Don’t always believe publisher spin on the evils of Big Tech

Publishers have become adept at using the public’s rising antipathy toward Big Tech as a vehicle for driving forward their own corporate goals.

Image via Wikimedia

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Don’t always believe publisher spin on the evils of Big Tech

If you have an opinion about Amazon’s effect on the book publishing industry, it’s probably a negative one. After all, the tech giant has driven thousands of bookstores into the ground, including major chains like Barnes & Noble, Borders, and Waldenbooks. 

After it shrank the market of booksellers, Amazon gained increasing leverage over book publishers themselves, which it then used to artificially drive down prices through huge discounts, thereby diminishing the value of books. In response, publishers had no choice but to consolidate through a series of mergers and acquisitions, and as a result we only have four major publishers left standing today. This consolidation has forced publishers to become more homogenous in the deals they sign, which means less literary experimentation and fewer opportunities for emerging authors.

I’d argue that what I wrote above represents the mainstream view of Amazon’s effect on the book publishing industry and is reflected in most media coverage of the issue. And while I think there are certainly grains of truth in that viewpoint, it also leaves out an absolutely enormous mitigating factor: the Amazon Kindle.

Prior to the Kindle’s launch in 2007, self-publishing was considered a joke and was often referred to with the pejorative term “vanity publishing.” But the Kindle launched an overnight market for ebook publishing that’s not only steadily grown over the past 15 years, but has also increased the viability of self-publishing. As a result, tens of thousands of authors who otherwise couldn’t break into traditional publishing are now generating significant income from their work. The subscription platform Kindle Unlimited alone is paying out over $300 million a year to authors, and the entire self publishing market is estimated to be somewhere north of $6 billion.

This has all had a profound effect on who and what gets published. Entire subgenres have emerged, and authors who were roundly rejected by every New York publisher and agent now have successful writing careers. Don’t get me wrong: it’s still incredibly difficult to generate real revenue in book publishing, and the vast majority of self-published authors only sell a handful of books, but I’d argue that there’s more entrepreneurship in book publishing today than at any other time in history.

So why isn’t this more nuanced view reflected in coverage of Amazon? Partly because publishers have become adept at using the public’s rising antipathy toward Big Tech as a vehicle for driving forward their own corporate goals. Their opinions are often laundered through trade associations that cater to large media conglomerates, and they’ve been fairly successful at creating a David vs Goliath narrative that sidesteps their own anti-competitive motivations.

It’s not just book publishers that do this. You’re probably aware that Australia recently passed legislation that forces large platforms like Google and Facebook to negotiate fees with publishers, and lawmakers in several countries — including in the US — have proposed similar regulations. Proponents for such laws accuse the platforms of content “theft” and argue that Google and Facebook “steal” advertising revenue away from publishers.

Let’s set aside for the moment the counter arguments that such legislation would further undermine the notion of fair use and also establish a right-to-link precedent that could have all sorts of negative consequences. Instead, let’s focus on the fact that the largest beneficiaries of such payment systems would be large media conglomerates and newspaper chains owned by private equity companies. In Australia, for instance, Rupert Murdoch’s Newscorp took home the lion’s share of the money offered up by Google. Legislators basically forced a multi-billion dollar tech company to pay off a multi-billion dollar media conglomerate. 

Arguments for these bills also tend to gloss over the tens of thousands of media entrepreneurs and creators who have benefited from distribution and revenue from the tech platforms. Take Google-owned YouTube as an example. Over the last year, it’s paid out over $10 billion to video creators, many of whom would never have gained entry to traditional Hollywood. As someone who spends a lot of time watching YouTube, I’m consistently amazed by the amount of creativity and entrepreneurship that’s been unlocked by the platform’s reach and creator-friendly policies. I speak to a lot of creators and bootstrapped media entrepreneurs for my podcast and newsletter, and I’ve never heard one complain to me that Facebook and Google should be paying them for the right to link to their content. Those arguments stem almost exclusively from large legacy publishers.

That’s not to say that creators themselves don’t sometimes push their own anti-Big Tech spin. Perhaps you’ve heard the absolutely horrifying, oft-repeated stat that Spotify and other music streamers pay artists at little as 3/10ths of one cent per stream. How heartless could Spotify be that it won’t pay artists a measly cent per stream?

Pop quiz: How much does YouTube pay creators per video stream? Or better yet, how much revenue does a news article generate per pageview?

