Why “the creator’s economy” is music’s biggest lie

You want to hear the most depressing statistic in modern entertainment? It was delivered effusively the other month by a beaming Jack Conte, co-founder and CEO of fan-fundraising app Patreon, which is now worth $ 4 billion. “A study released a few years ago showed that 75% of kids ages 6 to 17 want to be online video makers when they grow up,” Conte boasted in a YouTube video. “There’s a whole generation of kids watching today’s creators make videos, do podcasts, shoot bullshit with their friends, start awesome businesses, make money. No wonder these kids want to be designers when they grow up! “

In Conte’s opinion, it is a cause for universal celebration that three quarters of children prepare for a career by fucking in front of a webcam. In his words, this is the foundation of a “second Renaissance” that will make the effort of three centuries of da Vinci & co. a simple “blip in a history book”. (Yes, he really does say so.)

The question to be asked in response to the 75 percent statistic is not whether the next generation’s ridiculously optimistic life plan will spawn a new creative class; this is the role the remaining 25 percent should play. If everyone is a creator, who is the audience? Moreover, in an economy of supply and demand, when creators are in the majority and the public the minority – who pays who?

Of course, Conte isn’t supposed to think about the ramifications. He only wants to stir up the hopes and dreams of millions of creators online, which Patreon can then reap at a profit. Patreon makes money by dipping into the income of DIY artists and taking a percentage of their fan subscriptions. Even though these creators individually craft lean moolahs, as long as there are huge volumes of them, Patreon prints silver.

To perpetuate this scale-dependent business model, Patreon, like many other tech companies serving creators, is keeping a hollow promise: If you were born to create, a bargain awaits you just around the corner. That’s it other the guy, the one in the adjacent “For You” window, who is a stray Joe Schmoe; you, my friend, you are a true artist, and your art is worth money!

The online influencer community should be really wary of this Kool-Aid. As proof, they may be left speechless at the music industry – where a new generation, raised on the vanity metrics of streaming, are now experiencing the overwhelming reality of the so-called “creative economy” (or as Conte and d other leaders make it run, the “passion economy”).

As recently as last week, politicians across the UK, following an eight-month investigation, concluded that the commercial music streaming device was in need of a “full reset”. Yet their report came off on the front page: “Some successful and critically acclaimed artists have discovered that streaming revenues’ are not big enough to keep the wolf out of the door,” “he said. he declares.

The problematic word here: “Success”, which is – surely deliberately – left undefined. What is a successful artist in the era of democratized streaming?

The quote “The Wolf in the Door” is an overt reference to famous British singer-songwriter Nadine Shah, who used the phrase when she provided convincing evidence to the politicians’ inquiry in November. With Covid sidetracking any hope of touring income, Shah said, she is struggling to pay her bills with streaming income alone. She currently has 71,378 worldwide monthly listeners on Spotify – which seems like a lot at first glance. But thanks to the mass of creators now clamoring for a limited audience paying fixed subscriptions, it’s actually relatively little. Every day, Shah battles over 7 million other artists for a portion of Spotify’s worldwide zero-sum royalty.

By delving into Spotify’s royalty indicator, “Loud & Clear,” one can see just how ruthless the minimum requirements of “success” have become. Spotify proudly tells us that 57,000 artists currently share 90% of the royalties it pays. In 2020, Spotify paid around $ 5 billion in publishing and recorded music royalties; 90 percent of that would be $ 4.5 billion. The 57,000 acts sharing that money are what we can rightly call Spotify’s “Gold Club”. They only represent 0.8% of the total number of artists on its platform.

So if you’ve made it to the “Gold Club,” sharing the 90% Spotify royalty, that’s success, isn’t it? Press releases suggest so, but common sense probably tells us no: 57,000 individual artists are enough to fill Madison Square Garden twice.

Where does the threshold of the guillotine really fall for a “successful artist”?

