Daniel Ek resigning alters nothing for Spotify

Spotify has become the focus of musicians’ complaints for various reasons throughout the years: poor sound quality, insufficient royalties, paying Joe Rogan several million dollars… the list is extensive. However, lately it’s been Daniel Ek’s outside interests that have caused the most uproar. His financing of the German defense firm Helsing via his investment firm Prima Materia has been the tipping point for numerous artists, including Hotline TNT, Massive Attack, Godspeed You! Black Emperor, Deerhoof, and others.

Then, on Tuesday, Ek revealed that he would be stepping down from his position as CEO. Neither Ek nor Spotify suggested that the rising outrage regarding his shift to warfare motivated this decision. However, if the company had hoped that replacing Ek in the CEO role would halt the influx of artists departing the platform, I have unfortunate news.

The Verge contacted various artists and labels that had withdrawn their music from Spotify, and it appears none of them intend to revise their positions in the near future. This reluctance stems partly from the understanding that Ek’s title alteration is just superficial. He will continue as the executive chairman and was quick to diminish their authority in the announcement regarding Gustav Söderström and Alex Norström being appointed co-CEOs, stating, “Gustav and Alex will still report to me … I will be more involved than some of my U.S. counterparts who hold a Chairman title.” When asked about how Ek’s role would evolve, Spotify opted not to provide a comment.

Thus, while Ek may relinquish some responsibility regarding daily operations, he will maintain significant influence over company decisions. Jeremy Leaird-Koch, who releases music under the alias Jeremy Blake and operates the YouTube channel Red Means Recording, had his music removed in July. He told The Verge that this boardroom reshuffling “changes nothing.” He quickly pointed out that “an Executive Chairman is a key leadership position that leads the board of directors while also maintaining an active, strategic, and often hands-on role in the daily business and executive management of the company.”

Will Anderson of Hotline TNT shared a similar perspective, stating to The Verge, “By their own admission, nothing is expected to change. Their declaration indicates that the move ‘formalizes how Spotify has effectively functioned since 2023’. To me, this suggests the company is conscious of changing public sentiment and is attempting to promote a minor title change for their CEO to regain goodwill before things spiral further.”

Colin Volvert, label manager for Kalahari Oyster Cult, which withdrew its entire catalog from Spotify in June, was also unfazed. “We remain cautious about developments, but as it stands, this is merely an optics-driven management stunt,” he told The Verge. “Not exactly the fresh start we had hoped for. More likely, it frees him to pursue his more controversial endeavors.”

What Anderson, Leaird-Koch, and others have made clear is that this is not solely about Daniel Ek. Anderson remarked, “Our grievances with this specific streaming service extend far beyond one individual.” His “financing AI combat technology,” in Deerhoof drummer Greg Saunier’s terminology, was merely the latest issue in a long list. Satomi Matsuzaki, Deerhoof’s vocalist, made a firm statement to The Verge:

“We will not return to Spotify unless they begin to treat every artist with respect and compensate them fairly. They must cease profiting from AI fraud. Artists struggle to make ends meet. Spotify’s payment of $0.003 per stream won’t even buy us a can of soda. Their system will not transform significantly. The good news is that Deerhoof will continue to exist outside of Spotify if you search ‘Deerhoof’ on any search engine. Spotify does not dictate our existence.”

The payments from Spotify have long been the primary concern for artists, and without alteration, it’s improbable that this recent exodus of musicians will abate. Spotify offers one of the lowest per-stream payouts in the industry. Most estimates place it between $0.003 and $0.005 in recent years. (However, Spotify’s opaque method of determining royalties complicates things.) It’s the principal reason that major artists like Thom Yorke and Taylor Swift have removed their music from the service previously, although both have eventually returned. For lesser-known artists, those whose tracks receive fewer than 1,000 plays annually, the payout amounts to $0. The company’s payments are so minimal that they have drawn the attention of the European Parliament and the United States Congress.

The concern extends beyond simply devaluing artists. In 2024, the platform modified its Premium plan to incorporate audiobooks, enabling it to diminish royalty payments by bundling audiobooks with music. With significantly more hours of content to allocate subscription revenue, royalty payouts decreased by $150 million, while Spotify’s revenue continued to rise significantly. The underhanded strategies employed by the company to artificially lower royalty rates were even the subject of a bipartisan demand for investigation in June — a rare case of Senate Republicans and Democrats agreeing that Spotify has gone too far.

Leaird-Koch views this prioritization of profit over artistic value as the core issue. “Spotify will need to undertake substantial efforts to reverse many damaging choices they’ve implemented over the years. I do not foresee that occurring in a publicly traded company committed to generating profits for shareholders,” he stated.

Some artists have shown that while it might not always be simple, it is possible to achieve success without Spotify. Joanna Newsom has consistently kept her music off the platform, referring to it as a “nefarious cabal” in an interview with the Los Angeles Times. Meanwhile, Cindy Lee gained recognition as a critical favorite with Pitchfork’s top record of 2024, Diamond Jubilee, but it remains unavailable on streaming platforms.

With the rise of AI imitations, ties to controversial figures, and abysmal payout rates, Spotify carries considerable additional baggage beyond Daniel Ek’s investments in military firms. Xiu Xiu’s Jamie Stewart informed Anthony Fantano that “our absence from Spotify won’t financially impact them. It primarily relates to our ethics.” However, Anderson was somewhat hopeful about artists’ capacity to instigate change: “It appears that Spotify is shaken, and rightfully so.”