On Wednesday, Music Business Worldwide reported that Spotify is gaining extra income by making its own recordings and inserting them into its playlists. These playlists are a modern form of Muzak: wishy-washy instrumentals, curated according to genre. By these means Spotify brings you ‘jazz, chill and peaceful piano playing’. These playlists are also extremely popular. The article reports that five of these Spotify-owned tracks have each racked up more 500,000 streams, while one has been played over a million times.
Spotify is playing an old game here. When physical formats were dominant, businesses and artists would play tricks with formats in order to rake in extra copyright income. When a customer bought a 7-inch single, for example, the b-side would earn as much in songwriting royalties as the a-side. As a result, some business moguls would deliberately force artists to include works that they controlled as b-side material. Artists too would take advantage of b-side credits. The Rolling Stones balanced their early a-sides, which were cover versions, with group-composed b-sides. And similar games were played with albums. When a physical album was sold, the copyright income would be spread equally, regardless of the popularity of each track. As such, some groups deliberately chose to divide the publishing spoils (witness the Who’s album, A Quick One, which includes compositions by Roger Daltry and Keith Moon, in addition to Pete Townshend’s and John Entwistle’s more popular songs), while others had members who usurped the credits (Roger Waters of Pink Floyd went from the egalitarian splits of Dark Side of the Moon, which includes a false compositional credit for Nick Mason for ‘Speak to Me’, to the complete control of The Final Cut).
Ironically, it had been thought that streaming was bringing such games to an end. Streaming income, such that it is, is based on plays rather than sales. As such, the copyright worth of b-sides and album tracks has been reduced, while the bias towards hit singles has been increased. Spotify does have a successful longer format, however: it is the playlist rather than the LP. And as we have learned, they have now found a way to monetize it to their advantage: by creating their own works and inserting them in a sequence alongside better-known recordings.
There is one difference from previous practice, however. The tricks with b-sides and album tracks were centred on songwriting income. Spotify is making its money through sound recording copyright. Music Business Worldwide reports that the company isn’t necessarily interested in the publishing money, it is the ‘master rights’ in the recordings that they are most keen to own. This is reflective of the income split that has been somewhat forced upon them by the record companies and which has had the publishers up in arms. The record companies generally see 55-60% of the revenue from streaming services, the service providers retain 30%, which leaves the publishers with just 10-15%. Is this evidence that the money is no longer in the publishing?