The Spotify site informs us that only 13,400 artists (0.2%) made $ 50,000 or more on the streaming platform last year. Of this group, 7,800 generated more than $ 100,000; 1,820 generated more than $ 500,000; only 870 artists won over $ 1 million.

Spotify Data / Rolling Stone Calculations

Exploring these granular statistics assures us that these 13,400 artists – the minority over $ 50,000 per year in our “Gold Club” of 57,000 members – cumulatively generated a minimum $ 2.22 billion on Spotify last year. Most likely, they generated over $ 3 billion.

That would leave a smaller pot, $ 1.5 billion, to be divided among the second division of the “Gold Club” – the remaining 43,600 artists falling under the $ 50,000 per year bracket.

Obviously, the most popular artists among those 43,600 would carve out the lion’s share of Spotify’s $ 1.5 billion. Yet even if that number were somehow evenly distributed among them, it would still only amount to $ 34,404 per artist per year. (Shah can be found at the bottom of Spotify’s “Gold Club,” with “Loud & Clear” ranking her among the 56,000 most popular artists on the platform.)

All this reveals a painful truth: even among the elite of the 0.8% of the “Gold Club” of artists on Spotify, there is a great disparity between successes and failures, with the majority of artists firmly in the latter. category.

Wolves, don’t forget to wipe your feet when you enter.

Obviously, the “passion economy” does not work for the 99.2% of Spotify creators outside the top 57,000 level. But, as Nadine Shah demonstrated, this also doesn’t work for a significant proportion of the 0.8% of the “Gold Club” elites. which are simply too far away from the growing number of 57,000 acts to make any money from streaming.

We could discuss whether a reworked payment model would make a difference here. If the royalties were split not from a fixed pie, but via a fan-centric model with per-stream pricing, could this help improve the lot of low-paying artists? Some reports suggest that this change would not make a big difference; the likes of SoundCloud, and now Portishead, would strongly disagree.

It’s also worth noting that, of course, artists like Nadine Shah can leverage their visibility on Spotify et al to build business elsewhere – for example, radio, retail, direct outlets like Bandcamp or live broadcasts that get five star reviews in broadsheet newspapers.

But to say that the creative economy alone works for successful musicians is deeply flawed.

I would like to come back to Jack Conte, selling his creative utopia to the 75% of children who want to become video makers. Conte knows that the millions of participants in his “passion economy” don’t just bring their downloads to the party – they bring friends, family, listeners and followers; they bring online marketing and social media promotion; all the tools to combat the odds that are fiercely stacked against them. The sum total of this promotion of autonomous creators, over millions and millions of accounts, is attracting mass audiences to the platforms. Tech companies are making a lot of money and getting a lot of subscribers, out of this frenzy of creators.

Maybe once the prosperity of big tech from the “passion economy” collides with the reality already evident in the music industry – that 99% of artists don’t make any money. decent online – we could see the 75% of kids dampening their interest. by becoming creators. Maybe artists like Shah, and millions by his side, will simply remove music from streaming services that don’t reward them enough for making their way into the world’s top 56,000 acts.

Until then, the global scale of the “passion economy”, combined with its participants’ desperation to get noticed, will roll the money for tech companies and their funders. And these backers are very happy: Take the investment firm Tiger Global, which was one of the biggest investors in Spotify before cashing in most of its stake in 2019 for $ 1.3 billion, as an example. and more. Tiger Global just led the $ 155 million investment round that gave Patreon its $ 4 billion valuation.

In the same video announcing the roundtable, Conte says, “There are podcasters on Patreon who make millions of dollars a year. There are YouTubers on Patreon who are making hundreds of thousands of dollars a month. These individuals, he assures us, “are living a crazy dream! On the rest – the creators who struggle to keep the wolves out of the door, who in the case of Spotify musicians make up about 99.8% of people – it’s much quieter.

Tim Ingham is the founder and publisher of Music trade in the world, who has served the global industry with news, analysis and jobs since 2015. He writes a regular column for Rolling stone.

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