up between Spotify and a number of artists over royalty rates and compensation practices. No doubt the most famous of these disputes (this year) was between the streaming service and popstar Taylor Swift. In what has come to be known by some in the tech and music communities as SwiftGate, Taylor Swift abruptly pulled her entire catalogue from Spotify just around the same time that she released her new album 1989. The response was nearly biblical.

All I saw for weeks on end was a back-and-forth exchange of words, accusations, arguments, and media coverage between Swift and Spotify. Even the service’s CEO Daniel Ek took time to release a public statement responding to Swift’s qualms with the service. This was definitely a story with legs—it just didn’t seem to die down.

Yet what struck me the most were not the statements made by either side, or even the statistics each used to bolster their respective cases. I was more focused on the amazingly divided response that Swift’s actions and statements generated from her fans. Personally, I’m ambivalent—I enjoy some of Swift’s music, though not all, and would not call myself either a major fan or a hater. When Swift wrote her op-ed piece in the Wall Street Journal earlier this year, though, there were immediately a couple of things I didn’t agree with. Perhaps the most presumptuous statement I thought, though, was:

“Music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for. It’s my opinion that music should not be free, and my prediction is that individual artists and their labels will someday decide what an album’s price point is. I hope they don’t underestimate themselves or undervalue their art.”

This statement, though most likely made with the best of intentions, comes across to many within the music community as narrow-minded and out of touch. First, I readily agree with Swift that music is indeed art; art is subjective and highly personal to each person who experiences it. But art is not inherently rare. Nor should it be. This is an outdated concept that smacks more of a stuffy art-history academic than a modern musician. Art as a commodity, or even simply as a means of expression, should derive value from its inherent existence and experience; economic value is secondary to the very nature of what art is. In stating that art requires qualities of rarity and economic value in order to be valuable as art, Swift thus demonstrates a misunderstanding of what art functions as at its core. The concept of music as free is a notion that I will tackle in a later post (probably more than one), but what I will say with regard to Swift’s analysis is to point out how narrow its definition is. There are a great many artists who distribute their music for free, either online or as free giveaways at shows. By insinuating that these artists are devaluing their own art by making the decision to freely distribute, Swift does two things: 1) she demonstrates a worldview that is essentially narrow in its scope, and 2) she effectively succeeds in insulting these artists, more or less stating that they’re not smart enough to “know better.” It’s been a while since I performed as an artist in my own right, but even I still take offense to the above insinuations. Am I really to believe that Swift never played a pass-the-hat acoustic set at a Starbucks or diner somewhere when she was just starting out? [1]

But back to the response to Swift’s sparring with Spotify. If the goal was to generate a media response, then such a goal was certainly achieved. The responses from Swift’s fans in the general music community were far more diverse than even I would have thought. They ranged from those championing her decision and statements to those swearing they will never buy another Swift album from here on out (of course, the latter of those is hardly a statistic that can be confirmed at present). Yet what I focused on through this whole maelstrom of attention and biting back-and-forth comments was the way it could very conceivably (and most likely did) affect Swift’s fans on a psychological and emotional level.

Music, as stated, is emotional and highly personal. There’s a certain identification that one feels when one identifies with a particular artist, song or album. The psychology of wearing a shirt with an artist’s moniker on it effectively marks one as flying a flag for that artist—they become an extension of oneself—an extension of us. We use an artist’s music as a way to expand our sense of expression to the world. That makes our identification with that music highly volatile. Snap decisions like Swift’s have the opportunity to aggressively backfire (depending on one’s point of view, I suppose). Thus I question the long-term effect of Swift’s actions and statements. Yes, the immediate effect was fantastic for her: sales of her new album 1989 blew through the roof upon it’s release on Oct. 27, 2014. It opened at number one on the Billboard 200 and sold over 1 million copies. But I can’t help but focus on the gripes of those fans who felt personally betrayed by Swift’s removal of her catalogue from and subsequent sparring with Spotify. Are those fans going to go see her on tour? Buy a shirt? Tell their friends about her new album? Probably not. The way I see it, Swift has effectively traded long-term benefits for short-term gains. One thing I know about music and artist-loyalty is that it can be a fickle beast. The possible (probable?) effect of dividing her fanbase I think will constitute a major challenge for Swift to overcome in the future. She will have to spend time, energy, patience (and most likely money) trying to reconnect with those fans she might have alienated or even lost.

While it’s possible that the short-term gains may have been worth it to Swift and crew, I think the next currents will prove more difficult to navigate in the coming months. I think Swift has a lot of work ahead of her, and a lot of damage-control to partake in (ironically, not unlike the damage-control that Metallica faced in the wake of the whole Napster controversy). [2] I suppose only time will tell. We’ll reassess in the new year.

 

Thanks to Alyssa Shaffer, Charles Jo, Mom, and Dad for reading drafts of this. (And to Paul Graham for reminding me that thanks are as much in order for assistance as much as publication of the final product).

 

Notes

[1] Within the music community, the term “pass-the-hat” most readily refers to a (usually) acoustic set where no cover charge is required, and the artist relies mostly on the generosity of the audience to throw a few dollars in a hat or the guitar case to show their appreciation for and enjoyment of the performance.

[2] As many may remember, when Metallica waded into the thick of the Napster controversy in 2000 (most visibly driven by drummer Lars Ulrich), their rabid fanbase subsequently split into those who supported Metallica’s decision and those who vehemently opposed it. The alienation of a portion of their fanbase proved a challenge that took Metallica a number of years to surmount (and arguably one they are still surmounting). It affected both their sales of merchandise/tickets and their reputation within the music community.