Will Books Survive Spotify?

Spotify may have made it easier than ever for us to listen to an enormous trove of music, but it extracted so much money in doing so that it impoverished musicians. Now the company is turning its attention to books with a new offering. It will do the same thing to writers, whose audiobooks Spotify has begun streaming in a new and more damaging way.

We’ve read this story before. Tech platforms and their algorithms have a tendency to reward high-performing creators — the more users they get, the more likely they are to attract more. In Spotify’s case, that meant that in 2020, 90 percent of the royalties it paid out went to the top 0.8 percent of artists, according to an analysis by Rolling Stone.

That leaves the vast majority — including many within even that small group — struggling to earn a living. The promise of the business strategy laid out in the book “The Long Tail” was that a slew of niche creators would prosper on the internet. That has proved illusory for most content creators. It’s a winner-takes-all game; too often the tech platforms aggregating the content and the blockbusters win it all, starving the vast majority of creators. The result is a gradual deterioration of our culture, our understanding of ourselves and our collective memories.

This is why regulation is so crucial. Before writing books, I worked at Google, leading three large sales and operations teams and before that, I was a senior policy adviser at the Federal Communications Commission. What I learned is that today’s tech platforms are different from the kind of monopolies of an earlier era that inspired our regulatory framework. Their networks can have powerful positive or negative impacts. We don’t want to regulate away the value they can create, but the damage they can cause is devastating. We need a regulatory framework that can distinguish between them.

To explain why content creators continue to lose at the hands of distributors/platforms, it’s helpful to understand the three mutually reinforcing networks that characterize most tech platforms.

A successful tech “content aggregation” platform has three networks: content creators, users and advertisers. Many networks have so-called positive externalities, which effectively mean that growth builds more growth and usability. A telephone network that allows you to call only half your friends would be far less than half as valuable as one that allowed you to call all your friends.

The network effects of a platform are more complicated because each component reinforces the others. The more content, the more users; the more users, the more content, and so on. Once the platform has enough content to get enough users, then it can also get advertisers. If the platform shares advertisers’ money with the content creators, more content gets created, which attracts more users, which attracts more advertisers, and so on. If the ads are relevant, nonintrusive, and do not invade one’s privacy, that is good for users, because the advertisers are paying for the content. It is also good for content creators, because more users will interact with content they don’t have to pay for. It can be a virtuous cycle.

However, when the platform extracts too much and shares too little, it harms the rest of the ecosystem. Once a tech platform has a critical mass of users, it can start squeezing content creators. Most people can’t afford to work for free, so they quit creating. How, then, does the tech platform continue to grow? Often by sending users to lower-quality content that is free or almost free to produce. For example, songs seemingly created by A.I. are apparently being uploaded to Spotify and recommended to listeners. And of course, the platform may simply serve irrelevant, intrusive, privacy-invading ads or even sell their users’ data.

Let’s recall what Spotify did to the music industry. Streaming royalties are a pittance compared with à la carte sales — the pricing model changed to Spotify’s current $10.99 per month for access to millions of songs from around $10 for a downloaded album, $13 for a compact disc and $24 for a vinyl record a decade ago. The result? Many would-be musicians cannot afford to pursue their art. That is why, as of 2022, the market for new music is shrinking; the growth in the market is coming from old songs.

On Nov. 8, Spotify started its audiobook program in the United States in an attempt to replace its previous à la carte audiobook sales system. Under this new offering, Spotify premium subscribers get 15 hours of audiobooks a month for no additional cost. The company is already wooing publishers and authors with promises of new readers, much as it promised the music industry an expanded audience.

But the largest demographic group of its premium subscribers is the same as those who already listen to a lot of audiobooks (18-to-24-year-olds, followed by 25-to-34-year-olds). Inevitably some in this group will transition from paying for audiobooks to listening to a portion of those audiobooks as part of their existing Spotify subscription.

Even assuming Spotify attracts some net new readers, those gains will be offset by another company invention: While Spotify struck different deals with different publishing houses, in general, authors will be paid in full only if users finish the book. If the user listens to only a portion of the book, the author gets paid only for the amount of time the user listened. Given that many books are sold but never finished, many authors will likely make significantly less under this model.

Spotify will also likely put a thumb on the scale of which audiobooks find an audience. It is, seemingly, pushing users to old, out-of-copyright books like, bizarrely, works of Karl Marx. Or it’s pushing content from blockbuster artists with whom it hasa relationship. Some users told me they were being sold on the new Britney Spears autobiography, regardless of whether they were a person likely to be interested in Britney Spears or not. The middle class of book creators looks set to be even more squeezed, and revenue seems likely to be even more concentrated in the 1 percent of authors.

Furthermore, the complexity of auditing Spotify’s reporting on who listened to how much of what and how that translates to royalties sounds like a fresh hell for writers and publishers alike.

The publishing industry has already been squeezed by the rise of Amazon and a broader industry consolidation that has narrowed success to a smaller field of winners, but the business has remained relatively intact because even Amazon still prices books by the title. If the industry moves to a Spotify pricing model for audiobooks on other platforms — like Audible — that, combined with the company algorithm, will damage publishers and authors alike. Authors: We can act collectively. I asked my publisher not to include my books in this new offering and encourage you to do the same. My publisher honored my request.

Spotify could take the long view, and not abuse its market power to extract more from the already paltry payments to writers. After all, it is in Spotify’s long-term interest to keep the quality of music and books high. However, if I were chief executive of Spotify, I too would be a lot more fixated on the company’s growth and profitability than enriching musicians and writers. Expecting anything different is not realistic. As for consumers — trying to pressure them to boycott a dominant service because of systemic problems is probably the least effective solution.

A tech platform should not be allowed to use its market power to steadily decrease payments to content creators, to sell user data and to price gouge advertisers. Obviously, those are problems that go beyond Spotify. Amazon, Facebook, Google, TikTok, Twitter and other tech platforms pose the same risks as well. Regulators should create rules that can distinguish between the positive and negative impacts these platforms create.

In the best of times it’s hard to make a living as a writer or a musician. The best of times, these are not. Now more than ever we need new music and ideas to remind us of our shared humanity. We need to feed — not starve — our artists.

Kim Scott, the author of the book “Radical Candor: Be a Kick-Ass Boss Without Losing Your Humanity” and the forthcoming “Radical Respect: How to Work Better Together,” was an executive at Google and Apple.

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