Music Business

Why A Spotify ‘Tip Jar’ Is A Bad Idea

In and effort to make streaming more profitable for bands and artists, an idea has been floated around for Spotify to set up a digital “tip jar” for artists, allowing fans to directly support the music they enjoy. While a popular concept, there are some serious concerns about what such a business model would actually look like.

Guest post by Michael Donaldson of the 8-Sided Blog

In discussions with artists, in think-pieces, in Twitter threads — [There’s] an idea that comes up all of the time: streaming platforms (Spotify, etc.) should add a ‘tip jar.’ If you enjoy an artist, you can ‘tip’ them, like a dollar bill in a busker’s guitar case. It’s a way of helping the artist in a time of dwindling streaming payouts.

The suggestion is well-meaning and, at first, sounds like a great idea. But there are a lot of problems.

Let’s start with logistics. The streaming platform would need to implement a direct payment system. And the only way a ‘tip jar’ would work is if the payment goes directly to the artist. A label or distributor could be a conduit, but if the idea is to eliminate the ‘go-between,’ then having someone in the middle — accountable for payments and likely taking a cut — defeats the purpose.

For this ‘tip jar’ to work, the artist would need to contact the platforms and set it up personally. And, unlike a single distributor that maintains relationships with multiple platforms for an artist, the artist would have to directly manage each platform (assuming different spaces come on board to the idea).

But could we even get to that point? This concept wouldn’t work unless Spotify came on board. And what’s the incentive for Spotify to do something like a ‘tip jar?’ It would take an investment and change in infrastructure to set up this feature and facilitate direct payments. What’s in it for them? As a shareholder-controlled company, there needs to be a profit motive embedded in everything they do. And, again, if a platform takes a cut of the ‘tips,’ then the purpose is defeated.

I don’t harbor an illusion that Spotify would install a ‘tip jar’ without a profit motive simply to support the artist community. It’s not hard to discern Spotify’s interests, given the company’s recent moves: the opposition to raising copyright payouts to songwriters, the shift to podcasts, Daniel Ek’s insistence that Spotify is an ‘audio company,’ not a ‘music company.’ Spotify, and other corporate platforms, seek profit above all else, and a ‘tip jar’ doesn’t fit into that equation.

Now let’s pull back and look at some broader problems. We have to accept that, on its face, a ‘tip jar’ on streaming platforms is a bad idea. It disguises the insufficient payouts to artists — as well as the lousy record deals where many artists find themselves trapped — by claiming they can (and should) live off tips. There are already ethical problems with paying service industry workers far below minimum wage due to the possibility of ‘tips.’ We shouldn’t continue to normalize this practice by extending it to recording artists.

Also, an artist tipping system harms non-artist songwriters. Songwriters would not receive these tips. If fact, non-artist writers would probably receive less royalty. It’s possible services and labels would use the tipping feature as an excuse to reduce royalty payouts.

If we can ignore this bad behavior, then there’s an additional danger. A tipping system on Spotify, used by artists for income, would ironically increase reliance on the platform. It’s another method of separating artists from their fans, with Spotify standing in the middle. If the domination of corporate streaming platforms is what brought us here, wouldn’t it make better sense to offer solutions that lessened an artist’s ties to them? I worry that including Spotify et al. in plans to help independent artists shuts us off from outside-of-the-box ideas that further artist independence.

I also don’t think that artists should have to busk and beg on the side of a road that runs alongside corporate property. It’s a bad look, and it’s demeaning, and, despite what we’re led to believe, there are other options. Yes, artists need to make a living, and streaming payouts are awful, especially in the niche genres. But ‘if you can’t beat ‘em, join ‘em’ isn’t the answer here.

The answer lies in fandom — it always has — and finding ways to cultivate and engage an audience without a middleman controlling access. For starters, a robust artist website is key. Create a hub that draws new listeners and repeated visits from diehard fans. Reward with bountiful content, consistent updates, surprises (very important), and full streams of the catalog. Your website is where you send people, not Facebook or Spotify or another platform that controls access to fans. One can still use those platforms, of course, but use them merely as tools to get people to your site. And, if you want, that’s where the tip jar goes.

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  1. Lol, did someone from Spotify write this? It’s complete bullshit.

    Not only does Spotify not pay artists a fair share per stream, but it literally states in their mission statement that they exist “to unlock the potential of human creativity by giving a million creative artists the opportunity to live off their art and billions of fans the opportunity to enjoy and be inspired by these creators.”

    From this mission statement, they aren’t following their own beliefs, and it’s gross. It’s just a donation button, and if they can code a music streaming monstrosity, they can implement a feature that actually benefits music artists.

    Thanks for publishing this, though. You’ve inspired me to write an article advocating for exactly the opposite.

    Stay out of the music industry

    1. Weird. Apparently Nick didn’t read the article (or even the title) before commenting.

  2. The author may be right about the feasibility about a tip jar approach to compensating artists, but his complaints seem to be mostly ones of issues with logistics and participation. But more importantly, I know where this idea came from. Let’s take a look at where it is working as a viable business model.

    In China, and many other Asian countries, they frequently tip artists and performers. The #1 streaming platform there, Tencent, and most other streaming and live platforms, use a tipping function, and it is hugely successful. For many Asian artists, that’s is their #1 source of income, and they survive off their tips. The difference is cultural.

    Perhaps if we compare it more to other jobs that are tip-based, it wouldn’t seem so outrageous. Waiters, buskers, love sex workers, and even video chat sex workers all rely on tips, and it works for many of them. If this same approach was taken with recording artists, it wouldn’t seem so unusual.

    The difference is cultural. It is about the attitude that Westerners have, both as consumers that don’t think they should have to tip, and as creators, who feel that adopting a tipping model is either beneath them (stuck in the past), or somehow lets the usurious streaming companies off the hook for underpaying the artists. Of course those are separate issues, but like the points raised by this author, I can see the bitterness of low streaming payouts affecting this op/ed regarding tipping, too. They’re not the same thing.

  3. Show4me offers the option to subscribe to an artist’s Artist club to access premium content (including unlimited music listening) and users can also pay more for an album than the price listed, if they wish. So some services do offer options similar to this, just like the other commenter said about Tencent.
    It’s also very important that listeners know exactly whose music they are consuming because, I feel, with streaming, people use playlists so much and don’t necessarily need to remember the names of all the artists they are listening to. This cuts potential connection and profit possibilities for musicians a lot – people don’t listen to full albums, don’t seek out live shows, aren’t getting merch. These are very important streams of income for musicians, a lot of bands say that.

  4. We have to accept that, on its face, a ‘tip jar’ on streaming platforms is a bad idea. … A tipping system on Spotify, used by artists for income, would ironically increase reliance on the platform. It’s another method of separating artists from their fans, with Spotify standing in the middle.

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