for forcing the company to respond , the real question of the company ’ s business model — built on the severely underpaid labor of millions of creators — remains unchanged .
To put it more concretely , an independent musician crafting works of art that they put their heart and soul into may find success with a hit that garners millions of plays on Spotify . Users of the service might imagine this translates into a generous payout for their new favorite artist , but in reality , Spotify ’ s paychecks are peanuts .
One analyst estimated that an artist with a family would need to have more than 24 million plays on Spotify per year in order to earn just enough to meet the federal poverty line .
Additionally , the minuscule royalties may need to be split with a record label , with band members , songwriters , managers , and more . The money that most of Nestel-Patt ’ s musician friends earn from Spotify is “ so negligible that they don ’ t even account for it .”
Picture a business model built on selling the enjoyment of a product that the creator gets almost no money to produce . It ’ s akin to theft . “ Imagine any other business working that way ,” says Nestel-Patt .
He explains , “ the people who are making substantial money are having tens of millions , hundreds of millions , or billions of plays on Spotify annually , and that ’ s a very small percentage ” of artists on the platform .
Now Spotify is facing scrutiny from the British Parliament for its paltry pay . Independent musician Nadine Shah , who has had four critically acclaimed albums and won awards for her work , testified to members of Parliament saying she could not even pay her rent anymore .
Nestel-Patt says Spotify ’ s business model ensures that musicians need to have other sources of revenue or start out as independently wealthy in order to survive . “ This reinforces already existing barriers for class and race to get into [ music ] and be successful as a musician ,” he says . In other words , “ if you need a huge amount of money ” just to break into the industry , that could disproportionately exclude low-income people of color from pursuing music .
There was a time when musicians made money from sales of records , cassette tapes , and CDs — sales that were fueled by their songs being played on radio stations . That started changing in the late 1990s when digital platforms began offering music to the public for little to nothing , paving the way for Spotify . That digital transition forced musicians to rely more and more on live venue performances and ticket sales in order to earn a living .
But in 2020 , a global pandemic brought the world to a standstill , and live performances abruptly stopped .
“ The rise of streaming as the formal replacement for physical media sales is why musicians became so wholly reliant on touring [ in the first place ], because no one ’ s buying records at the same level that they were 10 years ago ,” says Nestel-Patt .
When the pandemic struck , he recalls that “ it was catastrophic for everyone I know ,” and that “ it was a wholesale overnight crash of everything we were doing .”
Musicians , seeing their work come to an abrupt stop , and their already meager revenue streams entirely drying up , began to organize online . From the ashes of musical careers rose the UMAW , where artists proclaimed that “[ m ] usic workers are workers , and it is time we get organized and join the fight .” The organization goes further in describing itself as “ an anti-capitalist , anti-colonialist organization that stands for Medicare for All , a Green New Deal , abolishing ICE , destroying borders , the freeing of incarcerated people , a $ 15 / hour minimum wage , and more .”
The group led multicity protests against Spotify in 2021 , and tens of thousands of musicians signed a petition as part of UMAW ’ s # JusticeAtSpotify campaign . Their demands were simple — pay artists fairly , directly , and transparently , and treat them with dignity .
Spotify responded saying it heard their demands . But Nestel-Patt dismissed it as a reiteration of previous responses that he characterized as , “ don ’ t blame us , blame the labels ,” and that the company engaged in “ obfuscations and misdirections about what they do and how they work .”
It ’ s not just musicians who are losing out under Spotify ’ s business model . Even as Americans are spending increasingly more money on music to the tune of $ 20 billion a year , and as music industry revenues have risen to $ 43 billion a year , it turns out that very little of that goes to musicians . Creators get only about $ 5 billion a year , or 12 percent , with corporate middlemen such as record labels and streaming services like Spotify sucking up a majority of the profits .
Worse , this predatory business model may be ruining music as a whole . Ted Gioia , writing in the Atlantic , recently asks , “ Is Old Music Killing New Music ?” Pointing out that a majority of music being consumed today is from the catalogs of older or even deceased musicians , he concludes that “ record labels … [ are losing ] interest in new music .”
Although there is plenty of incredible new musical talent , “ the music industry has lost its ability to discover and nurture their talents ,” writes Gioia . And , Spotify is a big reason why .
“ I think this is as much a listener issue as it is a musicians ’ issue ,” says Nestel-Patt .
He worries that “ if the only thing that makes money on Spotify is major pop acts , then … what happens to classical music ? What happens to Tejano music ? What happens to Appalachian bluegrass music ?”
62 x The Trial Lawyer