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Spotify deal with UMG is just another brick in the wall

Spotify inked a deal with the Universal Music Group on Tuesday, the terms of which allow for artists and their record company bosses to withhold their new releases from non-premium subscribers for two weeks following their arrival, during which time only Spotify Premium subscribers would have access to them. This appeals to both artists and labels, because during that two-week period, Spotify will pay a higher royalty rate than it does for product released on its free tier.

For independent artists living and working around these parts, this won’t even register. The royalty rate paid by Spotify has long been equated with a below-the-poverty-line wage. You wait a good while for a check to show up, and when it does, it's likely to be well below $5 in total, unless you happen to be Drake. It might be easier to seek to monetize the ancillary effects of giving your music away for free via Soundcloud than it is to justify viewing Spotify as anything resembling a valid business platform.

Sure, you're free to throw your new release up on Spotify. You're also free to sink your money into an individual Health Savings Account. If you have no money, that freedom does you no good. Similarly, if you aren’t moving boatloads of digital product on Spotify, having a presence there is just another teardrop in a monsoon. No one will notice.

Drake performs in Austin, Texas in 2016. (Tamir Kalifa/The New York Times)

One can’t blame Spotify for creating a music industry norm where there are the rich mega-artists, and then there's everyone else. The company is the symptom, not the disease. And embracing reality demands that you accept that this widening chasm between the 1 percent and everyone else is the not-so-new American normal, a state of affairs arrived at by design, not by happenstance.

Daniel EK, chairman & CEO of Spotify, did his best to put a pleasant spin on the agreement in a statement issued by the company on Tuesday: "This partnership is built on a mutual love of music, creating value for artists and delivering for fans. We will be working together to help break new artists and connect new and established artists with a broadening universe of fans in ways that will wow them both. We know that not every album by every artist should be released the same way, and we’ve worked hard with UMG to develop a new, flexible release policy."

Well, OK, I guess. But I'm not so sure "a mutual love of music" has all that much to do with it. Spotify is the world's leading streaming service, and UMG is the Big Papi in the world of what the Spotify release called "music-based entertainment." Their union is not so much about celebrating the transformative powers of music as it is about Spotify wanting and needing to go public, and this deal being a necessary first step in that process. (UMG is home to artists such as Drake, Lady Gaga and the Weeknd, among others.)

Lady Gaga performs during the Super Bowl LI Halftime Show in February. (Anthony Behar/Sipa USA/TNS)

Spotify's contracts with UMG, Sony and Warner Bros. – the big three – all expired before Tuesday's announcement, and going public, as the company has wanted to do for several years, was not a reasonable option without those contracts in place. UMG is likely the first domino to fall; Sony and Warner Bros. are now under pressure to do the same, if they know what's good for them.

Understand that, despite efforts that will attempt to present it as such, this new union is not a victory for songwriters and music publishers. According to The New York Times, these lowly servants – the folks who actually create and publish the music - are due only a 10 percent royalty rate from Spotify, as opposed to the roughly 55 percent that goes to the label that owns the recording itself.  That's the real problem with streaming services, and this new tryst does nothing to address it. In addition to readying itself for going public, the deal sweetens Spotify's tea by reducing the rate it pays for UMG recordings from 55 to 52 percent, again, according to The New York Times.

Songwriters and publishers don't stand to gain much from this new deal, in the majority of instances. Already successful artists will make more money, and so will the big labels.

Consumers, by contrast, will likely think they're winning. Spotify has about 50 million paid subscribers, and these folks will be able to access the new album from UMG 'Artist X' for two weeks before their lowly "free tier" brethren – who also number some 50 million. Maybe there's certain "I got here first" thrill to be gleaned from such an arrangement for the paid subscribers, but it's a thrill that should be tempered by the fact that the non-paying class will be able to hear any and all singles released from that album during that two-week period. And if those folks are dying to hear, say, the new Halsey or Luke Bryan album during that time, they can always check YouTube. Someone will share it.

However, what many consumers might not realize is that they are contributing to the disparity between the music world's haves and have-nots, mostly due to their own greed and/or laziness. In such an environment, homogeneity moves in and takes over. You might be able to hear the hot new single, for free or something close to it. But you just might be hearing something that isn't worth any of your money, anyway.

In the end, "access to music" is only worth as much as the music you're being offered access to.




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