Spotify's 'tip jar' is a slap in the face for musicians. It should pay them better

Wednesday’s announcement by the government’s chief medical officer, Chris Whitty, that social distancing in the UK could last for the rest of the year is terrible news for anyone bar lavishly wealthy introverts, but professional musicians will be among the most acutely worried.

Decades of technological change have made musicians particularly reliant on live income. Once, you toured to promote album sales on CD, cassette or vinyl; now, streams of your album make you a pittance unless you are extremely popular, and are mainly promotional tool for tours. With venues closed – along with clubs and shops, where your music might have been playing, accruing you a little more royalty cash – a large part of your revenue is gone.

Spotify has acknowledged the new hardships facing musicians by adding a feature to the streaming service: a button that, if activated by the artist, allows users to directly donate to them via the digital wallet services Cash App and Paypal.me. Artists can also use the button to raise donations for coronavirus relief.

There’s more unpacking to be done here than in a Tesco loading bay during the crisis. First, that charity option has added needless moral quandary. The general perception of your average musician – a hangover from the better-remunerated CD era – is that they’re sitting around in clothes bought by their label, idly jotting down a chorus after a searching conversation with their French bulldog. For them to ask for fans’ money rather than making a charity plea will easily make them seem craven and selfish.

The reality is, as the US guitarist Chris Forsyth told me at the outset of the crisis: “A lot of fans don’t realise how low the margin for error is for a lot of musicians you see in the media . They are often making the same amount of money as a bartender.” Musicians need this money – but can their need be fairly compared with those of healthcare services? Spotify’s courting of charity donations should have been made in a different context from one where they’re trying to raise money for musicians. By combining them, it has undermined both types of giving.

Raising money for musicians is what Spotify’s business model already does, in its begrudging and miserly way. The company generates income through subscriptions and from advertising fuelled by people wanting to listen to music. The income that is then partly funnelled back to the musicians as royalties. This royalty rate varies depending on location and whether the stream is paid or ad-supported, but is extremely low whichever way you cut it.

Spotify’s method of generating the premium subscriptions that will turn it a profit was canny: draw people in with an excellent user experience and relatively light advertising in the free version during its early years, then ramp up the advertising to near-intolerable levels and wait for users to cave in to spending a tenner a month. Many casual music fans are now spending money more regularly on music than they did in the download or CD era. But the nature of the exchange has utterly changed: people are not paying for music but for a lack of advertising. The music is available either way.

This is why the inclusion of the “tip jar” button is such a slap in the face for artists: it’s being initiated by the very service that helped to break the link between art and money. By paying royalties via both ad-funded and paid-for streams, Spotify has taken the onus off the consumer to pay the artist, and then, via low royalty payments, quietly eroded the monetary value in music that consumers and labels once propped up. The tip jar, while helping to replace lost touring earnings, is a tacit admission that artists are not being paid enough by the very service offering it – a similar admission was made by Amazon on Thursday in revealing that it paid £250,000 to a coronavirus hardship fund for authors.

Looked at in isolation, the tip jar is a good thing. It reinstates that old financial link to a certain extent – a similar contract to the one made when you bought a CD, where your money was channelled towards one artist. Fan culture is one of the great intangible assets for a musician. It’s an engine that powers their popularity and indirectly funds their lifestyles through merchandise, concert tickets and more. With the introduction of direct-to-artist payments, that intangible becomes more tangible again, and artists can directly leverage their fans’ goodwill. Perhaps some will feel a moral queasiness at how naked this makes the transactional nature of art and commerce; others might feel a kind of snobbery, that they’re no busker. The dramatic reality of the pandemic will likely steamroller such objections.

Behind all this, we continue to stream music – it is one of the only ways we can hear it now. Spotify continues to generate profit from that streaming, as it stabilises after the huge expenditure of its development years. Royalty levels must increase in accordance with that ever-growing income; Spotify must not cut itself out as the middleman and outsource compensation of artists purely to consumers via tips, given it has created a business thanks to both parties.

For consumers, Spotify’s staggeringly vast and high-quality library remains one of the greatest things to have ever happened in music, but it is nothing without the artists who add to that library every day. Maybe subscriptions should cost more – the competitiveness between the streaming companies has forced down the value of music, and this now perhaps needs correcting. That would require a recalibration of how we value music, and it would need Spotify and its competitors to lead it. For now, donate to your favourite musicians, buy their T-shirts, cherish their artistry, and never let the company that built an empire from their labour off the hook.