Hi Bob-

I really appreciate you saying nice things about my contribution to Rolling Stone. I was happy with the piece, and I understand that they have limitations to how long it could be, but I wrote a more detailed breakdown of the issue. I wasn’t expecting RS to just print what I wrote, but putting things down in writing helps me think more cogently.  I thought you might enjoy it, so I’ll copy what I wrote in preparation below.

Best-

David Macias

Many artists are hurting these days. It’s become more difficult to earn a living as an artist. Anyone trying has my deep respect. For anyone who knows me and knows my company, Thirty Tigers, you know that our heart is squarely with the artist. We invest in artists; we work hard for artists. We try to help them navigate the industry so that they can earn the most money possible without sacrificing the quality of the effort in promoting their art, all while they maintain 100% ownership and control over their masters.

So, it pains me when I see artists and those who love them misdiagnose the source of their difficulty. Spotify is the current scapegoat for the ills of the working-class artist, despite them paying 63% of gross revenues back out to rights holders. This is in relative parity to other DSPs and slightly higher than brick and mortar retail (60%), which is understandable given that they must pay for physical space to conduct business.

A note about rates: Spotify is pilloried for the fact that they pay a lower net rate than Apple or Tidal. The reason for this lower rate is that Spotify offers something that the others don’t – an ad-supported tier that pays at a lower rate because advertising does not bring in the amount of money subscriptions do. You can choose to feel aggrieved about the lower aggregate rate (which many do), or you can choose to be happy that people that can’t afford to pay $10 a month are given a way to participate in a way that allows for some royalties to be earned (which is how I feel). People can disagree in good faith about which approach is preferable, but it’s simply not the case that Spotify is just paying less to pad their bottom line. They bring in less revenue per listener but still pay out a commensurate percentage to the other DSPs.

Between DSPs like Spotify and companies like TuneCore, music is more democratized more than ever, to the point where the DSPs upload 60,000 new songs every day. Let me repeat that. 60,000. SONGS. PER. DAY. That’s the equivalent of over 2,100,000 albums of material a year. The US global market share is 53%, so let’s peg the number of albums (including track equivalents) released in the US at 1,100,000. By comparison, in 2004, the US music industry released around 50,000 albums.

I pick that year for a reason. It was the first year that the RIAA recorded any digital revenue, and it was also a year that nearly matches the dollar amounts made by the industry in 2020.

Let’s consider what life was like for artists in 2004….

If you aspired for national or international success, you were forced to sign with a label to get the resources and advocacy that you needed to reach an audience. Those deals were most often at terms that were not favorable to the artist. Labels were absolute gatekeepers, and they wielded that advantage like a cudgel.

Today, you don’t need anyone’s permission.

If you look at the playlists on the DSPs, you will find an abundance of independent artists, unaffiliated with anyone getting their shot. Spotify has taken great steps to democratize access to the playlists, by allowing anyone to pitch their music to the people who make the decisions on what goes on their playlists.

As an example, Spotify’s New Boots playlist currently features 20 artists on it whose work is copyrighted directly to the artist with no label affiliation listed. That playlist has over 800,000 followers.

I think of Russell Dickerson, who delivered proof of concept by having his music streamed over 25 million times before he was picked up by a label (one that I am affiliated with), who has helped him chart four consecutive singles at #1. Spotify changed his life. If this was 2004, he would have likely never gotten that opportunity.

However, democratization has come at a cost. Let’s consider the math of 2004 vs. 2020. Both years saw $12.2 billion earned by the industry. If you divide that amount by 50,000 albums released, the average album in 2004 earned $244,000 in revenues. If you divide that numbers by 1,100,000 albums, the average album earned $11,090. If you apply the 80/20 rule to the 2020 numbers (a business maxim that hypothesizes that 80% of sales comes from the top 20% of money earners), you can estimate that the 880,000 least commercially successful albums earned $2.44 billion in revenue, or $2770 per album.

Democratization has been a huge boon to independent artists in that it has given more artists a chance, but not been enough to earn them a living wage. The pie is being sliced so thin, that most artists are left hungry.

A painful question must be asked at this point: Is it an artist’s right to earn a living from their art in a capitalist market? In a country where the business-failure rate is 65% over ten years, should artists be immune from their businesses failing? As much as my heart goes out to anyone who is not able to make their dream come true, I would say that that answer is no.

