Spotify, a music streaming company, has attracted significant criticism since its 2008 launch, mainly over artist compensation. Unlike physical sales or downloads, which pay artists a fixed price per song or album sold, Spotify pays royalties based on the artist's "market share"--the number of streams for their songs as a proportion of total songs streamed on the service. Spotify distributes approximately 70% of its total revenue to rights holders, who then pay artists based on their individual agreements. Multiple artists have criticised the policy, most notably Thom Yorke and Taylor Swift, who temporarily withdrew their music from the service.
Spotify faces particular scrutiny due to its free service tier, which allows users to listen free with advertisements between tracks. The tier has led to a variety of major album releases being delayed or withdrawn from the service. Spotify claims it benefits the industry by migrating users away from piracy and less monetized platforms and encouraging them to upgrade to paid accounts. Record labels keep a large amount of Spotify earnings.
Spotify has also attracted media attention for several security breaches, as well as for controversial moves including a significant change to its privacy policy, "pay-for-play" practices based on receiving money from labels for putting specific songs on popular playlists, and allegedly creating "fake artists" for prominent playlist placement, which Spotify denies.
Video Criticism of Spotify
Business practices
Allegations of unfair artist compensation
Spotify, together with the music streaming industry in general, faces criticism from some artists and producers, claiming they are being unfairly compensated for their work as music sales decline and music streaming increases. Unlike physical sales or legal downloads, which pay artists a fixed price per song or album sold, Spotify pays royalties based on their "market share"--the number of streams for their songs as a proportion of total songs streamed on the service. Spotify distributes approximately 70% of its total revenue to rights-holders, who will then pay artists based on their individual agreements.
The variable (and some say unsustainable) nature of this compensation, has led to criticism. In a 2009 Guardian article, Helienne Lindvall wrote about why "major labels love Spotify", writing that the labels receive 18% of shares from the streaming company--something that artists themselves never actually get. She further wrote that "On Spotify, it seems, artists are not equal. There are indie labels that, as opposed to the majors and Merlin members, receive no advance, receive no minimum per stream, and only get a 50% share of ad revenue on a pro-rata basis (which so far has amounted to next to nothing)." In 2009, Swedish musician Magnus Uggla pulled his music from the service, stating that after six months he had earned "what a mediocre busker could earn in a day".
Norwegian newspaper Dagbladet reported in 2009 that the record label Racing Junior earned only NOK 19 ($3.00 USD) after their artists had been streamed over 55,100 times. According to an infographic by David McCandless, an artist on Spotify would need over four million streams per month to earn the U.S. minimum monthly wage of $1,160. In October 2011, U.S. independent label Projekt Records stated: "In the world I want to live in, I envision artists fairly compensated for their creations, because we (the audience) believe in the value of what artists create. The artist's passion, dedication, and expression is respected and rewarded. Spotify is NOT a service that does this. Projekt will not be part of this unprincipled concept."
In March 2012, Patrick Carney of The Black Keys said that "Spotify isn't fair to artists", and further commented that streaming services "are becoming more popular, but it still isn't at a point where you're able to replace royalties from record sales with the royalties from streams. For a band that makes a living selling music, it's not at a point where it's feasible for us." Replying to Spotify board member Sean Parker's claim that Spotify would make more money for the music industry than iTunes, Carney said: "That guy has $2 billion that he made from figuring out ways to steal royalties from artists, and that's the bottom line. You can't really trust anybody like that." In May 2012, British Theatre vocalist and Biffy Clyro touring guitarist Mike Vennart stated: "I'd sooner people stole my work than stream it from [Spotify]. They pay the artists virtually nothing. Literally pennies per month. Yet they make a killing. They've forced the sales way down in certain territories, which wouldn't be so bad if the bands actually got paid."
Singer David Byrne of Talking Heads criticized streaming services such as Spotify in October 2013, writing: "If artists have to rely almost exclusively on the income from these services, they'll be out of work within a year." Byrne concluded his piece by admitting "I don't have an answer." In March 2014, American funk band Vulfpeck exposed a loophole in Spotify's royalty calculation model. The band created an album titled Sleepify, which consisted solely of silence. The band asked users to stream the album on a loop while they slept to increase the amount of money earned. The album was pulled by Spotify in April 2014, citing unspecified service violation. Vulfpeck had accumulated enough streams to result in around $20,000 in royalties before the album was pulled. In July 2015, Neil Young removed almost all of his music from Spotify and other streaming services, citing low sound quality as the primary reason. He stated that he did not think his fans deserved the low quality they were receiving, and said it was bad for his music. Young's music has since returned to Spotify and other streaming services.
