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Spotify Royalty Outrage: What it ACTUALLY Tell Us About the Music Industry
Episode 104 β€’ 31st January 2024 β€’ Progressions: Success in the Music Industry β€’ Travis Ference
00:00:00 00:10:11

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This week we talk about how Spotify's royalty changes will affect artists in 2024 and what the resulting outrage says about the false narrative much of the industry is living.

In this episode, you'll learn about:

  • Spotify's Royalty Changes
  • Monetization Requirements
  • The Dangers of Focusing on Public Facing Metrics
  • What to Do about the Royalty Changes
  • Why the Story You Believe About Yourself May Be Holding You Back

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Credits:

Guest: N/A

Host: Travis Ference

Editor: Travis Ference

Theme Music: inter.ference

Transcripts

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Just when you thought streaming royalties couldn't get any worse, Spotify pulls

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a hold my beer move and tells us that our music may no longer earn

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royalties. But as bad as it all sounds, I think this may be an opportunity

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to change the way we think about this business.

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You so in case you've somehow missed the

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hundreds of articles and videos talking about Spotify's royalty changes, here's a quick rundown

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of what's changing. There are three main changes to Spotify's

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royalties. One, they're instituting a penalty fee for

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tracks that are found to be using artificial streaming. Now, if you're unfamiliar,

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there are entire bot farms streaming third party playlists

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24 hours a day. I think at this point, any serious artist

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should know that paying for playlist placements, especially on a

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bot playlist, does far more harm than good. So I think it's safe

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to say that we shouldn't have any issues with this change. The second change is

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in regards to what Spotify calls functional genres, I. E.

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Noise recordings. People have long been taking advantage. I

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use air quotes on that one of the rise of things like ocean sounds and

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white noise being played while people sleep on loop. I don't personally have an

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issue with people putting up non musical content, but I do agree with the changes

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Spotify is making. What they're doing is increasing the minimum track length for

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these functional genres up from 30 seconds to 2 minutes. They also

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intend on working with licensers to reduce the value of a noise stream

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versus a music stream. Now, at first glance, you might feel that this

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is taking money out of the pockets of creators, and that is technically

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true. But if you're an actual musician creating art, you know that you spend

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days, if not weeks, on a track. These noise tracks can be made and

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uploaded in a matter of minutes. So I think we can all agree

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that the more money going into the pile of royalties being distributed to real

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artists, the better. And speaking of royalties distributed to artists,

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that brings us to the third and most important change track

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monetization eligibility. Starting this year, a

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track must have reached at least 1000 streams in the previous twelve months

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in order to generate recorded royalties. What happens to the money that would

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have been earned by those tracks that don't meet the threshold? Well, to cite the

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Spotify website quote, Spotify will not make additional money

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under this model. There is no change to the size of the music royalty pool

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being paid out to the rights holders from Spotify. We will simply use the tens

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of millions of dollars annually to increase the payments to all eligible

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tracks rather than spreading it out into three cent payments, end

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quote. The unfortunate part of that statement is that Spotify had to put into print

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how pitiful the payout to artists already is. Now, part of Spotify's

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reasoning behind this is that many distributors have payment thresholds that must be met

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before royalties are even paid to the actual rights holder. I believe CD

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baby, for example, has a threshold of $10, while ditto plus is a whopping

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150 british pounds. That should be criminal. They are literally

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keeping your money for months, if not years, maybe forever.

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So since tracks with less than a thousand streams are definitely not

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meeting a lot of these payment thresholds, Spotify has decided that money is better

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served going into the royalty pot for tracks that are, quote,

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monetized, which by their calculations would increase payouts by nearly $1

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billion over the next five years. I honestly don't know where I personally want to

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stand on this because if this change actually results in real independent

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artists making more money, I think that's great.

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But it is setting a very bad precedent for artists not

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being paid for their art. Even though we're talking about potentially single digit

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dollars or less, you're still making it okay

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to devalue someone's work, which I am not cool with.

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Obviously there's been an outcry of frustration with these changes, everything from people calling for

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Spotify boycotts to threatening to cancel their subscriptions. So that brings us to the part

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of this video that's going to be nothing like any other video you've seen on

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this topic because this is progressions, and deep down inside, this is secretly a

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self help podcast. Now, before you say, travis, what right do

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you have to talk about releasing music? You're just a mix engineer.

