Everyone is hating on Spotify. And it only has itself to blame (Op-Ed)

The old saying “everybody loves a winner” is half-wrong. Eddie the Eagle busts that idea. And at the other end of the spectrum, Manchester United, Collingwood, the L.A. Lakers, Spotify.

Some of us cry with joy when the underdog gets a break, and we laugh ‘till it hurts when the champion falls on their sword.

When you boast 172 million paid subscribers and 381 million monthly active users in a space that was virtually non-existent a decade ago, you’re doing well.

Spotify is numero uno, the giant in its field, a business that almost single-handedly breathed life into a dying record business. Its brand the layman’s shortcut for streaming music.

But giants, as we know, fall hard and create a lot of collateral damage on the way down.

Everybody’s hating on Spotify right now, with Neil Young leading an exodus from the platform, many wondering why the boss is investing in AI defence technology, #CancelSpotify trending on social media, and billions stripped from its market cap.

It only has itself to blame.

Strip away its top-notch brand recognition, its easy-to-use service, its fat catalogue, there’s one critical blunder that’s left Spotify exposed. Money. The service is tight-fisted with those it should kneel to, the artists. But it spunks a fortune on bright, shiny things that it might steer clear from.

In April 2018, ahead of its direct listing on the New York stock exchange, Spotify took us on an “office tour” of its sexy new space in 4 World Trade Center. The streamer reportedly locked-in a lease agreement for 15 years and four months, for which it would pay an eyewatering US$650 million over the lifetime of the deal. That’s artists’ money paying the rent.

Matters got ugly when, in 2020, Spotify signed up Joe Rogan for an exclusive podcast deal, estimated to be worth US$100 million over several years.

Artists were rightly pissed with the optics. Here, a knuckly loudmouth who sits on the right of politics, the sort of guy who would steal lunch money from the scrawny music kids at school, is given the house, the car and all the toys.

When Rogan dabbled with anti-vax messages and conspiracy theories on his show, Neil Young bailed. It was Young who told us it’s better to burn out than to fade away, and he lights the blue touch paper with his own boycott of Spotify, taking his music with him.

Joni Mitchell and Nils Lofgren have followed suit (Rogan has since pledged to “do my best in the future to balance things out”).

The tide is turning on Spotify. We’ve all got our popcorn at hand.

With content providers bolting, and subscribers changing suppliers – as they’re telling us on the way out the door – Spotify has taken a beating. A US$4 billion beating.

At the close of trading last Friday, shares of Spotify were down about 12% from the close one week earlier, data from Nasdaq shows.

Don’t give Neil Young all the credit.

In the U.K., one of the world’s biggest markets for music streaming, the competition watchdog last week announced a landmark investigation into the entire streaming ecosystem, from “creator to consumer,” and “paying particular attention to the roles played by record labels and music streaming services.”

That’s after the Department of Digital, Culture, Media and Sport (DCMS) issued a stinging report in which it argued that “streaming needs a complete reset.”

In one scenario, Spotify and its rivals could be forced to up its royalties to creators. The entire game could be forced to change.

Lump all these issues together and you’ve got problems that can’t be fixed with PR alone.

All of it comes back to money. None of this would’ve happened if Spotify had done a better job looking after its artists on the way to the top. 

This article originally appeared on The Industry Observer, which is now part of The Music Network.