In response, Spotify claims that they are benefiting the music business by "migrating them away from piracy and less monetized platforms, and allowing them to generate far greater royalties than before" by offering a free, ad-supported service tier, and then encouraging users to opt into the paid subscription.
Support to Spotify
In June 2012, Charles Caldas, CEO of the Merlin Network (a representative body for over 10,000 independent labels), clarified that Spotify pays royalties to the music labels, and not the artists. According to Caldas, the payments Merlin's labels received from Spotify rose 250 percent from the year ending March 2011 to the year ending March 2012, while at the time, the revenue per user was "the highest it has been since the launch of the service". Caldas said that Merlin had observed "consistent, ongoing growth on revenue per user, revenue per stream, and the total revenue" that Spotify generates for the labels it represents. "The thing about 'Spotify doesn't pay artists enough'--Spotify doesn't pay artists... They pay labels", said Caldas.
Caldas also highlighted the issue of time lag for artists, as they are not gaining an impression of Spotify's status at the time they receive their payments. They are "getting reporting quarterly, or six-monthly, on sales that happened six months ago." Caldas explained that "royalty statements could be a year old".
In February 2015, Music Business Worldwide reported on a French study between music trade body SNEP and EY that concluded that major labels kept 73% of Spotify Premium payouts, while writers/publishers received 16%, and artists received 11%. Mike Masnick of Techdirt wrote: "Sure, in the past, it may have been reasonable for the labels to take on large fees for distribution, but that's when it meant manufacturing tons of plastic and vinyl, and then shipping it to thousands of record stores around the globe. In this case, there's no manufacturing, and distribution is an "upload" button.
Spotify's "artist-in-residence" aid
In February 2012, Forbes reported on "Spotify's secret weapon": musician D. A. Wallach, member of the band Chester French and former Harvard classmate of Mark Zuckerberg. He acts as Spotify's "artist-in-residence" and helps Spotify "brainstorm artist-friendly applications that can be carved from the gusher of data it collects". One such application includes geographical data of which cities listen to artists' music the most as suitable tour locations. He told Forbes:
We're working very carefully to make Spotify the most artist-friendly company that has ever existed. ... We're very interested in a high level of letting artists directly connect to their fans and manage that relationship and deliver value to their fans, and vice versa. We want to do that really elegantly, at a scale that's never existed before.
In a June interview with Hypebot, Wallach reported that $180 million of royalties was paid out in 2011 and 70% of Spotify's revenue consisted of royalty payments. Spotify's growth meant that the per-stream royalty rate doubled between the service's inception and mid-2012. He said that, at the time, compared to iTunes, the average listener spends $60 annually on music, whereas Spotify Premium users spend twice that amount. According to Wallach in 2012: "The growth of the platform is proportional to the royalty pay out, and since inception, we've already doubled the effective per play rate."
Artist withdrawals
Thom Yorke
In July 2013, Radiohead singer Thom Yorke and producer Nigel Godrich removed their band Atoms for Peace and Yorke's solo music from Spotify. In a tweet, Yorke stated: "Make no mistake--new artists you discover on #Spotify will not get paid. Meanwhile, shareholders will shortly be rolling in it. Simples." Godrich stated: "[Streaming] cannot work as a way of supporting new artists' work. Spotify and the like either have to address that fact and change the model for new releases, or else all new music producers should be bold and vote with their feet."
In an October 2013 interview with Mexican website Sopitas, Yorke said: "I feel like as musicians, we need to fight the Spotify thing. I feel that, in some ways, what's happening in the mainstream is the last gasp of the old industry. Once that does finally die, which it will, something else will happen." He described Spotify as "the last desperate fart of a dying corpse". Spotify responded in a statement that it was "still in the early stages of a long-term project that's already having a hugely positive effect on artists and new music", and that it is "100% committed to making Spotify the most artist-friendly music service possible, and are constantly talking to artists and managers about how Spotify can help build their career". In 2015, Brian Message, partner at Radiohead's management company Courtyard Management, stated that he disagreed with Yorke, noting that Spotify pays 70 percent of its revenue back to the music industry. He said that "Thom's issue was that the pipe has become so jammed ... We encourage all of our artists to take a long-term approach ... Plan for the long term, understand that it's a tough game."
