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Hypebot Interviews Spotify’s “Secret Weapon” – Artist In Residence, D.A. Wallach

Dawallach_webD.A. Wallach holds an undeniably unique position within the music business, being deeply involved on both ends of the spectrum. On one side, D.A. is an accomplished recording and performing musician as one half of the dynamic progressive rock group Chester French, while also being knee-deep in the digital side of things as an Artist in Residence at Spotify (or as Forbes calls him, Spotify's "secret weapon"). His background in music and digital marketing makes him perfect for the position he’s created for himself. I’ve had the privilege of working with D.A. and Chester French on the release of their new album MUSIC 4 TNGRS, and wanted to learn more about his unique positioning and thoughts on the new music space.


Hisham Dahud: What exactly does "Artist in Residence” at Spotify mean?

D.A. Wallach: Basically it means that I am to be an advocate for the creative community within Spotify. I oversee everything we do related to artists. That encompasses a team we built called “Artist Services” that is constantly allowing artists to use Spotify better, educates them about what it is, and ways to promote on the platform.

Hisham: Some artists would argue that while the service is great for users, it is not so great for the content creators.

D.A.: Spotify as a product is exciting for rampant music fans, but so many artists are also huge music fans naturally and any artist that uses Spotify tends to love it. We’re adding a huge value into the music business, with $180 million dollars paid out in royalties just last year alone. Part of my job is making those numbers intelligible for artists and clarifying that in our model, you make money when people listen to your music forever, unlike downloads where it’s a one-time deal.

Anyone who doesn’t think we’re paying a fair cut hasn’t seen the numbers we pay out. By far the vast majority of the money we’re making goes back to the owners of the music – about 70%. When compared to iTunes, the average listener spends $60 dollars a year into the creative community, whereas Spotify Premium users spend $120 per year. As “the pie gets bigger” so to speak, so do the royalty payments. The growth of the platform is proportional to the royalty pay out and since inception we’ve already doubled the effective per play rate.

Hisham: As both an artist and music business professional, you’re one of the lucky few whose “day job” (for lack of a better term) correlates perfectly with what you do on the creative end – there’s plenty of cross pollination going on. What is that balancing act like? How are you able to switch hats, and is one ever completely off?

D.A.: You know, I view the business as art rather than the art as business. The things that I do at Spotify are an exercise of creativity. To me, it’s all the same – it’s all creativity. I like both types. Granted, it’s a very different mindset when stepping foot in the studio and stepping foot in the office, but it’s all one vision for me. I enjoy working with Spotify in particular because I love being involved in ideas that are inevitable. Steaming music is obviously what the future holds, and I like to hasten a future that is, in some sense, preordained in my mind.  

Hisham: What are some of the biggest mistakes you’ve witness indie artists make – both on the business side of things, as well as on the creative side?

D.A.: Arrogance is always a mistake – pervasive in both worlds. The biggest mistake I’ve seen artists make, and have made myself, is not to be constantly creating. We’re going to shift away from album cycles very soon, and besides, real artists don’t create in a cyclical manner anyway. I encourage artists to always be creating and always be releasing music.

Hisham: On the flip side, what are some of the brighter ideas you’ve seen indie artists makes – again, both on the business side and creative side.

D.A.: The crowd funding thing is really cool and while the models aren’t quite perfected yet, they’re definitely testament to the new space that has emerged, where fans have more of a say than ever in dictating an artist’s career trajectory.  But to me, the most exemplary careers of recent time are in hip-hop. Artists like Rick ross and Lil Wayne grew their fan bases tremendously and they did so by constantly releasing new content – they’re always working and relentlessly giving their fans more.  

Hisham: The hot topic of the moment is certainly this whole Emily White / David Lowery thing. What’s your take on it?

D.A.: I'm just now getting the time to really look into it, but when Lowery referred to White as “your generation,” it just exemplifies how the old generation has always had this disconnect to music fans over time. Back in the day, their customers were retailers and not fans. The majors never really built a business around fans, which ultimately led to a negligence of those users. So they never focused on making a good experience for users. In retrospect, everyone probably agrees that the labels should’ve tried to work a deal with Napster, or build one of their own maybe, since people clearly wanted music that way and loved getting music that way. With Spotify, the platform effectively monetizes the experiences that consumers have been demanding. The goal now is to create a mass-market consumer experience that gets people to pay for music again.

