DISTURBED’s DAVID DRAIMAN: Streaming Services Like SPOTIFY ‘Saved Music’

DISTURBED frontman David Draiman says that streaming services like Spotify and Apple Music “saved” the music industry.

The 48-year-old singer shared his opinion after a video compilation surfaced of podcaster Joe Rogan repeatedly using the “n-word” on his “Joe Rogan Experience” podcast, which first launched in 2009 and became exclusive to Spotify in late 2020, prompting renewed criticism against both Rogan and Spotify at large. Just a couple of weeks earlier, Neil Young and other musicians pulled their music from the platform over their belief that Rogan and his guests spread COVID-19 misinformation. Meanwhile, some musicians have taken the opportunity to open up larger conversations about Spotify‘s payout structures, artist rights, and the streaming economy at large.

Draiman addressed Spotify‘s payment rate to artists in a series of tweets on Wednesday (February 9). He wrote: “All those attacking @Spotify, young and old, would do well to remember a couple little things called MUSIC PIRACY, and BITTORRENT SITES.

“Before streaming took hold, both artists and the very music industry itself was on the verge of collapse. Why? Because the heads of the major labels at the time refused to see the future when a young Sean Fanning and Sean Parker, the guys behind a little startup called @napster, approached them with a new way to reach their consumers at unprecedented levels, and they shot them down. So instead, Fanning and Parker let Napster do it’s thing for free. Piracy and BitTorrent sites soon followed along with the new perception that ‘music should be free’. Artists suffered, record labels suffered and the industry itself nearly collapsed. It took STREAMING to bring it back to life. Streaming made the labels profitable again, made catalog artists regain a royalty stream, and made Piracy obsolete. Streaming made legacy artists catalogs, like @Neilyoung and others tremendously valuable. It created the current environment where people stream their music, and where musicians had the opportunity to sell their catalogs, which had regained their value, like Neil did.

“Could or should @Spotify have a better streaming royalty rate?” he continued. “I believe so… …but it doesn’t take away the FACT that without streaming, there would no longer BE A MUSIC INDUSTRY, and these artists who are complaining after they already sold their catalogs for gargantuan sums of money, would be liquidating their assets… …and many would be struggling to survive.

“Artists you want to blame someone? Blame the heads of the labels in the days prior to Napster who refused to adopt new technology in favor of an antiquated retail system that had a higher profit margin. Blame your lawyers and your management for not negotiating a better royalty percentage in your respective record deals, and blame YOURSELVES for not paying attention to it.

“The majority of the legacy artists out there have newfound riches from streaming… …and music fans have easier and higher quality access to the widest range of music in existence,” Draiman added.

“In summary, stop bitching, educate yourselves and read your damn contracts.

“Streaming saved music. Wether you want to accept it or not…its the TRUTH.”

Draiman, who has been a vocal supporter of Spotify for years, previously discussed the paltry payments streaming services pay out to music rightsholders in a 2016 interview with “The Jasta Show” podcast. At the time, he said: “It’s a simple thing. It comes down to very, very basic principles. The question is, for your individual recording contracts, with whomever you’re signed with, what is your digital royalty rate? If it’s treated a license, that’s a 50-50 split. If it’s treated like however they want to go ahead and put it your fine print, and they’re giving you 0.04 percent of what they’re taking, well, then you can only blame yourself for not reading the contract, number one. Number two, the biggest problem is that when streaming services make deals with record labels, they make deals based on their entire catalog. So any label will license their entire catalog for, let’s say, ten million dollars. And over the course of that year, it only generates five million worth of spins. What happens to the other five million? They keep it. And it doesn’t go to the artists and it doesn’t go back to the streaming service. The record label pockets that. So all of that additional revenue that is pulled out unnecessarily, because it’s unjustified, right? — ’cause it should be spin per spin, right? — instead they say, ‘Hey, our catalog is gonna be worth ‘X’ in the next year, give us this.’ They are forced to agree to it, because it’s the only way they can legally stream the stuff on their platforms. And that’s why, if you just saw, and if you look at every single record label’s bottom line, digital has become the bulk of their profit margin, or leading towards profit. Warner Bros. just issued a statement this past quarter where it’s the smallest loss they’ve seen in years, and they’re going more and more into the positive, because of what they are generating from digital and streaming services. So it’s not that there isn’t money to be made. The issue is, take a look at your recording contracts, make sure you know what you’re getting, and whether we like it or not, streaming isn’t the big demon here; YouTube is the big demon. When you’re being paid a sixth of what a streaming rate would be, and they’re claiming that they’re giving you all the bang for your buck because of exposure when you’re the reason why people are going ahead and advertising, that’s the criminality.”

He continued: “The industry is creeping — and, unfortunately, it’s a creep — slowly, slowly towards finally making this whole digital concept a little bit more transparent; they’re gonna have to, one way or the other, eventually. When they do, just for accounting purposes, for data collection purposes, because that’s what ninety percent of these things end up being — big data plays — they’re gonna end up having to be accountable.

“Look, the Irving Azoffs of the world, the big heavy hitters of the world, are pushing us forward in that direction. I applaud Nikki Sixx and the guys from SIXX:A.M. for taking a strong stance on the YouTube issue. There are a number of people out there who are doing it right. But people are very quick to demonize streaming services. Spotify and entities like it were created to directly combat piracy. Piracy is the issue, and that’s what people are forgetting. It’s almost like the media is putting so much hype on these paltry royalty rates, when, in truth, at least there is a royalty rate. You get nothing from piracy — absolutely nothing — and you have an entire generation of fans that have been raised to think that that’s okay, when it still isn’t.”

Draiman added: “All of these streaming services are still — and Spotify in particular — seventy percent of their proceeds are going back towards license holders. License holders — that’s the key. But not only that. You can’t look at streaming as something that’s supposed to replace physical sales. Physical sales are done; they’re done. In two years, you won’t see records in stores anymore, period. The CD will be as extinct as the VHS tape just became recently; it’s just a matter of time. So the entire environment has shifted. The industry is finally adjusting towards it. It’s a painful adjustment period, it’s gonna take time, but it’ll get there, and whether we like it or not, the revenue stream will never be the same. So we need to then re-approach things, simply deal with the status quo, try and make these royalty percentages better, more in our favor, be smart about the recording contracts you are signing, pay attention to the fine print, and make sure you know what you’re doing. Start maximizing your touring, start maximizing your merch. You need to view streaming the same that we’ve always viewed publishing. Same thing — you are being paid per spin, not per sale. It’s not the same thing. So streaming royalties are not a whole lot different than publishing royalties. Physical sales may simply no longer be something we can count on, and that is a very hard pill to swallow.”

Spotify‘s total monthly active users grew 18% year over year to 406 million during the fourth quarter of 2021. Its paid premium subscribers grew 16% to 180 million, while its ad-supported monthly active users increased 19% to 236 million.

Spotify has never turned a full-year profit since being listed in 2018.

A major part of Spotify‘s expenses are the royalty fees that the streaming platform has to pay to the music artists and license holders.

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