On 17 June 2016, Radiohead's ninth album, A Moon Shaped Pool, was made available on Spotify, six weeks after it was released on paid-for streaming services including Apple Music and Tidal. Spotify had been in "advanced discussions" with Radiohead's management and label to make A Moon Shaped Pool the first album available exclusively to Spotify's paid subscribers, but no agreement was reached. Spotify spokesperson Jonathan Prince stated: "Some of the approaches we explored with Radiohead were new, and we ultimately decided that we couldn't deliver on those approaches technologically in time for the album's release schedule." In Rainbows, the only other Radiohead album not previously available on Spotify, was added on 10 June 2016. Yorke's solo material and Atoms for Peace were re-added in December 2017.
Taylor Swift
On 3 November 2014, singer-songwriter, and recording artist Taylor Swift's entire discography was removed from Spotify. Swift had previously delayed the streaming of her 2012 album, Red. Swift stated: "I'm not willing to contribute my life's work to an experiment that I don't feel fairly compensates the writers, producers, artists, and creators of this music. And I just don't agree with perpetuating the perception that music has no value and should be free." Earlier, in July 2014, she wrote an article in The Wall Street Journal, in which she stated: "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."
Spotify launched a social media campaign to persuade Swift to return and, in a statement on its website, claimed that nearly 16 million of over 40 million users had played her music in the preceding 30-day period.
In response to Swift's statement that music should be paid for, Spotify CEO Daniel Ek wrote: "Taylor Swift is absolutely right; music is art, art has real value, and artists deserve to be paid for it. ... At our current size, payouts for a top artist like Taylor Swift (before she pulled her catalog) are on track to exceed $6 million a year." However, Scott Borchetta, CEO of Big Machine Records (Swift's label), disputed those figures, and claimed that Swift had received "less than $500,000" in the past 12 months of domestic streaming of her songs. A Spotify spokesperson further disputed those numbers, telling Time that the total payout for Swift's streaming was $2 million globally.
Ben Popper of The Verge wrote in an article that "all these numbers could be accurate without conflict. Borchetta was looking to cherry-pick the smallest possible figure, so he went with $500,000, which is what Spotify paid for Taylor Swift streams in the US. But that's only one of its markets, and it's not even its largest. Globally, Spotify paid Swift $2 million over the last year." Regarding the $6 million figure, Popper further wrote: "As more people sign up for Spotify and Taylor Swift continues her march towards infinite popularity, the amount she is getting paid is increasing. [Ek] took her trend line and ran it forward a year to get to the highest possible number he could quote."
According to Borchetta, the amount Swift earned from streaming her videos on Vevo was greater than the payout she received from Spotify. He told Time: "The facts show that the music industry was much better off before Spotify hit these shores. ... Don't forget this is for the most successful artist in music today. What about the rest of the artists out there struggling to make a career? Over the last year, what Spotify has paid is the equivalent of less than 50,000 albums sold."
Borchetta clarified in a February 2015 interview that Swift's catalog would be permitted on a streaming service "that understands the different needs that we [Swift and Big Machine Records] have," whereby "the choice to be [on the free, ad-supported tier] or not" is provided. Borchetta argued that Swift's musical oeuvre is "arguably the most important current catalog there is", and stated that the streaming issue is "about each individual artist, and the real mission here is to bring ... attention to it."
In November 2014, Borchetta stated in a radio interview that "If this fan went and purchased the record, CD, iTunes, wherever, and then their friends go, 'Why did you pay for it? It's free on Spotify', we're being completely disrespectful to that superfan."
In an interview with Music Week in November 2016, Spotify's UK head of content programming George Ergatoudis stated that "Nothing's guaranteed, but I met up with [Big Machine Records president/CEO] Scott Borchetta personally and had that conversation with him. It's not a lock-in, but I've got every reason to be very optimistic Taylor Swift will be coming back to Spotify. I'm not saying it's done, but the indications are good, put it like that".
Swift collaborated with Zayn Malik for the song I Don't Wanna Live Forever for the movie Fifty Shades Darker. The song, released in December 2016, was withheld from Spotify for one week after its original release on competing streaming services.
In June 2017, it was announced that Swift's full catalog would be released on all streaming services, including Spotify. On social media, Swift's management team stated: "In celebration of 1989 selling over 10 million albums worldwide and the RIAA's 100 million song certification, Taylor wants to thank her fans by making her entire back catalog available to all streaming services." Rolling Stone questioned whether the move to allow her music on all streaming services was permanent or temporary. On 25 August 2017, Swift released her single Look What You Made Me Do. The single was made available on Spotify immediately following release. However, her sixth studio album, Reputation, which Look What You Made Me Do belonged to, was withheld from all streaming services after its 10 November release date, being made available for streaming on 1 December 2017.
