Spotify’s Ek ‘content’ comments out of touch and out of line

One or the headlines Ek attracted. Source: Loudersound.com

You are likely to have seen the social outrage over Spotify CEO and co founder Daniel Ek’s comments about how affordable it now is for artists to create ‘content’ given platforms like his.

And for once the noise it is completely justified.  Even if the outrage is slightly mis-placed.

Let’s unpack the context a little to work out why.

A major music industry disruptor

Prior to Spotify releasing its ‘jukebox in the sky’ (or to Ek ‘musical content catalogue in the sky’), artists and their record companies could make very significant coin out of their recordings, despite being digitized this millenium.

Depending on the proportions of live performance and recording releases in any given year, the percentage of an artist’s income made from recordings could be as high as 90%.  And of course it was by far the main source of revenue for their record companies.

However what Spotify and its ilk didn’t factor into their royalty deals was the cannibalization of pretty much every other revenue stream (ironically) recordings could provide.  This in turn almost fully eliminated the recording earnings income artists and record companies.

Don’t get me wrong, I fully support the idea of such a service.  In fact, I tried to start my own service, (complete with IMHO the much better name of ‘Stream Machine’) several years before Ek.  Given the development in both streaming technology and internet bandwidth, it was a logical next step for the music industry. 

Doing the basic math

But the fact that Spotify and its ilk have so effectively wiped out such a critical source of income for music rights holders seems to have been lost on Ek.

A Grade 2 pupil could work out that only the biggest international artists would cover the costs of recording given the miserly returns from the streaming services.

So for the co-founder of such a disruptive, and many would argue destructive company to remark that ‘the cost of creating content (today) is close to zero’ is as incorrect as it is ignorant as it is insensitive – particularly when grassroots live music has also recently been hit hard by various economic factors.

The other umbrage musicians took over the remark was that music was referred to as ‘content’.  But in my book, of the two issues, the ‘close to zero’ is the one that is far more offensive to a desperately hurting music community.

Create VS Distribute

Where I think Ek fundamentally got the comment wrong was not so much around the word ‘content’ but around ‘create’. While technology advances may well have reduced the cost of music ‘creation’ (mostly recording), it is still relatively expensive given the now paltry return on investing in it.

What is close to zero is not music’s creation but its distribution. Once the domain of pressing plants and logistics companies to get the ‘product’ to market, now it is indeed but a few device clicks away from accessing a global market. But even that ignores what is now the main wheelhouse of the record company, marketing.

Still, the fact that the CEO of the most disruptive company on the planet can’t articulate the difference between content creation and distribution is slightly concerning.

Ek has since issued an apology over the remark.  But given he is now more famous among the source of his income – musicians, for the remark than for founding his ubiquitous service, you can only hope it’s one he comes to really regret.