Deconstructing: Pandora, Spotify, Piracy, And Getting Artists Paid

Deconstructing: Pandora, Spotify, Piracy, And Getting Artists Paid

“Who the hell is this guy and why is he trying to sell me a warm sack of shit?”

This question lit up my mind last week, as I sat in the audience for the Future of Music Coalition Policy Summit in Washington, DC. The guy in question was, in fact, a US Senator — Sen. Ron Wyden (D-OR) — while said warm-sack-of-shit was the Internet Radio Fairness Act (IRFA), which Sen. Wyden is sponsoring in the Senate.

The IRFA has the stated goal of correcting inequities in royalty rates that are paid to songwriters and musicians based upon type of radio transmission. Real inequality exists in the royalty rates between terrestrial radio, cable/satellite radio, and Internet radio (like Pandora). Some rates, like those for Internet radio, are arguably too high while others, like terrestrial radio rates, are probably too low. “Fairness” for artists and businesses would mean taking all of these rates into legislative consideration at the same time: raising some while lowering others. But that’s not what Sen. Wyden was there to support.

The IRFA would instead lower rates exclusively for Internet radio. It is a wealth-transfer bill, taking money that’s going to artists and redirecting it to Pandora and Clear Channel — the legislation’s main backers and potential beneficiaries. In the bill’s resounding lack of balance, we may as well be calling it corporate welfare or trickle-down economics. It’s a funny theory advanced by IRFA supporters that by paying artists less, artists will then be paid more. (There’s this bridge I’m interested in selling. Care to hear about it?)

Of course, that reality of the IRFA doesn’t make for a great populist pitch. Sen. Wyden was there last week, standing before the large conference room, to massage the issue. He vilified record labels, like a stock character from a Cory Doctorow novel, portraying them as against the interests of artists and even “shackling” them (glossing over the basic truth that labels, imperfect as they are, wouldn’t exist if musicians didn’t choose to partner with them). He spoke in vague, Orwellian terms about making sure “the past doesn’t get a leg up on the future” — whatever that means. He spoke of “adequate” compensation for artists, even as he cheered a bill that would continue the decade-long digital tradition of slashing such compensation and methodically devaluing artistic work itself.

But Sen. Wyden said one thing that was unequivocally true: “…the reality is that there is no functioning market here.”

If you needed a reminder that digital music is woefully broken in its current form, all you had to do was read Pitchfork the day after Sen. Wyden’s speech. Last Wednesday, Damon Krukowsi (Galaxie 500, Damon and Naomi) published a column that illustrated just how dire the payouts are from digital streaming services, so often hailed as the future for music. Krukowski wrote, “To put this into perspective: Since we own our own recordings, by my calculation it would take songwriting royalties for roughly 312,000 plays on Pandora to earn us the profit of one — one — LP sale. (On Spotify, one LP is equivalent to 47,680 plays.)”

This set off the usual internet media cycle for these types of articles: some bloggers and commenters offering basic sympathy, others offering arrogance and blame.

The “blame” contingent was expressed by a Detroit blogger who wrote, “If [you] want to get paid for music my suggestion is that you should play it for us in person, instead of just whining about the old days” — to which Maura Johnston called, “bullshit!” In her own reality check of a Tumblr post, she not only lambasted the tired excuse that touring is the magical tonic for every music industry affliction, but took the opportunity to diagnose a deeper existential problem in what we talk about when we talk about music, culture and money:

Why are we letting geek-defined Darwinism (and the destructive hypercapitalism that comes with it) take over every goddamn aspect of culture? Why can’t the system be criticized for not working for people who create culture, even though it “works” for shareholders and executives? Why is it only appropriate to celebrate those at the top of the heap, or those who have pandered successfully to the “thought leaders” (I’m putting that in quotes because I basically mean the Reddit-beloved likes of Jonathan Coulton and Am*nd* P*lm*r here), when tech people and executives are deified? Why can’t musicians who make records that people enjoy speak out about how the revenue model for that enjoyment has changed, and how it might affect not just the way they make music in the future but the way others will?

Yet the problems remain. Johnston asks some of the right questions, but for many this issue of streaming payouts is already becoming a bit tired. So what? What is the proposed solution to all this? We can place David Greenwald of Rawkblog/Uncool somewhere within that category. In his own post on Krukowsi’s piece, he labeled the original link, with an implied sigh of fatigue, “Another article on Pandora/Spotify,” and made a good observation. “The false expectation,” he writes, “that a handful of specific tech start-ups were going to make artists a living overnight seems deep-rooted and pervasive and I’m not sure why.”

Perhaps now we are getting somewhere. Where did these expectations come from?

In fact, stemming from those halcyon days of Napster, a strain of conventional wisdom took hold among New Media prophets that digital piracy wasn’t really a problem. The real problem was the lack of convenient, legitimate alternatives to piracy. This line of thinking had a few consequences. 1. It offered consumers a rationalization for their own freeloading ways — they weren’t part of the problem, rather it was the record labels’ dragging their feet and foolishly fighting “the future.” 2. By implicitly portraying mass piracy as acceptable, the baseline value of music was set (and remains) at zero — this skewed the entire legitimate digital marketplace and still does. 3. This thinking communicated to artists to just be patient, because the solutions, in the form of better digital services, were indeed coming.