Content withdrawals and delays
Spotify states in its support pages that: "We want all the world's music on Spotify. However, some artists and tracks are not currently available. Sometimes agreements can't be reached with the artist or label, or a change may happen in music ownership." Furthermore, in its apps, Spotify states a message for unavailable content: "The artist or their representatives have decided not to release this album on Spotify. We are working on it and hope they will change their mind soon."
In December 2015, Coldplay withheld A Head Full of Dreams from Spotify until one week after its release, citing that all music on Spotify is available to both paid and free users. Coldplay previously delayed their album Ghost Stories from all streaming services for four months after CD, vinyl and download release, and did the same with its earlier album Mylo Xyloto.
Beyoncé's self-titled album was not available until 24 November 2014, nearly a year after its original release. Adele's 21 was not initially available on Spotify, as Adele wanted Spotify to make her album available to paid subscribers only, but not to free users. Spotify declined her offer to avoid creating separate catalogues for subscribers and non-subscribers. The album, originally released in January 2011, became available to stream 17 months later in June 2012. In November 2015, the singer confirmed that her new album, 25, wouldn't be available for streaming on any service. In a series of interviews with Time, Adele stated: "I know that streaming music is the future, but it's not the only way to consume music. ... I can't pledge allegiance to something that I don't know how I feel about yet." However, the album was made available for streaming seven months later, in June 2016.
Several bands from the 1960s and 1970s delayed their work being made available on Spotify or any streaming services. Until the end of 2013, Led Zeppelin's music was not available, before the parties reached an agreement in December. In 2015, AC/DC and The Beatles allowed their music on streaming services.
Icelandic singer Björk initially chose not to release her album Vulnicura on Spotify, saying: "This streaming thing just does not feel right. I don't know why, but it just seems insane. ... To work on something for two or three years and then just, 'Oh, here it is for free.' It's not about the money; it's about respect, you know? Respect for the craft and the amount of work you put into it."
In February 2017, Prince's music produced under the Warner Bros. label, including the albums 1999, Purple Rain, Dirty Mind, and Sign o' the Times, became available on Spotify and other streaming services.
In April 2017, rapper Jay Z, part-owner of streaming service Tidal, pulled his music catalog from Spotify and Apple Music. This was the third time the artist removed his albums from competing services, following the release of his debut album Reasonable Doubt, and later The Blueprint.
Controversial policies and alleged behaviors
2015 privacy policy backlash
In August 2015, Spotify changed its privacy policy. The change included the following paragraph:
With your permission, we may collect information stored on your mobile device, such as contacts, photos, or media files. Local law may require that you seek the consent of your contacts to provide their personal information to Spotify, which may use that information for the purposes specified in this Privacy Policy.
Gordon Gottsegen of Wired wrote that the changes were "ridiculous", and compared Spotify wanting to see and collect users' photos and contacts to that of a "jealous ex".
Tom Warren of The Verge wrote that "Apps collecting any personal information like photos or contacts should really have a good explanation of why they need to do so" and wrote that "Spotify's [privacy policy] is far too broad without examples or vital context and detail around the data gathering the service is implementing".
On Twitter, Spotify CEO Daniel Ek wrote that "[...] I'd argue it's a nice thing that I can upload a photo to my playlist to personalize it." This was followed by an apology on the Spotify blog by Ek, in which he wrote that "We should have done a better job in communicating what these policies mean and how any information you choose to share will - and will not - be used", along with details on what features the permissions would enable.
An updated privacy policy, with "clearer language" focused on helping users, rather than lawyers, understand its contents, was rolled out in September 2015.
2015 Pay for Play practice
In August 2015, Billboard reported that Spotify was among the streaming services influenced by "pay for play", in which labels pay for songs to be placed on popular playlists followed by many users. Daniel Glass, executive of Glassnote Records, stated that playlist promotion was "a very, very big deal". Billboard referenced an August 5 practice, in which Universal Music Group hired Jay Frank as its Senior Vice President of Global Streaming Marketing, followed by an investment in Frank's marketing firm DigMark, "an innovator" in pay-for-play practices that charges clients US$2,000 for a six-week campaign. The price goes up for playlists followed by more users, up to US$10,000. "For a while, Spotify didn't take a view", on the practice, according to a music label executive, but its then-new Terms of Service agreements would "[take] a stand against commercializing accounts and playlists by rank-and-file users", as well as prohibit the practice of "accepting any compensation, financial or otherwise, to influence ... the content included on an account or playlist". However, Billboard wrote that "policing, let alone enforcing, these terms could be difficult", adding that loopholes can still be exploited to continue the practice.