Financially, the low point of the music business was in 2014. The RIAA figures for the retail value of all music sold then was $6.7 billion. As streaming has become the predominant way people consume music, that number has skyrocketed to that $12.2 billion figure in the US. That is a 75% increase in revenues in six years. Anyone who argues that streaming has been harmful to the ecosystem has billions of dollars to explain away when making their case.

I attended a music business conference presentation in the early 2000s, where the RIAA presented a study where they asked people who self-identified as avid music consumers how much money they spent a year on music. The average amount was about $60 a year. Remember, we’re making as much money now as then, so we really are talking apples-to-apples. If you want to subscribe to a streaming service, you are contributing $120 a year to the till. The contribution of the average consumer has roughly doubled, so is it any surprise that industry revenues have mirrored this doubling since the advent of streaming?

So how then can artists make enough money to survive? There are options for a patronage model like Patreon that can operate outside the revenue models of pre-recorded music. Though I am suspicious of the lasting value of NFTs, some artists are earning money creating singular goods that can be made available to fans. Though on the horizon, potential applications of direct funding through web3 applications may give artists an opportunity to monetize their creations more directly.

What I do not want to see happen is that artists misattribute the source of their problem and undermine the DSPs that have played a huge role in the democratization of independent music.

Is Spotify perfect? Far from it. I won’t touch the Joe Rogan issue. That’s a matter of conscience for artists and their advocates. Do I wish that Spotify were not joining other DSPs in appealing the Copyright Royalty Board’s ruling that pays the publishers and songwriters 15% of revenues? Absolutely. When artists I work with have walked into their NYC offices, as often as not, I hear about the opulence of their offices and the perks that are made available to their employees on full display. On a gut level, the artists correlate these with their lower royalty rate (explained above) as compared to other DSPs. Spotify, I tell you these things as your friend. Sometimes you don’t do yourselves any favors.

Vilification is easy. I’ve heard that it’s not the people, it’s the system that is broken. To that, I counter that any system that has increased parity and overall revenues is not a broken system. There is just way, way, WAY more music available, and though the pie is growing, it’s unable to feed everyone. Artists need to understand the reality of the situation and be clear eyed about what battles they need to be fighting. My contention is that dismantling the existing system without a replacement will harm independent artists.

My heart is with all of you, and I wish you all the best.

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Amen to you and to David for this one.  This debate has really gotten under my skin.  I am an agent and across about 20 acts, and while I don’t participate in any of the recorded revenues, they have become life changing for the artists over the past five years and especially through the pandemic.  This is mostly due to Spotify.  The other key is that I mostly work with independent artists – meaning they own all or parts of their catalogues.  Napkin math, but out of 20 clients, 4 or 5 of them have major label deals or deal with big indies where they do not own/control masters.  The rest have distro only deals (with companies like Thirty Tigers, whom I love, or AWAL), or deals with fair and artist friendly indies (like Dualtone, whom I love) where they might have a mid-term (7 year) license but still retaining masters ownership.  Most of my artists are also taking small or no advances, so that they are seeing cash flow in many cases from dollar one.

My acts that own pieces or all of their catalogue, and have between 1.5mm-4mm monthly Spotify listeners, are making anywhere from $20k to $100k PER MONTH from Spotify revenues.  4mm monthly listeners is significant and means that the artist has a real following, but this is nowhere near the top of the heap and what you might consider “mainstream” names like Drake who has 53mm monthlys.  My smaller acts who have between 200k-500k monthly listeners, are still making $1k-$5k per month from Spotify.  When they own their catalogue – again, a key differentiator in who gets paid.  These are artists you have most likely not heard of, but who ARE making a livable wage between these recorded revenues, shows, merch, etc.

So for everyone weighing in and unsubscribing from Spotify to say “fuck the man,” all you’re doing is fucking the little guy.  Spotify in my mind is an EXTREMELY artist friendly company.  As the pie gets smaller, these revenues go down for all artists, and the ones who are hurt most are the small ones at the bottom of the totem pole.  Neil made his point and I commend him for it, and it made a (small) difference, but Spotify is not the problem, quite the opposite.  We are living in a golden era of recorded revenues!

Keith Levy

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Brilliant. I’ve been saying similar things for a long time but less eloquently.

 

The popular narrative is unfair to the streamers and is misdirected anger. The streamers are paying more than 50% of their gross revenue to rights owners, and in the US radio is paying what – under 3%? Concerts are paying what – fractions of what the rest of the world pays for performing rights at a concert. The most unfair royalty issue in streaming is the disparity between master and publishing. No excuse. Unsustainable. Let’s see a popular uprising over those issues.

