In early November, Taylor Swift announced she would no longer offer her music on Spotify to fans looking to stream. Reactions ranged from outrage to resigned understanding to conspiracy theories (which probably are conspiracy facts - save that last link for later).
The narrative has been pulled in many directions. Scott Borchetta, president of Taylor’s label Big Machine called it a “big fist in the air” to signal other big artists and a move to protect the “superfan” who wants to purchase her albums directly. Spotify founder Daniel Ek blogged that Spotify has paid “more than two billion dollars” to artists and labels and compared Spotify’s business with its true main competitor - piracy, which pays artists “nothing, zilch, zero.” He also notes Spotify pays out “significantly more than any other streaming service.”
In my last post, I looked at network topologies and what can happen when influencers abandon platforms. Taylor Swift is certainly an influencer, having made $2 million in the twelve months before her departure from global streaming on Spotify. But will her departure be a precedent for other artists? And could big artist departures actually destroy Spotify - or are they out of the woods? (Sorry.)
Let’s quickly examine the Spotify ecosystem.
From the perspective of fans, Spotify offers a number of music-related services. These can be separated into streaming features and sharing features. Streaming features include discovery features (featured playlists, radio) as well as replay features (playing from a saved library or playlist). Sharing features include influencer features (Follows, public playlists) or peer features (Find Friends, direct shares).
All of these features exist within a pool of music populated with featured artists, emerging artists, and unknown artists:
If an artist leaves the platform (like Taylor) it restricts what can be shared on Spotify, shrinking the pool of available music. However, it does not weaken the fan-to-fan connections or any of the discovery features. In fact, for fan influencers and tastemakers on the platform, Taylor’s departure may go completely unnoticed - these influencers often create playlists of lesser-known or emerging artists and may just shake it off. (Sorrrrry.)
Despite what artists like Taylor might think, artists are not the primary influencers on Spotify’s platform. It’s the tastemakers.
Going back to my post about network topology, we know it’s the removal of major hubs that can weaken a decentralized network. The departure of a major known artist actually strengthens the role of peer influencers on Spotify’s platform. Users who don’t take Taylor’s cue and leave the service are those most likely to be using Follows and public playlists to discover newly popular artists.
Meanwhile, from the perspective of the artists, Spotify looks more like this:
Right now, according to Spotify, rights holders are paid about 70% of Spotify’s total revenue - between $0.006 and $0.0084 for each stream on the platform. As the number of paid subscribers grows, that revenue total increases and the overall number of streams on Spotify increases as well.
If a major artist is eliminated from the platform but the number of overall streams stays steady or grows, the average total payout per artist will increase (stable pool of $ split over fewer artists).
Thus we see another truth: the departure of a major artist increases the value of Spotify for other artists, especially smaller artists. Far from being a “fist in the air,” Taylor’s turn away from Spotify only creates a blank space (sorry again) and makes the platform more attractive for her artistic “competitors.”
Even if some users leave the service in reaction, the writing is on the wall for the music industry. The number of music streams across all platforms grew 54% in 2014 to 164 billion songs, while individual track downloads decreased 12%. Meanwhile physical music sales continued to collapse: 140.8 million CDs were sold in 2014, a further 14% drop from 2013’s record low total.
With Taylor Swift’s music still available on alternate platforms such as YouTube, her departure from Spotify will do nothing to dissuade users from primarily consuming music (legally) through streaming.
So will Taylor’s move be seen as a call-to-action for other major artists and labels? From the analysis above, it seems very unlikely. No strong signals have been sent, nor have other artists followed suit.
And users, far from abandoning Spotify, have flocked to it. Spotify now boasts 60 million users worldwide and 15 million subscribers, up from 10 million in May 2014. This was partly driven by mass adoption on mobile as well as additional publicity (thanks, Taylor?).
Is there any chance Taylor Swift will return to Spotify? Given the business implications, maybe not. If she stays off the platform, things will likely continue trending upward as we’ve seen over the past few months - unless Spotify makes moves to placate larger artists that alienate its peer influencers.
But if her music returns to the platform? Nothing could signal Spotify’s success more strongly.
It looks like it’s all upside for Spotify from here - and with more users joining the platform, that pool of cash for artists will continue to grow.
Maybe in this love story, everything has changed.
(I’m really, really sorry.)