2016-17 "fake artists" controversy
In August 2016, Music Business Worldwide reported that Spotify had begun paying producers to create music and placing the tracks on highly followed and popular playlists on the service. The production of the music, reportedly paid for by Spotify, was published on the service using fake artist names, and the motivation behind the practice reportedly due to creating tracks to "quality control" the mood of specific playlists and gain more favorable royalty rates than major and independent labels offer. However, the implications of the practice meant certain rightsholders who normally earned decent payouts from being featured on such playlists were excluded. After being mentioned in an article by Vulture in July 2017, a Spotify spokesperson told Billboard that "We do not and have never created 'fake' artists and put them on Spotify playlists. Categorically untrue, full stop [...] We pay royalties -- sound and publishing -- for all tracks on Spotify, and for everything we playlist. We do not own rights, we're not a label, all our music is licensed from rightsholders and we pay them -- we don't pay ourselves". However, in another report, the Music Business Worldwide publication discussed the situation, including the artists' lack of social media profiles, lack of managers, lawyers and industry relationships, the listing of owning all their own rights, the lack of appearance on other streaming services, Spotify's denial to comment regarding questions of the artists' frequent placement on playlists, royalty rates and recommendation origins, and anonymous comments from "very senior figures in the music business" with alleged knowledge of the practice. The publication listed 50 of the top artists under suspicion, and asked them to contact the publication to verify their authenticity, adding that "We're pretty sure A&R teams from across the globe would love to hear about artists with no online presence who have managed to rack up millions of Spotify plays with their first few tracks".
Maps Criticism of Spotify
Security issues
2009 security breach
In March 2009, Spotify warned users that a security flaw discovered and fixed in December 2008 was more serious than previously thought, having compromised the password hashes of individual users in Spotify's pre-December 2008 customer base, as well as potentially "registration information such as your email address, birth date, gender, postal code and billing receipt details". Credit card information was not exposed, due to being handled by a secure third-party provider. Spotify advised users to change their passwords, especially in cases where the same password was used for multiple sites.
2011 PC malware reports
In March 2011, Spotify temporarily removed display advertising on its computer software, after reports from users on the free service tier that a malicious advertisement had infected their systems. Then-named security firm Websense stated that the attack used the Blackhole exploit kit. Spotify said in a statement that "Users with anti-virus software will have been protected", and "We sincerely apologise to any users affected. We'll continue working hard to ensure this does not happen again and that our users enjoy Spotify securely and in confidence".
2014 security breach
In May 2014, Spotify announced it had been hacked, but stated that only one user's information was accessed. It released a new Spotify app on the Android platform, replacing the former app, with Spotify chief technology officer Oskar Stål writing in a blog post that the upgrade was "a necessary precaution" and that no action for apps on other platforms were necessary.
Missing or inadequate application features
Lack of explicit content filter
Spotify is one of the few music streaming services that do not allow users to filter explicit content, which Rick Broida of CNET writes "may prevent users from opting into Spotify's Family Plan subscription offering".
Limit on music library
Spotify limits users' music libraries to 10,000 songs. This has caused negative publicity on several occasions and "years of user complaints". Derek Mead of Motherboard wrote in March 2016 that the limit was "insane", and suggested that Spotify, after raising "another billion dollars" in funding, should "fix the service's most asinine limitation". Chris Welch of The Verge wrote in May 2017 that "It's time for Spotify to stop capping how much music you can save", further questioning "Why is there such an arbitrary cap?" Welch's article also highlighted the "thousands of votes from users" on Spotify's community forum asking for a higher limit, and attached a reply from a company representative, stating "At the moment, we don't have plans to extend the "Your Music" limit. The reason is because less than 1% of users reach it. The current limit ensures a great experience for 99% of users instead of an "OK" experience for 100%".
Other criticism
2013 playlist copyright lawsuit
In September 2013, Ministry of Sound sued Spotify, alleging that user playlists mimicking the track listings of their compilation albums were infringing on album copyrights.
References
Source of article : Wikipedia
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