Committee Description

Despite its dominance in the global music streaming industry, Spotify faces significant financial and reputational challenges. At the core of these issues is the ongoing controversy over artist royalties. Many artists argue that the $10 billion in royalties Spotify reported paying out in 2024 is still insufficient. The platform pays musicians approximately $3 for every 1,000 streams, significantly less than what competitors like Apple Music and Amazon Music offer. This disparity has sparked public outcry, with Grammy Award winners and nominees such as Neil Young threatening to remove their content from Spotify, and Snoop Dogg repeatedly posting on Instagram calling for a restructuring of the royalty system.

From a business standpoint, increasing royalties could strain Spotify’s profitability, potentially impacting stock performance and investor confidence. The company must strike a balance between consumers’ expectations for affordable streaming and artists’ demands for fair compensation. Furthermore, Spotify risks losing exclusive content deals, vital to maintaining market share, as competitors offer more attractive payouts. Independent and smaller artists are particularly affected. The maximum payout per stream on Spotify is just $0.003. As of 2024, Spotify stopped paying royalties on tracks that receive fewer than 1,000 streams annually, redirecting those funds to more popular artists. While this benefits major artists, others are now earning nothing from the platform. This policy has sparked outrage among musicians—an outrage that is beginning to spread to their fanbases.

Moreover, listening to music has become a private and solitary activity, contrasting with the once-social nature of the experience. However, audience preferences are shifting again, many are growing tired of digital music consumption and craving live, communal experiences like music festivals. Should Spotify invest in artist-led live events? With artificial intelligence (AI) reshaping the tech landscape, Spotify has embraced AI to expand its offerings. It introduced an AI DJ that curates music like a personalized radio station and recently launched an AI assistant that generates playlists based on user preferences, for example, producing a custom "study playlist" on demand. While these features have been well-received, they have also faced criticism. Spotify leadership found AI more efficient than human curation, leading to workforce reductions. To date, 17% of Spotify’s employees have been laid off, prompting further backlash.

If you have any questions, feel free to contact Paul Rafael Malpartida Durroux at spec@ssuns.org

India Aim Bejaoui

Chair

Lea Hamze

Vice Chair