When it comes to songwriting, is Spotify really the bad guy?
AUSTIN, Texas—Streaming platforms have become the most ubiquitous purveyors of music and also the most vilified. But an unexpected ally spoke out on their behalf Thursday at the South by Southwest music conference.
“There’s a lot of noise coming from the media” about streaming services such as Spotify, said Merck Mercuriadis, a business partner of songwriter-producer Nile Rodgers. “A lot of darkness, doom and gloom that these services don’t pay enough, that artists aren’t getting a big enough piece of the pie … which is right, but the pie is exploding. It’s growing every day. There is money coming into the music business that has never been there.”
The bottom line, Mercuriadis said, is “we need to allow these streaming services to grow.”
Spotify, the 10-year-old Swedish corporation that is the biggest player in the streaming pond, takes in $6 billion (U.S.) in annual revenue and doles out 70 per cent to rights holders. But most artists see only micro-fractions of a penny for each stream by the time the revenue trickles down to them from a variety of middlemen, including publishers and record labels.
“The thing that propelled” my career was songwriting, “but the remuneration was not fair,” Rodgers said, a problem that predates the streaming era. “When Bernard Edwards (cofounder of Rodgers’ band Chic) and I started out, we were splitting 3 per cent of the revenue on a song we wrote.”
“Spotify is not the reason songwriters haven’t had a seat at the table,” Mercuriadis said. “They did not have a seat at the table with Universal and Sony (record companies) either.”
To change that, Rodgers and Mercuriadis have created the Hipgnosis Songs Fund, a publicly traded music investment company. It’s based on the idea that songs have value in the same way that gold or oil do. They claim to have raised $3 million so far for investors. It’s the only music rights company on the London Stock Exchange, but it may spawn imitators if it continues to build.
“My career has proven that hit songs are highly investible,” Rodgers said. But he also pointed out he’s written songs that stiffed that later become hits when repurposed by other artists. “Songs can have a third, fourth, five, sixth life.”
Artist compensation remains an annual issue at South by Southwest and Hipgnosis provides the latest attempt to unify the artistic community to gain market leverage.
“The big holistic goal is to make an environment that’s better for songwriters,” Rodgers said. “There’s no reason that the person who distributes the message should get far more than the person who creates the message.”