Spotify had a rough couple of days last week. Besides Jimmy Buffett's petition for more money, less problems and the ill fate of their #thatsongwhen campaign, the streaming service's artist-only streaming sessions with the Music Managers' Forum the Future Artists Coalition in New York City, Nashville, and Los Angeles did not go well, according to those who spoke to Billboard.
You may remember Blake Morgan from his highly-publicized, tense email exchanges with Tim Westergren when Pandora came out in support of (and then abandoned their push for) the Internet Radio Fairness Act, which would have reduced the amount of royalties the online radio streaming service paid to songwriters and rights holders.
It wasn't all that surprising, then, that he was one of the "two or three very, very vocal people who came with a strong agenda to deliver some messages to Spotify, as opposed to what we hoped would be more of a dialogue," said the FAC's Paul Pacifico, who orchestrated the event with Spotify following the success of a similar initiative in the U.K.
But first, to set the scene: four or five panelists (Pacifico would not disclose attendees' names for the same privacy reason he wouldn't tell Billboard which artists were in attendance) at the Soho House addressed an audience of about 100 artists and managers -- no media were allowed -- and fielded their questions and concerns before Spotify representatives entered the room a little later.
"We put ourselves into these scenarios where artists can ask us questions directly," director of artist services at Spotify U.K. Mark Williamson tells Billboard. "When that happens, we’re aware discussion can get passionate and emotive. That's part of the reason we're doing it. Ultimately, the goal of why we're over here and doing this isn't to whitewash any concerns or leave the room with any artist being in love with Spotify. We're here to talk. If you disagree, let's discuss."
Morgan saw things that night a little differently. To give you an idea of his perspective, he compares Pandora's unavoidable association with their IRFA stance to BP's unavoidable oil spill connotations and the United States' long-contested radio royalties to those of North Korea and Iran. Which is to say, his agenda is crystal clear -- unlike Spotify's, he says. "Spotify reached out to me earlier and made it very clear they don't want to be the next Pandora," he tells Billboard. "Unfortunately, that's not from a policy perspective; that's from a PR perspective. The meeting was very disappointing."
His main complaints were manifold, but two were based on the meeting's central tenets: that the per-stream rate is never going to go up (70 percent of revenue goes to royalties) and 100 song streams equals a sale on the Billboard charts and the U.K.'s Official Charts Company. With regard to the former, both Williamson and Pacifico stress that Morgan (and a few other malcontents) didn't pipe down long enough to let Spotify help the uninitiated artists in the room understand their position.
"What I was trying to explain," Williamson says, exasperation emanating from his voice over the phone, "Is that we’re a revenue share model. How do we increase the amount of revenue -- the pot of royalties -- which increases the amount we pay out?"
One of the ways is to change the process on the industry side of things, which Pacifico also blames for taking an undue chunk of revenue that could be paid out to artists. (The New York Post's very recent news that Sony/ATV may separate from BMI and ASCAP by the end of the year, at least partially to fight for higher streaming royalties, would be a crucial step in that direction.)
The Nashville meeting a few nights later seemed to go similarly, according to Chris Castle, an Austin-based entertainment lawyer who blogs at Music Tech Policy. "The Nashville meeting apparently involved many raised voices and frustrating arguments between those who drank the Koolaide [sic] and those who did not," he writes. "It’s important to understand that when someone is watching their livelihood slip away, telling them they just have to have faith in people whose own livelihood has more to do with venture capital and IPOs than selling music is not a good look." Especially when one of those people has an estimated $300 million net worth and used to be the CEO of uTorrent.
Aside from the back-and-forth, the facts speak for themselves: Spotify was responsible for Universal Music's 75 percent jump in streaming revenue last year, and Spotify U.K. saw its revenue grow 40 percent in 2013. And yet album sales hit an all-time low in August, and mid- to lower-tier artists are finding it harder to make money by touring. Spotify may have the patience to wait out these growing pains, but artists can't seem to afford it much longer.