Broadcast of recorded music. Artists hate that.

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Streaming services like Spotify and Apple Music saved the music industry. They are also tearing it up.

My colleague Ben Sisario says musicians complain about the streaming economy which can translate millions of clicks on their songs into pennies for them. Last week, a group of musicians demonstrated outside Spotify’s offices for changes to the way they are paid from streaming.

Ben explained to me why streaming music has been a disappointment for many musicians. The challenges reflect a larger question: what happens when the promise of making a living online through music, writing, or building apps doesn’t match the reality?

Shira: How has streaming changed the music industry?

Well: This is the salvation of the industry. Thanks in large part to Spotify and other subscriptions, streaming has provided the industry with something it’s never had before: steady monthly income.

Simply put, the big winners are streaming services and major record labels. The losers are the 99% of artists who are not at Beyoncé’s level of fame. And they are angry that they are not sharing in the success of the music industry.

If more people are paying for music, why isn’t that money flowing?

There’s a convoluted and opaque formula that determines how the $10 monthly subscription for Spotify or Apple Music gets to artists. Once these services take their cut, about $7 goes into a prize pool that’s split up in different ways — for record labels, songwriters, music publishers, artists, and others.

The more music people listen to, the less each song is worth because it cuts the cake into smaller and smaller slices. I’ve seen financial statements from some pretty popular indie musicians that suggest they make a pretty good living from streaming. But often, unless the musicians have hit numbers, they don’t earn much.

Who is to blame for this?

Streaming services and record labels bear the blame.

Spotify pays a large portion of its sales to the record labels, and then it’s up to those labels to distribute the money to the musicians. The music industry does not have a good track record of fairly compensating artists.

But Spotify is also falling short of its stated mission to “give one million creative artists the opportunity to make a living from their art”. It probably has around seven million artists on its platform, and Spotify figures show only around 13,000 of them generated $50,000 or more in payouts last year. How can this number reach one million?

Haven’t many musicians always felt exploited and underpaid?

Yes, but the streaming model has exacerbated the gap between superstars and everyone else. It is also a mistake to dismiss complaints from musicians. Economic inequality has been around for a long time, but it still needs to be tackled.

What is the solution ? Can streaming work for everyone?

There is talk of changing payment systems to a “user-centric model” that would allocate payments based on what people are listening to. If I only listen to Herbie Hancock on Spotify, my subscription costs only go to him, after the service takes its cut. Proponents say this system would be fairer, especially for artists in niche genres. But there have been studies that say it’s not that simple. And I wonder if it’s not too late to change.

Are there companies that do things differently?

There’s a smaller music service, Bandcamp, which musicians tend to like. It allows artists to limit how often their music is released and takes a relatively small commission from sales of song downloads, t-shirts, and more. It’s proof that Spotify isn’t the only way to do it.

I’m also interested to see what Square might do with Tidal, the streaming service it bought last month. It won’t change the economics of what a streaming song is worth, but Square is deeply integrated into things like merchandise sales. It could come up with new ways to help artists make more money or connect and market to fans.

In China, emerging tech companies are doing something that may seem impossible. They challenge the kings of technology.

The Wall Street Journal recently reported that a five-year-old Chinese e-commerce site, Pinduoduo, has become the most used shopping website in the country. More people made purchases last year on Pinduoduo – which is a combination of Costco, a video game, QVC and Amazon – than on Alibaba, the Chinese version of Amazon.

By the way, do you want to feel small and insignificant? Chinese shoppers spend more than $2 trillion each year shopping online – and that accounts for almost half of all retail sales in the country. Americans spent about $800 billion on e-commerce in 2020, or about 14% of retail sales.

One of the big questions about technology is whether current American tech giants like Google, Facebook, and Amazon will remain powerful forever. In China, the answer may be no. (But we’ll see.)

In recent years, ByteDance, the company that makes the Douyin app and its international version TikTok, has also challenged China’s almighty Tencent.

I don’t want to go too far. Alibaba and Tencent remain hugely powerful, and it’s hard to imagine that changing. ByteDance and Pinduoduo might struggle to stay popular and make money. It’s also unclear whether China has any insight into what might happen to tech powerhouses elsewhere in the world. China is atypical.

But it’s fascinating to see tech superpowers pitted against newcomers bringing new ideas.

  • Online hate as a precursor to violence in the real world: Anti-Asian hate speech has increased in fringe corners of the internet, reported my colleague Davey Alba. The researchers told Davey that an increase in online vitriol towards ethnic groups showed an increased risk of violence against them.

  • A new but potentially abusive way to get more people online: Rest of World has written about loans for people who couldn’t otherwise afford smartphones, but they have a catch. Pop-up messages flood the phone screen to urge people to make payments, and the phone can lock if people miss too much.

  • TikTok is the opposite of reading books but… TikTok videos sell a lot of books. My colleague Elizabeth A. Harris wrote about “BookTok,” or short videos of people recommending titles, recording time-lapse videos of themselves reading, or crying after an emotionally overwhelming ending. “I wish I could send them all the chocolates!” one author told Elizabeth.

Here is a cat dancing to a viral video of another cat.

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