Mood Machine:
The Rise of Spotify and the Costs of the Perfect
by liz pelly
atria/one signal, 288 pages, $28.99
The music business is a cruel and shallow money trench, a long plastic hallway where thieves and pimps run free, and good men die like dogs. There’s also a negative side.” This statement, which is everywhere online, is attributed to Hunter S. Thompson. But Thompson’s original subject was the TV business, not the music business. No one knows who changed it. The Groucho kiss-off was added by another hand, too. Thompson’s epigrammatic gift to posterity is a collaborative fiction.
Anyway, all that is now the good old days. Those days were rarely good for musicians, but invariably good for business. They are certainly old now. The music business was the first to be remade by digitization. At a 16-bit, 44.100-kilohertz sampling rate, a three-minute pop song was compressed into a three-megabyte MP3 file—small enough to be downloadable with a late-1990s dial-up connection. By the year 2000, 60 million people were sharing recordings on the illegal file-sharing site Napster. The record companies, which were no longer record companies but CD companies, responded as pimps to thieves. Bertelsmann AG struck a deal with Napster while BMG Records, a Bertelsmann subsidiary, was suing Napster for copyright infringement. Napster folded, and the major labels launched their own streaming platforms. But new illegal streamers appeared: Limewire, Grokster, Pirate Bay. The streaming rate accelerated: 0.127 megabytes per second in 2000, 5.1 in 2010, 42.86 in 2020. The naughty trickle became a bit-torrent capable of washing away first the music industry and then the biggest money trench of all, Hollywood.
The sweet spot that saved the swinish generators of the music business from having to get honest jobs was Spotify, a streamer that pays royalties. Two Swedes, Daniel Ek and Martin Lorentzon, founded Spotify in 2006 as a platform combining the peer-to-peer sharing of pirate content with ad revenues for copyright holders. They thought they might win big with the biggest files, movies. They soon discovered they would win bigger with the smallest files, songs. The majors, staying afloat by catching the tide, negotiated with Spotify secret terms on streaming rates. Sony’s deal included a $25 million advance for the first two years’ streaming and free advertising worth $9 million, with no stipulation about paying any of it to the artists.
Streaming, Liz Pelly writes in Mood Machine, now accounts for 84 percent of recorded music revenues. Spotify, the biggest legal streamer, has 30 percent of that market, and its market capitalization has passed $120 billion. The digital music business pays performers in a similar way the analogue music business did. Pre-digital musicians could expect a “mechanical royalty” of up to 10 percent, and occasionally higher, on the sales of physical records and CDs. They also received a “performance royalty” each time a recording was played on the radio.
The analogue model survives. ASCAP and BMI, the major collectors of performance royalties, negotiate licensing terms with the radio stations, then divide it among composers and performers according to how many plays they get. The rates vary, depending on the time of day and the type of broadcast. Spotify’s royalty rate is $0.0035 per stream.
When the Beatles signed to Parlophone in 1962, their royalty rate was a penny for every single they sold. This meant that if “Love Me Do” sold a thousand copies, each member of the quartet would receive 15 British shillings; the same amount, as it happens, that Bob Cratchit received in 1843 for a week’s work on a clerk’s stool in A Christmas Carol. In today’s money, Ringo’s turn on the drum stool would earn him £13.72 (just over $17) for those thousand singles. Instead, he gets roughly $1 for a thousand streams. The Beatles’ early contracts are often described as exemplary in their unfairness—unless we compare them to Spotify’s terms.
Mood Machine is in the key of Thomas Piketty, and a sorry melody it is. The free market in digital music has mobilized a new technology and generated a new business, only to create market-distorting monopolies. From the 1950s onward, the music business used the radio to sell singles, and singles to sell albums. If you lived in a city, the employees at your local record store might expand your aural palette, too. Streaming has demolished all that. The listener selects individual tracks, and the algorithm does the rest. There is no human intermediation between the recording and the listener.
Streaming has also reduced royalty payments to a fraction of what they were. When Spotify is not selling music at a discount, it is giving it away. Spotify’s “freemium” model, with ads for the cheapskates and ad-free streaming for paying subscribers, has more than 615 million users, but only 239 million are paying subscribers. The Spotify model is licensed robbery—licensed by the major music companies who are the silent partners in the beggaring of musical copyright. When the old music business was riding high in the 1980s, songwriters might get 6 percent royalties and upward, and top artists might get 15 percent overall revenue from their contracts. When the major labels launched their streaming services, they lowered the royalty back to a Beatles-era 1 percent or less. Spotify lowered it further.
But Spotify has done more than dance to the majors’ tune. In theory, streaming offers infinite access to obscure recordings and minor genres. In practice, its “playlist data dashboards and automated systems” are designed to narrow what you hear. Spotify, Pelly writes, is a “new type of gatekeeper.” It sends feedback data to composers, so they can “optimize” their music’s reach by harmonizing their compositions with the platform’s algorithm. Its “discovery tools” analyze user preferences to refine the algorithm that shapes the playlists that keep us listening. It pushes inane and intrusive advertisements so that we eventually succumb and subscribe. Much like an old-time radio station, it massages our ears so that a background presence becomes an essential companion.
The ideal Spotify user performs “lean-back listening,” constantly employing the same mood music as a soundtrack to non-musical activities. Hence, the “Spotify sound,” a “deluge of platform-optimized pop that [is] muted, mid-tempo, and melancholy.” Exemplified by the dismally anhedonic Billie Eilish, the Spotify sound is the perfect soundtrack for such activities as self-harm in the bedroom and ingesting SSRIs in a coffee shop.
