Death by streaming | Review of Liz Pelly’s Mood Machine

When Spotify first started gaining serious traction as an audio streaming service in the early 2010s, its brand positioning was quite clear. The claim was that it was standing up for the little guys, the independent artists, against their oppressors i.e., major record labels such as Sony or Universal.

Those bullish on the company and other startups disrupting the entertainment industry would often use the language of ‘internet evangelism’ to back up their points. How algorithms ‘democratise’ an industry, how a ‘free and fair’ internet would raise the quality of democracy around the world — these were the naïve visions of techno-optimists 12-15 years ago.

But as Liz Pelly shows readers in her excellent book Mood Machine: The Rise of Spotify and the Cost of the Perfect Playlist, that vision was corrupted very soon, and Spotify quickly made deals with the Big Three (Sony, Universal and Warner) that consolidated their own market position. And of course, this involved hurting smaller indie labels as well as smaller musicians who produced their own tracks. A number that has often been thrown around when we talk of Spotify and musician payouts is $0.0035 — that is the estimated revenue per stream Spotify pays to an artist. Basically, one-third of a cent.

Opaque payment system

This number is supposed to be indicative of average payouts, because as Pelly explains, Spotify doesn’t actually pay artists per stream. It doesn’t even directly pay artists at all. Instead, Spotify makes pro rata payments every month to the record label or aggregator that’s representing the artist. And because Sony, Universal and Warner make up over 70% of all recorded music, we are back to square one. The opaqueness of the payments system, as Pelly rightfully points out, is very much by design.

She writes: “The penny-fractions discourse also tells us something else: over fifteen years into the era of music streaming, most artists and listeners cannot explain how the value of a stream is calculated. The U.S. Congresswoman Rashida Tlaib estimated in 2023 that it would take over eight hundred thousand streams per month to make the equivalent of a $15/hour job. But as a representative of the United Musicians and Allied Workers (UMAW) told me in an interview, an outsized percentage of working musicians cannot accurately delineate what percentage of their income comes from streaming, simply due to the absurdly complicated nature of the system.”

Mood Machine is the result of a rigorous, years-long journalistic investigation, and the author’s thoroughness is visible. Especially in the book’s second half, where she draws up a list of basically every corporate misdemeanour ever carried out by Spotify. And it does not make for pretty reading if you are an independent musician.

Corporate misdemeanours

“(…) playlists heavily dominated by major label acts, endless feeds of neo-Muzak loaded with ghost artists — anonymous, stock music commissioned at a discount — and a series of pay-to-play schemes. Those include the controversial Discovery Mode programme, which sells (mostly independent) artists and labels algorithmic promotion in exchange for reduced royalty rates, and frames it as an ‘opportunity.’ This cost-saving initiative is a move popularly regarded as a new type of payola, the term that emerged in the 1950s to describe the process of record labels making under-the-table cash payments to radio stations in exchange for airplay.”

There is, of course, a deep irony in Spotify, the company that promised to put the people first when it comes to payouts and royalties, now commissioning AI-generated elevator music, the making of which involved zero human brains and zero human hands. But the pay-to-play schemes are arguably more egregious. Think about this coolly for a minute — this is a company abusing the dominance of its platform to extort small musicians and small-scale record labels, and it has somehow managed to spin this deeply cynical ploy into a kind of charity. Even Amazon, when it was caught favouring its own white-label brands in terms of search visibility, had the decency to say ‘mea culpa’ and try to make amends.

Mood Machine is a book about some alarming things, but it never devolves into alarmism. Instead, it calmly and systematically makes its case about Spotify and in its concluding chapters, offers case studies and market models that promise harm-reduction and maybe even a sustainable path forward. A highly recommended read for anybody curious about how audio streaming actually works.

Mood Machine

Liz Pelly

Hodder and Stoughton/Hachette India

₹699

The writer and journalist is working on his first book of non-fiction.