For more crisp and insightful business and economic news, subscribe to The Daily Upside newsletter. It's completely free and we guarantee you'll learn something new every day.
When it comes to famous jokesters like John Mulaney, Tiffany Haddish, and Kevin Hart, Spotify isn't laughing.
The world's largest audio streaming service removed hundreds of comedians from its library in recent weeks, after they demanded payment for writing material just like songwriters do. It's just the latest development in a fight over how Spotify pays creators.
That Joke Isn't Money Anymore
"Streaming services like Spotify have been criticized for paying paltry amounts for plays on their platforms, which often get slashed into fractions of pennies and divvied up between performers, songwriters, and record labels. But, unlike with musical recordings, comedy albums on Spotify aren't considered written works like a song is, so comedians only get paid a performance credit and don't receive anything for writing their material like musical artists do.
When a Bruce Springsteen song gets played, he gets a performance and writing royalty. When a Patron Oswalt bit gets played, he only gets paid for the performance. Spotify signed deals with comedians labels that it understood meant this was OK, but global rights agency Spoken Giants, which represents many of the comics who were cut, wants the deal to change, which would require Spotify to pony over more cash. But if the experience of songwriters says anything, it's that getting Spotify to boost royalties is a difficult task:
- Songwriters have fought streaming services over payments that, according to The National Music Publishers Association, are worth just one fifth what labels and recording artists get paid out — but an NMPA proposal to raise the rate to 40% of what labels are paid was rejected.
- The NMPA also proposed streamers — including Spotify, Apple, and Amazon — pay publishers and songwriters the largest of four sums: 20% of revenue; 40% of what is paid to record labels; $1.50 per subscriber; or $0.0015 per stream, but streamers have fought this as well.
The Punchline: Spotify — which insists it's not focused on profitability — projects it will have over 400 million users by the end of the year, and already has 165 million paying Premium subscribers. That's a massive audience for the affected comedians to sacrifice.