In 2013, Spotify launched in-house playlists. The pitch for “Grandma’s Home” reads: “It’s giving coastal grandmother, it’s giving Diane Keaton, it’s giving apple pies.” I would give money to avoid doing time in Grandma’s Home. In the same year, Spotify launched the “Discover” page, which used “collaborative filtering” to match your user pattern with those of users with similar tastes. This allows Spotify to recommend still more similar music. You have not yet heard it, but you feel like you already know it. This is because Spotify knows you, or your data. The future is Grandma’s Home, and there is no escape.
As Pelly adroitly describes, Spotify works in two directions. While it pumps music downstream to subscribers, it also pushes upstream toward the sources: the songwriters and the reservoir of copyright. In 2019 it launched songwriting camps, engaging artists who had previously worked well with the algorithm to compose new material for “flagship playlists.” Users who like new Irish music were directed to the “Breath of Fresh Eire” playlist. If they fit the profile for modern R&B, Spotify slid them into “Butter.”
This is the other “Spotify sound,” and the one that Spotify would prefer that you hear. If you stream “Love Me Do,” Spotify has to pay Ringo and the other chaps. If you stream “Butter,” Spotify pays itself. The players on “Butter” have taken a “buy-out” (an upfront fee) and alienate any claim to royalties. Like the songwriting camps, this is one of Spotify’s digital encroachments on what used to be the record companies’ turf. Fake bands, false attributions, “ghost players,” and buy-outs are as old as the record business. You may not have heard of Vinnie Bell, but you know what he sounds like: He is a silent partner in Simon & Garfunkel’s biggest tune. When folk-rock became popular, Columbia Records’ producer Tom Wilson dubbed an electric band onto a Simon & Garfunkel acoustic recording called “Sounds of Silence.” Vinnie Bell played electric guitar on the session.
Hello, darkness, my old friend. The sound of silence is Vinnie’s royalty check not hitting the mat. Pelly disapproves of “prefab instrumentals” and “ghost” playlists,” but it is hard to moralize about a business whose model has always been the extraction of pocket money from children. The songwriting camps are an update on the Brill Building of the 1960s, itself the heir to Tin Pan Alley. The old-school had “pay-to-play”: We paid to play on the stage, and the promoters were often thugs and crooks. Spotify has only the “aggressive marketing scheme” of “Discovery Mode,” which sells aural access to songwriters. In digital “payola,” no one gets kneecapped. Only the music is crippled.
Spotify’s ideal composer is someone who supplies “a constant drip of shorter, quick-hit releases to engagement-bait and trigger playlist algo-recs,” ideally taking the buy-out each time. The same could be said of most pop songwriting at any point in the last century: The songwriter who sits down to write “neo-Muzak” for Spotify is no different from the songwriter who, like every songwriter with any sense, sat down with the intention of writing a hit. The deeper digital difference lies less in efficiencies of production and delivery than in the collapsing of discrete but interwoven fields of artisanship (songwriting, studio performance, promotion) into a single medium, and at a royalty rate that amounts to indentured labor, only without the promise of release after a term of years. It is hard to see a future for record companies in such a business. Nor will Pelly’s kind of musician, the indie guitar throttler, make much of a living.
There’s also a negative side. The pop music business, Pelly writes, is really two businesses: “mood-enhancing background sounds” and “independent art-making.” It is now clear that the two cannot survive “on the same platform under the same economic arrangements and the same tools of engagement.” Under the frictionless tyranny of the streamers, all music is “flattened out into an endless chill-out stream.” As Radiohead’s Thom Yorke said when he withdrew the licensing for his solo work, the Spotify model is the “last desperate fart of a dying corpse.”
Pelly’s ideal alternative is a “more liberated and de-commodified cultural sphere.” In this spirit of hopeless idealism, she offers three solutions. The first, unionization and collective bargaining, might help a bit. When I was a working musician, I joined the Musician’s Union not because it guaranteed fees for jazz gigs (it didn’t), but because it guaranteed the fees for other types of work, especially theater and television gigs. I have no idea how Pelly’s putative union will extract union dues from the gangbanging rappers of Compton and the headbanging rockers of Akron, Ohio. Perhaps some toe-tapping Jimmy Hoffa will step forward.
The second option is state subsidy through Universal Basic Income (UBI), a luxury version of unemployment benefits, to be funded by taxing the streamers. In 2022, the Irish government, which gives generous tax breaks to artists who manage to make a living, launched a three-year Basic Income for the Arts program. Two thousand artists, including 584 musicians, received 325 Euros per week. For the musicians, it really was a breath of fresh Eire. They reported lower levels of anxiety and depression. As the money freed them from their day jobs, they were able to spend more time in the pub—sorry, working on their music. The French have had a similar system since 1936. But then, they barely work anyway.
I am all in favor of government’s intervening to break up corporate monopolies, but you can kill music with kindness as easily as with algorithmic coldness. Nothing in the history of subsidized artistic production in liberal states suggests that anything of value will be produced. The Stalinist cartoons of Diego Rivera are not a justification of the WPA but an indictment. This leaves the third option: forming profit-sharing independent streamers such as Catalytic, in which musicians pool their efforts and share the proceeds. It’s giving anarcho-syndicalism, it’s giving a digital update on analog indie music, it’s giving the good old days when the only digital music was the alarm tone on a Seiko watch. But this is not your grandmother’s music business. The streamers have burned Grandma’s home.
