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As the music streams, artists see but a trickle in profits

Local musicians are seeking better payments from Spotify, other services

Kevin McCord, the vocalist and guitarist for the band We Demand Parachutes, in his home studio with a laptop opened to his band's Spotify page. He would like Spotify to pay his band more money when people stream their songs, but he also welcomes wider audience that streaming affords.
Kevin McCord, the vocalist and guitarist for the band We Demand Parachutes, in his home studio with a laptop opened to his band's Spotify page. He would like Spotify to pay his band more money when people stream their songs, but he also welcomes wider audience that streaming affords.Jim Davis/Globe Staff

He may not be a household name, but Will Dailey makes a living as a singer-songwriter. He’d be in much better shape, however, if Spotify would bump up the microscopic royalties it pays for the millions of times his songs are streamed on the global music platform.

Songs from Dailey’s album “National Throat” have been streamed 12 million times on Stockholm-based Spotify since 2014. The online exposure won the Newton singer an international audience.

“I got to go all around the country and Europe with that record,” Dailey said. “It did quite well.”

Except for the royalty checks. Dailey estimates Spotify has paid him just $20,000 or so for those 12 million streams, which works out to less than two-tenths of a penny per play.

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“Now there’s a pay structure that’s not really viable to the working artist,” Dailey said.

That’s why he and other Boston-area musicians are demanding higher royalty payments from Spotify and other music-streaming services. In March, the Union of Musicians and Allied Workers held protests at 31 Spotify offices worldwide, including the company’s Boston location. Their chief goal is a sort of minimum wage for Spotify artists: 1 cent per stream. At that rate, Dailey’s album would have earned him $120,000.

A few years ago, the music industry could have gotten away with pleading poverty. From 2001 to 2014, industry revenue fell by 41 percent, when the file-sharing of pirated music on online services such as Napster was popular. Then came an extraordinary surge in lawful music streaming with services like Spotify. In just six years, streaming has come to account for 62 percent of all music revenues.

Today, the industry is almost as big as it was pre-Napster, mainly due to Spotify, Apple Music, Amazon Prime Music, and YouTube. But except for a handful of superstar performers, little of the new wealth is going to artists.

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That’s why Joe DeGeorge of Providence, a member of the musician union’s steering committee, thinks it’s time for the services to pay up.

“They’ve built their companies’ valuation and their good will on the labor that musicians have produced,” DeGeorge said. “Musicians haven’t had a say in the structure of this industry.”

DeGeorge said that Spotify is target number one because it keeps the union’s focus simple: Music streaming is a sideshow for Apple, Amazon, and YouTube parent Google, but it’s Spotify’s core business.

Spotify insists it’s making life better for independent musicians by enabling them to reach a global audience at very little cost. And the company pays out hefty sums — in the aggregate — for the music it plays: $23 billion in royalties over its lifetime, including $5 billion in 2020 alone, according to Bryan Johnson, Spotify’s head of artist and industry partnerships.

Where’s all that money going? Spotify’s not sure. Johnson said the company doesn’t give per-stream payments to individual artists. Instead, it pays money to the “rights holders,” such as recording companies and music publishers, based on how many times their various properties are streamed.

Sony Music, for instance, might get a huge chunk of Spotify’s billions for streams of its artists’ music. And it’s up to Sony to divvy up the money among the artists. How that’s done depends on Sony’s contract with each artist. Thus a hugely popular Sony artist like Beyonce might get a much bigger piece of the pie than a lesser-known act, even one with lots of online plays.

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All the major recording companies — Sony Music, Warner Music Group, and Universal Music — either declined to comment or did not respond to queries.

Some musicians say they’re willing to tolerate skimpy royalties in exchange for Spotify’s ability to attract new fans.

“You know you’re not going to make a lot of money through streams, but you do have the opportunity to get into a lot of ears,” said Kevin McCord, a former Army Special Forces soldier who now plays in the Boston band We Demand Parachutes.

McCord said his band’s songs were played on Spotify 100,000 times last year, yet brought in a paltry $300. But it has helped his band attract listeners in 130 countries. They’ve been invited to perform at the University of Wisconsin and have begun planning a tour, which will bring in far more money than streaming.

Given a choice between five times more royalties or four times more listeners, “I would choose a wider audience 10 times out of 10,” McCord said.

Besides, even Spotify’s critics admit the company will find it difficult to boost royalties. The big recording companies are in the black once more, while Apple, Amazon, and Google swim in cash. Meanwhile, Spotify has never earned a profit.

“They’re desperate to find a way to make money,” said copyright attorney George Howard, a professor in the music business management program at Berklee School of Music in Boston.

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Spotify has two sources of revenue: subscriptions, which start at $10 per month, and advertising, which is transmitted over its free music service and included in Spotify podcasts. In 2020, just 10 percent of its revenue came from ads, even though 190 million people worldwide listen to the ad-free version.

And some musicians say the company’s 155 million subscribers pay an absurdly low price for access to most of the world’s recorded music. Bumping up the monthly price by a few dollars, they say, would bring in a flood of cash, making the company profitable and capable of paying higher royalties.

“The problem with Spotify is their business model doesn’t work,” said Arlington recording artist Arthur Nasson. “I think they should sell it and have somebody who knows what they’re doing run it.”

Spotify replies that it’s open to price increases and has had a few in some countries. But the company fears higher prices could tempt listeners to stop paying for music and revert to piracy, which would mean lost revenue for everybody.

Howard said Spotify’s big move into advertiser-supported podcasts offers revenue that it doesn’t have to share with musicians and other rights holders, though is probably not enough to put Spotify firmly in the black.

“They can’t get enough subscribers to pay the premium,” he said, “and they can’t get advertisers to pay enough for the ad slots.”

Will Dailey said he’s a Spotify fan who wants the service to thrive, but added that the company has to start paying more. And what if higher royalty payments doom Spotify?

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“It’s not that precious to me,” Dailey said. “These things come and go. The art doesn’t.”






Hiawatha Bray can be reached at hiawatha.bray@globe.com. Follow him on Twitter @GlobeTechLab.