Hisham: What is the ultimate vision for your career? Or are you allowing things to unfold and embracing things as they come?

D.A.: I’m really a believer in serendipity and moving gracefully from one thing to the next. My anchor points will always be beauty, invention, and creativity. I just want to continue to express my own ideas and support those who have a desire to do so, as well.

Hisham Dahud is a Senior Analyst for Hypebot.com. Additionally, he is the head of Business Development for Fame House, LLC and an independent musician. Follow him on Twitter: @HishamDahud

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8 Comments

  1. At last, we have an answer! Spotify keeps 30% and pays out 70% of their revenues.
    Seems fair to me. I would like to see Daniel Ek confirm those numbers though.

  2. “Anyone who doesn’t think we’re paying a fair cut hasn’t seen the numbers we pay out.”
    I think that’s the point. The reason many artists and some indie labels are not fans of Spotify is the perception that the system is unfairly biased toward advances to majors while keeping artists and independents in the dark about how their per stream payouts are calculated.
    Hisham, did you not feel this interview was appropriate for asking a follow up question or did you simply assume or know that D.A. would not be privy to any actual payout figures and formulas?

  3. Hi Seth,
    You’re exactly right in explaining why that negative perception exists.
    I felt that D.A.’s response of 70% of revenue going towards artist payouts was adequate in demystifying that gray area and negative perception that some in the creative community may have of Spotify. While D.A. could’ve perhaps elaborated more on the nitty gritty of payout figures and formulas, I felt that the purpose of this particular interview was more geared to get inside the mind of someone in a unique position such as D.A.’s; someone who represents both the artist community and the music tech community at the same time and on the scale that he does so.
    Hope this helps, and thanks for reading!

  4. I have to agree with Seth here Hisham, Having someone like DA on your payroll is more like having a quasi-celebrity press correspondent.
    Realistically, he’s more like a magic shield than a secret weapon. Unfortunately he’s only reiterating the same evasive and vague info and figures that any other employee at that company is.
    If we’re supposed to appreciate it more coming from a relatively articulate artist, they need to put him in a room with someone who will ask the tough questions.
    One more thing, you rarely see an artist slag off their label publicly, and you can say the same about someone like DH here, he’s got his fingers in many pies.

  5. Hi Hisham,
    “While D.A. could’ve perhaps elaborated more on the nitty gritty of payout figures and formulas…”
    It certainly is user friendly, which is smart, though
    a prompt follow-up Q&A session with D.A. revealing Spotify’s royalty payout formula would be very helpful for artists and labels. The quoting of macro revenue figures is not particularly useful. Walk us through a single artist’s Spotify revenue experience and maybe we will all feel better about their model. Currently Spotify’s responses are unnecessarily vague.
    Jim

  6. I still don’t see a solution for remixers and DJs who uses copyrighted work. Won’t somebody please think of the DJs!?!
    On top of that, I think it’s funny that they can now essentially say, “With Spotify, you’ll never be able to stop paying your favorite bands for their music!” and it’s considered a benefit. I like owning my music. I like knowing that it will be there tomorrow if I want to listen to it, and not removed from the servers for some obscure legal or technical reason. And I like not having to pay someone every month just for permission to listen to it.
    The other point Spofity assumes is that they’ll be around forever. How annoying will it be when the service shuts down and users loose their music library, left to cobble together what they can salvage of their musical history.
    The internet doesn’t need one musical database. It needs several small, nimble ones. One large service will result in high prices and bad service for musicians and fans.

  7. A lot of good points.
    Also, another stupid hurdle and point in favour of what you’ve said, is geoblocking and regional BS.
    I just moved from the US to Canada and other than Google Music / Play and Rdio i think all my other streaming services have some regional bullcrap block that makes them unavailable (yes i know i some cases it is Canadian law that is in the way) – MOG, Spotify, iHeartRadio, LastFM. I used all the ones i just mentioned and now they are either severely limited or just outright unavailable.
    The more the merrier. The fact that there’s a bunch of them is why i have at least two, or one and a half, working.
    -G.

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