Spotify wants to be the only gatekeeper there is
This thrilling article on MBW reviewed Spotify’s Investor Day in March 2018. It became apparent that in demonizing labels as gatekeepers, Daniel Ek tries to camouflage his goal to become the last gatekeeper standing in the music business. Read what he said and compare to what it means:
The article says that Daniel Ek “doesn’t believe in gatekeepers – before laying down a thrilling, scene-stealing proclamation: ‘Our mission is to enable one million artists to live off their work.'” On the other hand Ek noted “that over 30% of consumption on Spotify is now a direct result of recommendations made by the platform’s own algorithms and curation teams – something he said ‘puts Spotify in control of the demand curve’.”
As Spotify excels at artist discovery for users, Daniel Ek feels “the need to nurture great talent is larger than ever before” as a platform. He continues to explain how this could be achieved: “We believe that great music and artists in the future will come from specialised talent incubators like the labels of the past – [which] brings opportunities for the next Berry Gordy, Rick Rubin or Ahmet Ertegun.” Yet it was also clear that Ek believes labels are gradually being forced to relinquish their ‘gatekeeper’ responsibilities.
I’ll come back to how Ek likes to see nurturing great talent when he speaks of “specialised talent incubators”.
Ek’s vision of a profitable business model
It is important to note, that his current business model differs a lot from his vision: “On Spotify, there will be more creators – and the number of creators that matter will also increase.”
To make the growing “material success of the top tier creators” happen – like Daniel Ek is telling his investors – at the same time as finally becoming profitbale, he has to pave a way for cutting costs.
Ben Thompson explained that for Spotify to become profitable it has to lower their marginal costs significantly and one way to achieve that would be to get rid of the labels.
Spotify could one day cut out the labels altogether — the idea certainly makes sense on a conceptual level. Spotify is in one sense an aggregator, in that it increasingly controls access to music listeners, and to the company’s credit, it has demonstrated the ability to exercise power via its control of music discovery and popular playlists.
An alternative is possible
In contrast look at Bandcamp, a “pay upfront, stream forever” platform with relevant cultural context: It’s vision and strategy of a fair, sustainable music economy made it possible for users to become responsible fans of independent artists and for Bandcamp to be profitable since 2012.
The new platform independent digital gatekeepers
The cited MBW article is ironically accompanied by banner ads for AWAL (artists without a label) that wants to allure independent artists. This is one of the “specialised talent incubators” Ek is talking about. “For too long, artists have had to go through the traditional gatekeepers to make a living from music. But now, a revolution for independence has begun. Join the movement.” So they say. But there is more: “We don’t accept everyone, so here’s what we look for in an AWAL member.” The digital distribution service elaborates in 5 paragraphs (this is no joke):
1. Strong Creative Quality
“Our seasoned A&R team searches for originality and the potential in an applicant’s music.”
2. Positive Engagements from Fans
“The ideal AWAL candidate should already have somewhat of an engaged fan base.”
3. Positive Engagement from the Media
“Our A&R team looks to evaluate candidates based on their reception in the media. Are you able to capture the attention of press and music blogs?”
4. Other Members on the Team
“Manager, Live Agent, PR/Publicist, Radio or club promotions company, Music Publisher, Lawyer. It’s not required for artists to have all these relationships to get accepted. However, in some instances we use the existence of these partnerships to gauge the potential an artist has to take their career to the highest point possible.”
5. Commitment to Your Brand
“We look to align ourselves with artists who are imbued with a certain level of professionalism. We specifically look for clear evidence of a well thought out marketing plan.”
This sounds awefully like AWAL wants to be a label without any chore or responsibility. When music labels are investors of artists they believe in, then “specialised talent incubators” like AWAL are merely selectors of already well known artists. A service like AWAL does not invest much in artists, so they can afford a lesser share from streaming platforms like Spotify, thus helping Spotify to lower their marginal costs. AWAL is not in any way a part of any music culture. Culture – a term that is not to be found in a meaningful way or simply as a word on their website.
Ben Thompson again:
It is not exactly groundbreaking analysis to note that Spotify has significant marginal costs — specifically, the royalties it pays the music industry (not just record labels but also songwriters and publishers). Spotify’s margins are completely at the mercy of the record labels, and even after the rate change, the company is not just unprofitable, its losses are growing.
The culture clash
Spotify’s freemium strategy completely changed the way of how people expect to be granted access to music: Everything got to be free at first and just to avoid inconvenient experiences like ads between songs people eventually change their behaviour to a paid flat rate account.
With artificial intelligence powered desire fulfilment Spotify raised the bar of the user experience even further: their playlist game seems to go very well with peoples’ needs as users continiously feed the machine what songs they like and when they skip. Spotify is about to become the ultimative gatekeeper of everyone’s listening demand for music.
At the same time Spotify succesfully de-contextualised the traditional way artists and labels previously connected to their fans: Formats like EPs and albums are losing their importance in favor to tactical placed playlists on the platform.
Now Spotify and the non-label “talent incubators” are outsourcing significant economic and cultural investment back to artists and even have the audacity to claim of “nurturing artists” – simply to make their own business work.
This neoliberal approach has serious consequences though. To become profitable Spotify requires an infrastructure of digital artist gatekeepers like AWAL just because they demand a lower cut from Spotify. These services however rely on artists who already became well known, are already well received by the media, are proven self marketers and ideally have a team of professionals in different trades to their support.
Who will these artists be? Who can afford to have a “team” of professionals around them to have the slightest chance of making it as a “top tier” earner on Spotify or elsewhere? What kind of music will pass through these gatekeepers? Will anyone make music that is new and innovative when gatekeepers looking for the popular formula?
Spotify and digital gatekeepers are basically supporting irresponsible artist self-exploitation to reach the acceptance level of being meaningful distributed at all. Or they are systematically nurturing rich kids’ music, simply because they have the headstart and can afford it.