Now, what do people say about the mistake of Napster? They say that the labels should have figured out a way to license the service. This is really just wishful thinking — closer to opportunistic mythology than history — but for our purposes, a licensed Napster (though a contradiction in terms) was the solution in front of everyone’s faces back then: a missed opportunity to save the music industry.

What would a licensed Napster actually look like? It would look like Spotify. And, as everyone can see, Spotify isn’t working for artists. Artists know this better than anyone.

So, to Greenwald’s observation, arguably ridiculous expectations have been placed on these streaming services for many years as a counter-argument to those who saw piracy as the primary threat. You don’t have to kill Napster! License it and adapt! And now, here we stand, with piracy as popular and socially accepted as ever, and streaming services clearly unsustainable in their current form.

And why are they unsustainable? Because for most users they are fucking free — and online advertising revenues will always be a limited source of income. Netflix and SiriusXM have well over 20 million paying subscribers in the US. Spotify has something like three million…worldwide. Pandora also won’t release its number of paying US subscribers, but you can bet it’s a relatively low number and, anyway, their subscription amounts to about $3 a month! And now, rather than try to corral customers into the paying model, they are trying to fix the system in their favor (in favor of free) through the IRFA.

The only free model that works on a commercial scale is also an illegal model: piracy. Unlike Pandora or Spotify, file-sharing sites needn’t balance their advertising revenues against royalties or licensing costs. They don’t pay artists royalties. They don’t pay artists anything. The Pirate Bay or poor, poor Megaupload’s Kim Dotcom made their businesses work by exploiting loopholes in the legal system and serving as black market distributors, charging advertising on content that they never invested a penny in.

What is “the problem,” exactly? Here’s one example: As an experiment, I recently used Google, one of the most celebrated and richest corporations on the planet, to see how easy it still is to pirate music: I searched for an unlicensed copy of the new Kendrick Lamar album. It took about two minutes to find and download the “iTunes Deluxe Edition” for free. I scrolled through page after page of Google results, clicking through these unlicensed downloads on pages that all contained commercial advertising. It was easy as hell.

That is the problem.

The digital revolution has brought about a great many things. However, the obvious exploitation of artists — in knowing denial of their basic rights — remaining at such an industrial scale in 2012 is an embarrassment to that revolution; it is the cancer at the core of its lofty talk of “openness”; it is what child labor was to the Industrial Revolution.

But nothing will change until more people find ways to make demands, making clear that the future of the Internet lies in amplifying the value of human creativity, rather than sucking it dry or cheering it along a futile race to the bottom.

The funny thing is, artists, the labels they partner with, and legitimate digital services like Pandora and Spotify ought to be on the same side of this issue, pulling in the same direction. The digital black market siphons demand from all current and future legitimate services while plainly undercutting the opportunities (and bargaining power) of artists in that same marketplace. Can these interests be aligned? Can we build a digital marketplace of basic fairness and opportunity, where artists and services alike have a shot to succeed and the value of creativity isn’t being artificially anchored down by piracy?

Some artists and labels (like Projekt Records) have already taken their music off of Spotify on account of the low payouts and, no doubt, many others are considering doing the same. In addition to announcing their grievances about streaming payouts, what if these same artists and labels united to also demand greater digital reform that protects their cardinal rights against mass piracy? Since legitimate digital services like Pandora, Spotify, iTunes, etc. also would benefit from the marginalization of pirate sites, perhaps a few key artist voices could cajole them to also get on board for digital reform… For instance, in pressuring the government to make sure US payment processors and advertising networks aren’t doing business with overseas torrent trackers, cyberlockers, and websites everyone knows exist only to deny musicians their common rights. Perhaps search engines could also be more effectively compelled to filter results that lead to black market distributors like the Pirate Bay.

It shouldn’t have been so easy for me to pirate that Kendrick Lamar album, or for the site that distributed it to make money from somebody else’s hard work. Can we look at that specific example and devise ways to make piracy less convenient for fans and less profitable for distributors, because such reform is better for our cultural health over the short-, medium-, and long-terms? Where there’s a will there’s a way. We would end up with a different Internet, in the sense that it would be a better regulated, fairer Internet of expanded opportunity for artists and legit businesses.

As has been true throughout this ugly debate, the success of any effort to establish fairness will come down to the attitudes and choices of fans. Will we as individuals recognize that we’re not entitled to free music; that if artists want to release their work for free, it is quite easy for them to do so; that we all will benefit from a fair digital marketplace; that we may already have missed out on great third or fourth albums by artists who, logically responding to the lack of investment and fan support, now approach music as a part-time hobby, because they need to make a living doingsomething?

It’s up to artists, fans, and labels to push for such fairness. It can most certainly be achieved with a bit of focus, clear communication, and effort. Then, perhaps, we will have built the Internet and the creative culture we all deserve. Maybe then we can turn our attention to reforming unfair radio royalties or unfair copyright provisions. And maybe people like Sen. Wyden, who has yet to show much consideration for artists or their basic rights, will be able to lecture us about digital “fairness” without sounding like a goddamned fool.


[Chris Ruen is the author of Freeloading: How Our Insatiable Appetite For Free Content Starves Creativity, which dissects the ongoing issue of internet piracy, and discusses it with musicians such as Craig Finn of the Hold Steady, Ira Wolf Tuton of Yeasayer, and Kyp Malone of TV on the Radio]

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