It used to be said that you could walk from the west of Ireland to Nantucket on the backs of the cod, so thick was the Atlantic with the fish. But as readers of a certain age will remember, by the last decade of the last century, it was looking doubtful that the cod population would see this century out to the end. By 1992, the cod population was one hundredth of its historic level.
We knew that the way we were fishing was, in that unappealing but apt vogue-word, unsustainable. The fishermen themselves knew that it was unsustainable – that they were destroying the very resource on which their livelihoods and futures depended; that they were, in effect, sawing off the branch they were sitting on. And yet, for years, the overfishing… just sort of happened. The logic of competition, and individual short-termism, added to the difficulty of regulating the open ocean, drove this weird industrial suicide-loop and the attendant environmental catastrophe. It’s a pretty good instance of that quirk of economics sometimes called the tragedy of the commons.
It was the fate of the Atlantic cod that came to mind as I read a report yesterday about how shockingly little musicians and songwriters are getting paid for their work on streaming services. This is not, it should be said, a bolt from the blue. Fully fifteen years ago, I remember writing in response to the story that Lady Gaga (remember her) had earned just $167 from Spotify after one of her songs was streamed a million times.
Spotify are in a position to squeeze both their suppliers and their customers with impunity
And here we are again. A Welsh indie band called Los Campesinos! decided to figure out how much money they were making from each music streaming service each time someone listened to their album All Hell. The most they were making was 0.75p – from a service called Tidal – and the least was, ta-dah!, Spotify, which at 0.29p per stream was paying a bit less than two-thirds per listen of what most of its competitors paid. And yet, be it noted, at nearly 7 million listens, Spotify represents the lion’s share of the band’s distribution and income. There’s a direct proportionality between the market dominance of the company and its exploitative relationships with the people who make its business possible in the first place.
With Spotify, incidentally, there are some extra miserly twists in the business model. One is the traditional big-tech arm-twist. Like Amazon and Google and Meta, they are so dominant in their markets – so locked in with incumbency and network effects and barriers to exit – that they’re in a position to squeeze both their suppliers and their customers with impunity. Further, they don’t actually allocate royalties per stream, as would seem intuitive: rather, they dollop the portion of their income from subscribing customers into a big pot (diluted, of course, by the free-with-ads customers), and divvy it up according to how big a share of the total streams for that territory the artist represents; which is in turn distorted by major labels paying to promote their artists through playlists. Goodish news for the likes of Taylor Swift. Not so much for Los Campesinos!
Further still, the deals are made with the rights-holders – usually record companies – and Spotify long ago signed sweetheart equity deals with the ‘big three’ record companies (Sony, Warner and Universal own more than 70 per cent of all music recordings and 60 per cent of compositions rights) meaning that those companies get paid megabucks whether or not their artists do; indeed, the less Spotify pays artists the better the bottom line for its co-owners. So, as Cory Doctorow and Rebecca Giblin have pointed out in their book Chokepoint Capitalism, the record companies have no incentive whatsoever to go into bat for their artists’ rights.
Why did I think of the cod? Because Spotify would not, could not, exist were it not for the musicians and songwriters who produce the material it’s selling to the public. And because, even if Spotify is the worst offender, it’s dizzying to consider that the fact that paying a musician a royalty of less than a penny on an album is taken for granted as normal. These services depend on musicians for their very existence, and they are sawing away at that branch like fury. No music, no Spotify or any other streaming service worth talking about (or, rather, a nightmare future represented by Joe Rogan stamping on a human face forever).
The same, I would say, goes for the AI companies whose slop-generation models wouldn’t exist at all were it not for the copyright material – millions of books by millions of authors; millions of paintings and drawings by millions of artists – they have infringed without permission or compensation. The business model is parasitic – and it’s that particularly stupid species of parasite that, in the long run, kills its host. This is not, as its tech-bro CEOs with their gruesomely sticky copies of Atlas Shrugged would have it, good old capitalism working as it should. The so-called free market is not free, and it is not working. It’s just making a handful of rent-seekers with their thumbs on the scales very rich in the short-to-medium term and wrecking the fisheries in the long term.
I remember a few years ago interviewing the economist Joseph Stiglitz about his book People, Power and Profits: Progressive Capitalism for an Age of Discontent on The Spectator’s Book Club podcast. When I said that some of his more red-blooded compatriots seemed to see him, Nobel Prize or no, as some sort of commie, he shot back very determinedly that he was a devout believer in capitalism. His objection to big tech was a capitalist’s objection – which is that monopolies are impediments to capitalism working as it should. The absence of regulation does not a free market make.
Those cod, incidentally: they recovered. But they did so not because the Invisible Hand swept in to save them. What saved them was governments and international bodies belatedly pulling their thumbs from their rear ends and applying some regulatory tough love.
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