Why Daniel Ek’s celebration of local artists is really anti-’streaming tax’ spin

MBW Views is a series of exclusive op/eds from eminent music industry people… with something to say.  The following comes from MBW founder Tim Ingham. It first appeared in December as the leader in the latest issue (Q2 2024) of MBW’s premium quarterly sister publication for and about the UK market, Music Business UK, which is exclusively available for MBW+ subscribers.

Daniel Ek dunked himself in hot water in June, tweeting that the “cost of creating content [is] close to zero” for modern music-makers.

Following an outcry from musicians, Ek apologized. “It’s clear I was too vague… including with my clumsy definition of content,” he wrote. “I understand how it came across as very reductive and that wasn’t my intent.”

That hullabaloo attracted a flurry of headlines, but an entirely different series of social posts from Ek left me startled in recent weeks.

Said posts weren’t offensive, nor economically insensitive, nor ill-judged, nor any of the things that tend to enrage ‘the blob’ over on X. No; these comments from Ek were rehearsed, specified… and pure propaganda.

I first noticed them in May. “Amazing to see more UK artists being discovered on Spotify,” Ek wrote on LinkedIn. “In 2023 alone, UK artists were discovered 13 billion times!”

I soon realized this wasn’t the first time Ek had deployed an uncharacteristically playful exclamation mark on this topic.

A fortnight earlier, in eerily similar prose, Ek wrote on LinkedIn: “Love seeing Brazilian artists continue to explode on Spotify! Just last year, first time listeners discovered Brazilian artists 10 billion times. [And] in 2023, revenues generated by Brazilian artists from Spotify alone reached more than 1.2 billion BRL.”

Wind the clock back an additional week, and you’ll find that Ek wrote the following: “[Just] last year, Canadian artists were discovered by first-time listeners more than 3.8 billion times. That’s huge!”

What triggered Ek’s sudden interest in (and jubilant celebration of) the success of domestic artists across these great nations?

His own economic peril, of course.

In early June, Canada’s Radio-television and Telecommunication Commission (CRTC) announced a new ‘streaming tax’ would be levied against global digital entertainment players, including Spotify, Apple Music, and Netflix.

These platforms now have to contribute 5% of their annual revenue in Canada to programs that directly support local content creators. The subtext: said local artists are being economically suppressed by streaming’s economics, and require government intervention to earn a fair income.

Canada’s move arrives after a similar story in France, where Spotify and co. are now being forced to fork over 1.2% of their local annual revenues to finance music created by domestic artists.

In reaction, Spotify has hiked its prices in the land of le Tricolore.

Obvious question, then: Are the international dominoes now falling? After Canada and France, could we soon see a similar ‘streaming tax’ introduced in the UK?

If yes, you probably won’t hear too many complaints from British rightsholders – so long as they can squeeze a few more million from Spotify’s annual coffers.

There are inherent dangers to this idea, however: As it did in France, Spotify could hike UK prices in reaction (i.e. passing on the cost of the ‘tax’ to consumers), which could, in turn, push cash-strapped music fans to cancel subscriptions.

Another possible downside: the administrative headache of redistributing the proceeds from such a tax.

Not only could that get complicated (and expensive), but as you’ll well know, the music industry is home to a number of worthy sectors (recorded music, publishing, live promoters, live venues, artist managers etc.) – each with its own claim on a ‘streaming tax’ windfall.

Either way, know this: Whenever Daniel Ek uses a cheery exclamation mark on LinkedIn, check his motives.

The cost of creating content might be “close to zero”, but music is a multibillion-dollar business – and Ek doesn’t want to give up his share.Music Business Worldwide