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And I have in fact been involved in releasing several

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projects to varying degrees of success. And let's not

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forget that I've been putting this podcast out into the world for more than

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three years now. Now, it might not be music, but trust me, I felt

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all the ups and downs and had all the thoughts of quitting that every musician,

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artist and producer watching this may have had at one point. When I see the

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reaction to Spotify's decision, there are two things that if we changed about

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ourselves, then I think the industry as a whole would be better off. First is

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this obsession over forward facing metrics. We're focusing

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on the wrong things. Spotify's choice to make the stream threshold

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1000, I think, has triggered a lot of people because the

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dreaded less than 1000 sign has already plagued so many

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of us. Releasing a song and not passing 1000 streams has for

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years been such a blow to an artist's confidence. Now, ultimately, I

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blame social media for this. The like has become a forward

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facing metric for how good something is. It's truly unfortunate that this is

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where the world is at, but this is where we are. I'm sure that it's

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not a coincidence that Spotify opted to have a similar public

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metric by displaying the stream count. Think about what that's done for their marketing and

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branding. Artists sharing their year end streams, announcing that they hit their first

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million. Do you see anybody posting about getting a million streams on Apple? No. The

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world has us so focused on these public metrics that we forget that

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this is a long journey. It takes time to build a fan base. A career

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is the compounding effect of everything we do. It's not just one song. And

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that goes for whether you're an artist, releasing music or behind the scenes in the

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production process. I feel this all the time. I want a project I work on

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to blow up as much as the artist does. So we should all be taking

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pride in the work we're doing, focusing on the enjoyment we get from making the

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things we're making and not on the number of streams or likes it has. Let

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me ask you this. Does 1001 make you feel better than less than

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1000? Let's not forget that less than 1000 could be

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999. Is it different? No, it's not. Your stream

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count is not a reflection of the quality of your music. It's a reflection of

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how many people have heard your music. You can't get caught up on the results.

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You've got to focus on the process. I talk about this on the podcast all

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the time. That's what brought you into music in the first place, right? The process

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of making music. Now that we've shifted our focus a bit away from these metrics

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that we all seem to want to live or die by, let's talk about how

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we identify what's the narrative that we've painted for ourselves. Right now

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it feels like we've painted the story of the starving artist that is being kept

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down by the big corporate DSP devils and pushed to the wayside by the major

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label artists. And look, that's not an entirely

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exaggerated description of the challenges of breaking through in the music industry.

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But that doesn't mean we should believe that's who we are. Our experiences all

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shape our story. If we let the setbacks and mistakes define who we are,

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then we'll become a self fulfilling prophecy. Example. If you identify

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as someone who fails to market their music effectively, then you won't take any

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steps to learn how to market your next single any better than your last. On

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the other hand, if you identify as a person that grows from hardship and

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is excited to learn how to beat a new challenge, you will eventually

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crack that code. And look, this stuff is hard. I promise you that I'll be

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tracking the views and downloads on this episode nonstop for the next week,

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despite the fact that I just told you to ignore all that. And while I'm

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doing that, I'll be trying my best to continue to identify as someone who is

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growing a podcast and is excited for the challenge to win people over one

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by one. But I will 100% have

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moments of absolute frustration. And by the way, this is a great moment

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to hit the subscribe button. So think of the artists that inspire you. Now we'll

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never know what they believed about themselves when they were starting out, but I think

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it's pretty safe to assume that none of them believed that they would never cross

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a thousand streams. There was an artist in the UK who was playing hundreds of

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gigs a year, self releasing his own albums, collaborating with as many musicians

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as he could, and building an audience on YouTube before he finally broke through.

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When he did, he hit number one on iTunes as an unsigned artist, and

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would eventually become the first artist to have a song hit 1 billion streams on

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Spotify. We're obviously talking about Ed Sheeran. Despite the many setbacks I'm

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sure he encountered, I would imagine that the story he believed about himself

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was always that he would be a successful musician and

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songwriter. You can't put that amount of work in unless you truly believe

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that that is your story. So let's return to this Spotify royalty nonsense. What are

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you going to do differently with your music career because of it? Nothing. Fuck

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it. Because it doesn't matter. Make music because you love making music

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and you'll build your career in music regardless of how many pennies Spotify is

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or isn't giving you. It doesn't matter what metric the world thinks should define

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you. You define yourself and you decide what success is to.