 

A million streams sounds like a lot so people are flummoxed that the dollars aren’t commensurate with that mental image. However, the number of radio spins necessary to equal a million impressions is, for argument’s sake, say 10 (100,000 listeners X 10 spins). OK let’s say it’s 20. Or 100. If you only had 100 spins on radio, you wouldn’t say you were successful.

Best,

 

Michael McCarty

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Agree with David. Side note, he has been on the front end of supporting streaming for at least a decade long before any of us could read the tea leaves.

We have been having a similar conversation in our office this week.

Should Spotify pay songwriters and artists more $? Yes. Should they stop spread of misinformation if they can? Yes. Is any tech company morally pure? No.

 

Amazon has had their own scandals and worker’s conditions questioned consistently…Apple had the same in China…and we all remember Batterygate…on the vaccine issue the biggest spreader of all misinformation is Facebook but there isn’t a mass musician’s exodus to abandon the platform (along w Instagram which it owns). All commercial entities have things to own and we should all hold them accountable but we are ignoring the good that Spotify does for artists.

 

The first question from all of our management partners after “What playlists did we get?” is “Can you help setup our tour presale w Spotify?”. Spotify has helped sell hundreds of thousands of tickets (probably more I don’t have an official stat) and put money in the hands of artists and creators through their pre-sale activations. The streaming rates for songwriters and artists need to come up but it’s more nuanced than that when evaluating the whole ball of wax.

 

We have benefited greatly from the Spotify Fans First merch activations around exclusive products generating six figures of revenue for our artists.

 

Spotify has developed tech to directly benefit artists…putting up the donation capability during COVID and enabling selling merch directly from Artist pages.

 

When comparing the big 4 (Apple, Spotify, Amazon, Youtube) no other tech company gives as much access to the fan data and ability to reach directly to fans through Spotify for Artists and through ad programs like Marquee. The comparison and chatter with Bandcamp/Patreon is a different conversation I believe as those platforms are more D2C built.

Out of home support, billboards in Times Square, Spotify Sessions developing content for Artists that they own…the list goes on.

Are there things wrong with Spotify…absolutely, as has been well documented (they just paid 300M+ to be a sponsor of premier league soccer team instead of increasing pay for artists and songwriters!). But we need to focus on the duality a bit here.

We work with several bands that literally were able to quit their day jobs to do music full time because of this service. That fact doesn’t let them off the hook for Rogan and everything else but the Spotify bashing doesn’t address how their innovation has shepherded us into a new music business economy that for most labels and artists on those labels is working.

They are our #1 revenue driver, it’s not even close.

Because of our partnership deals with our acts those dollars flow through and we win together. It’s not us vs. them and that shouldn’t be the tone of the Spotify conversation either.

Paul Roper

Dualtone

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I love how most discussions about Spotify never even bring up the biggest problem. David is correct in his assessment that the label earns approx $4000 – $5000 per million streams. In the Thirty Tigers model the artist gets the lions share of that. Very equitable.

The songwriter portion of the 4 to 5 k is ridiculous. It’s approx $200. Let us remember that many of the greatest songs ever written were not written by the artist. The professional songwriter has a storied history via Tin Pan Alley, Motown and Music Row as a major contributor to the music we know and love. Are we willing to let thousands of amazing songwriters wither up and die and be left with songs that are less than the best they can be?

Here’s a hypothetical for you that might make this easier to understand. “Man in the Mirror” by Michael Jackson was written by Glen Ballard and Siedah Garrett. The album it was on sold a ton of records for which the writers received mechanical royalties for at a rate of approx 9 cents per copy. Let’s use 10 million as our number. Maybe they both had co-pub deals so they probably made 3 to 4 cents per album sold. That’s $300, 000 TO $400, 000 EACH. Those royalties ( mechanical ) have in fact gone the way of the horse and buggy. No one buys anything any more. I’m sure they did fine on terrestrial radio performance royalties for the single.

Fast forward to the streaming era…No album sales of note. Reduced radio play. Now let’s do the Spotify numbers. Total guess but I’m thinking in this era a record like that would get somewhere around 200 million streams. Michael Jackson had a more conventional deal than the Thirty Tigers model. His label would get $5000 per million streams. He would get via his artist deal some of that money. Let’s do the math. $5000 x 200 million ( the lower figure ) = 1 trillion dollars. The writers would split somewhere between $40, 000 and $50, 000. So… label gets one trillion, artist maybe 1 million, writers $40,000 to $50,000. Do you think that’s fair? Do you realize how much other revenue a great song generates for the label and the artist. The labels colluded with Spotify to set the system up so they would both make a ton of money during the streaming era. I am so glad I came up in an era where I was able to write songs for artists other than myself and be rewarded monetarily when something good happened with them.

