Bye, Spotify: Musicians Take Back Ownership With This Cooperative

There is a streaming service that can benefit both artists and listeners.

What Spotify does in 150 to 200 plays, this platform does in nine.

Photo by Tanner Boriack

Jon Davies has set out on a career creating experimental music about the exploitation of people and the environment. Like many independent artists, Davies doesn’t expect to earn much profit from digital downloads or streams of his music, so he relies on a handful of side hustles to make a living.

He works five days a week as an usher at a local music venue in Liverpool, U.K. He also seeks out freelance writing gigs and performs at Café OTO in order to scrape together the 500 pounds needed to pay his monthly rent and bills. Making money off his music online just isn’t in the picture.

“From my own experience, I tend to just not make any money from streaming [services],” Davies says.

He has been making music under the alias “Kepla” for around three years. He was searching for an alternative to big streaming platforms like Spotify, which pay artists tiny amounts of royalties per stream, when he came across Resonate.

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Resonate, based in Berlin and established by founder and CEO Peter Harris in 2015, aims to put the money and power in the hands of the artists. It does this through three main selling points: an alternative to a monthly subscription service, an innovative technology that allows for a more transparent and efficient way of paying artists, and its cooperative model.

“It’s a protest against capitalism, it’s a protest against the Silicon Valley model of startups and platforms, and, in some sense, it’s a protest against the way music is now being distributed and consumed,” Harris says.

Harris is a musician and electronic artist. After trying out his music on various streaming platforms, he realized that none could offer him the experience he wanted—so he created his own.

According to The Trichordist, each time a song is streamed by a listener on Spotify, the artist earns an average of $0.00397 in royalties—less than four-tenths of 1 cent.  And yet, Spotify is the second most popular music streaming service, behind Apple Music, with 70 million paid subscribers worldwide.

“Many independent record labels have refused to go on record because they’re afraid that if they criticize Spotify, they’re somehow going to get blacklisted,” Harris says. “That’s a really dangerous power dynamic, and it also reveals that there’s a strong desire for something different.”

“Models like Spotify and iTunes aren’t built to sustain a class of artists.”

He also says comparisons to Jay-Z’s Tidal, which also claims to give more power and profit to the artists, are off the mark.

“If they had gotten up onstage at [Tidal’s] big announcement and next to every one of those stars was someone totally unknown, and they’d said, ‘We’re going to build a service for the big names and people you haven’t heard of,’ then maybe Resonate would have never needed to exist,” Harris says. “The reality is, the artists who own it are a very small handful of extremely rich stars. We contrast that against Resonate, where every single artist and member owns it.”

According to a 2014 report from MIDiA Consulting, 77 percent of recorded music revenue goes to the top 1 percent of artists.

“I’ve experienced firsthand how hard it is for artists from these backgrounds to actually make money,” says Natalia Linares.

Linares worked in the music industry for 12 years as a publicist and manager for independent artists, experiencing how unfair the business is, especially for artists from minority backgrounds. She is now a board member for Resonate.

“It’s very exploitative, and models like Spotify and iTunes aren’t built to sustain a class of artists,” she says. “If [Resonate] can work, and we can build this and show that it is possible to build a platform that artists and listeners actually share and benefit from, that would be a huge contribution. It’s something worth fighting for and being a part of.”

Resonate is a cooperative, and because of that artists, board members, and listeners all have stake in the company and participate in decision-making. According to its website, 45 percent of Resonate’s annual profit is distributed to artists, 35 percent to listeners, and 20 percent to paid staff.

Resonate’s alternative to a monthly subscription service is based on a stream-to-own model. Listeners pay a cheap price for streaming a song for the first time, which doubles with each play until it is comparable to the price of a regular iTunes download, $1.29. After nine plays, the song is completely paid for, and the listener can download it from the service.

“It takes somewhere between 150 to 200 plays on Spotify to reach the price of an [iTunes] download, and we do that in nine,” Harris says.

Resonate also uses blockchain, the online ledger technology behind Bitcoin and other cryptocurrencies, to create a more transparent way of tracking and distributing payments as well as more user privacy and power over personal data and interactions on the service.

Blockchain allows for the use of “smart contracts,” which could be a more efficient and seamless method for paying artists.

“You can have a smart contract that says send 30 percent to the singer, 25 percent to the guitar player, and split up the rest among the other four members of the band,” Harris says. “The smart contract will receive the money then distribute it out instantly.”

Davies says the blockchain aspect is one of the main factors that drew him to Resonate.

“As an underground artist, [I think] it’s not good politics to be dismissive of a technology like the blockchain, which looks like it’s going to be—sooner rather than later—a very important way we not only approach things like currency, but also the way we approach contracts and agreements and the documentation of digital goods,” Davies says.

He believes Resonate will be more beneficial for artists once it catches on and as more people start to use it for streaming. Harris says the service has almost 5,000 total members, 1,000 of whom are listeners.

In March, Resonate received a $1 million investment from RChain, a Seattle-based blockchain system cooperative, to further develop its technology.

Updated May 18 to correct a math error made during the editing process. $0.00387 is less than four tenths of one cent, not four hundredths. Updated May 22 to clarify that the figure is the average rate Spotify pays artists per stream.