There’s a reason that most people don’t know those numbers off the top of their head: virtually no digital medium calculates revenue that way. Most use metrics like CPM or RPM, which roughly measure how much revenue is generated per 1,000 impressions for a piece of content. Calculated that way, you’ll find that Spotify artists are paid at a rate of around $3.30 CPM, which isn’t amazing, but tracks to about the average amount generated by programmatic advertising on websites.  

Articles about Spotify’s allegedly low artist wages often leave out other crucial pieces of context. Here are a few of them:

• The claim that artists make only 3/10ths of one cent is largely anecdotal, and I couldn’t find any strong data showing it’s the industry average. In fact, performers aren’t the only rights holders that Spotify pays. It also pays the song writers, the publishers, and the record labels. How much the artist themselves get paid is largely dependent on their contracts with their labels. As Spotify explains on its website: “Spotify has no knowledge of the agreements that artists sign with their labels, so we can’t answer why a rightsholder’s payment comes to a particular amount in a particular month.” My guess is that Spotify is paying significantly more than 3/10ths of a cent per stream when you account for all rights holders. 

• Music lends itself to replayability more than virtually any other medium. You’re likely only to watch a MrBeast video one time, even if you’re his biggest fan, but you’ll listen to your favorite songs dozens or even hundreds of times. This dynamic allows musicians to earn more per user compared to other kinds of creators.

• It’s estimated that around 70 cents of every dollar Spotify generates goes to music rights holders. You can argue over whether a 70/30 split is fair, but it’s above average compared with many other internet mediums. YouTube creators, for instance, take home 55 cents for every dollar that’s generated against their videos. As a result of the 70/30 split, Spotify has struggled to maintain profitability; that’s why it’s expanded into other mediums like podcasts and audiobooks.

• The rise of Spotify and other streamers like it are credited with reversing a death spiral that was afflicting the recorded music industry. Both Napster and iTunes caused the bottom to fall out on music sales, since most consumers either pirated their music or only bought individual songs on iTunes (vs album sales, which were much more lucrative). But the convenience of the Spotify library lured many would-be pirates back into the fold and also drove up the per-capita music spending for non-pirates. The recorded music industry is now generating more money today than it has at any point over the last 15 years. 

I’m probably sounding pretty pro-Big Tech at this point, at least as it pertains to paying content creators. On the contrary, I think there are lots of ways Big Tech could be better on that front. For instance, I was largely in agreement with Hank Green’s criticisms of the “creator funds” run by platforms like TikTok, Snapchat, and Instagram. I also agree with some artists who argue that Spotify should pivot away from its “pro rata” model and instead pay based on the streaming habits of individual users. Rolling Stone published a good explanation of how that would work.

Ultimately, the tech industry is trending toward paying creators more, not less. This has less to do with public policy pressure and more to do with the fact that they’re all desperately trying to compete with each other to attract and keep creator talent. That’s the reason that Snap is pivoting from a “creator fund” to a much more creator-friendly revenue share, and it’s why every platform is launching more and more publisher monetization tools. As the Web 2.0 economy matures, content creators are gaining increasing leverage over the tech platforms, no matter how much media conglomerates try to convince you otherwise.

Speaking of creators generating enough revenue from their content…

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My latest: Why The Information launched a Creator Economy newsletter

In April 2021, The Information launched a daily Creator Economy newsletter. Kaya Yurieff helms that newsletter, and in a recent interview she explained why she took the job, how she shapes her daily coverage, and why she enjoys writing for a niche audience.

Quick hits

NPR let an intern experiment with creating TikTok videos for its Planet Money podcast. They were so successful that he now focuses on them full-time. [NYT]

TikTok keeps expanding the length restrictions for videos, likely because it wants to start inserting midroll advertising. [Wired]

"After years of telling media companies to invest in new streaming services, Wall Street is now unsure about its own advice. It’s no longer rewarding companies that brag about how much they are going to spend and how many subscribers they will have." [Bloomberg]

Playboy has pivoted away from editorial and is attempting to become a tech/ecommerce platform. [The Information]

"We became pioneers in trying to find every emerging show host we could before they’re super popular." Squarespace made an early bet on podcast advertising and it paid off in a big way. [NYT]

ICYMI: This YouTuber built a massive following with pop music guitar lessons

A lot of people conduct searches for David Potsiadlo’s instructions on how to play their favorite songs.

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Simon Owens is a tech and media journalist living in Washington, DC. Follow him on Twitter, Facebook, or LinkedIn. Email him at simonowens@gmail.com. For a full bio, go here.