When I lecture these days at Berklee school of music or Belmont in Nashville I tell young writers who are looking to go into songwriting as a profession, if you’re not the artist, you are looking at a huge uphill climb when it comes to paying your bills. What is the result of this syndrome? The world loses out on great music that won’t ever be written if we don’t change the model. There are artists that are quite capable of writing great songs for themselves. There are just as many that have no talent in that area and should leave that piece of the puzzle to those of us who can do it well.

In closing, here’s a few songs that would have never been written if there were no outside songwriters. “ You’ve Got A Friend “ I Can’t Make You Love Me” “My Girl”  “Up On The Roof” The entire Great American Songbook, George Gershwin, Cole Porter, Irving Berlin, Jerome Kern, Harold Arlen, Johnny Mercer, and Richard Rodgers, among others. Thanks for taking the time to read this and maybe look at it from another point of view.

Respectfully,

Steve Seskin

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Thanks for publishing this Bob.  David’s one of my dearest friends, and one of not only the best business minds in the biz, but human beings.  He built a revolutionary model and an alternative offering to individuals that wanted to pursue being an artist back when all that really existed before was the major label system.

I’ve seen him build Thirty Tigers from one man in a guest bedroom to the powerhouse that it is, and along the way his heart has been one of service and empowering artists.  Through the success, both in the growth of Thirty Tigers as well as many of the acts that they have broken, many of whom went to him after everyone else said “no” in town, he has not changed one bit.  His mission is and has always been on the art, but he has always had a balanced approach to how he looks at the macro economics of it all.

His message is true.  It should and needs to be heard.  It also comes from a good place.  I’m sure the complainers will shit on it, undeservedly so.  We should celebrate more having an opportunity, that’s all we’re given or should want is a shot, not everyone wins the game unfortunately but playing it sure can be a fulfilling ride.

Gino Genaro

CDA Entertainment

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A few back I worked David on the board of the Americana Music Association and found him to be the most insightful guy on the board. I also found him to have integrity and honesty. Artists they took on tended to never question their decision.

Bob Benckert

The Alternate Root

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I’ve had a few minor business dealings with David Macias over the years. Each time he was gracious, honest, and forthright. This was an awesome piece. It’s impossible to get it right every time, but Thirty Tigers has a helluva batting average. Kudos to Macias and the company he keeps.

Matthew Sterling

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What a great guy!

I first encountered Mr Macias maybe 20 years ago when he was managing Rich Robinson’s project called Hookah Brown.  Total straight shooter and hustled his butt off!

I was a young promoter / club booker, huge Crowes fan, and was completely star struck by Rich, too afraid to ask for a t-shirt and David must have read my mind because out of the blue he asked me my size and presented me with a shirt.  Just a little thing like that makes memories.

While I haven’t made much contact since, it’s been very cool to watch him grow from afar and he’s got one helluvah respectable artist roster!

Good on him for laying it out there.  You’re correct, almost no one will see it, including me, so glad you shot it out to us!

Rock on Bob!

Dan Millen

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I appreciate the clarification on artist pay. I never researched it but had caught an earful from a frustrated musician. I am teaching college students these days and they all live in different realities. it’s wild. i asked who would be watching the super bowl this weekend, only 5 or 6 out of almost 30 kids. yes, it’s an uninspiring matchup (bengals rams ho hum) but still. they share the same tech platforms but not the same content, beliefs or worldviews. it is truly challenging.

Colleen Kenny LaRocque

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Bob, the Cros says “Streaming stole my record money.”  Oh yeah? WHAT record money? The New Yorker, having no clue about music (they’re great in other areas) just ran a lengthy piece trashing Spotify.  I sent them a terse rebuttal, which they won’t print.  I’m annoyed at this shit.  The enterprisimg Daniel Ek could be somewhere else altogether, but instead he pulled the entire record industry up out of the craphole it had dug itself into, and now just look at the results benefitting consumers and creators alike.  Fuck Rogan, and fuck supposed music fans who’d rather line up with the last gasp of hippiedom than appreciate the most beneficial development since the debut of the 45.

Paul Lanning

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I want to shake David Macias’ hand and buy him a drink. Fuck it…two drinks.

Hugo Burnham