DJ Spiders Georg and the Great Streaming Swindle

On Tuesday, Damon Krukowsi sent a post to his newsletter Dada Drummer Almanach about streaming music accounting and why it is, in his opinion, “widespread fraud.” The post is very good, and not super long, so please go read it first.

Done? Good.1 So his main subject is the difference between “pro-rata” accounting and “user-centric” accounting in music streaming payouts. As Krukowski describes them:

This post went around the Tabs Subscriber Discord and everyone’s response was “needs more math” because we’re a bunch of fuckin’ nerds. So I’m excited to announce that in order to get a better grasp on the numbers here I have launched a new streaming music service called Sporkify. It’s only $10 a month, and since we’re funded by Egg, we’ll use all of the subscriber money to pay the artists. We’re just out of private beta so we only have 100 subscribers, but that’s pretty good for our first month! Especially since we only have two artists on the platform: trip-hop legends Portishead, and brand new pioneer of 30-second bops, DJ Spiders Georg. So far this month, Portishead has racked up a respectable 36,000 streams, but DJ Spiders Georg is absolutely crushing it with 864,000 streams.

Since we account for streams “pro-rata,” the split is pretty simple: Portishead earned 36,000 of 900,000 total streams, which is 4%. Four percent of our $1000 in monthly user fees is $40. Not bad! That leaves DJ Spiders Georg with the remaining 96% of streams and income, or $960. Rolling Stone is planning a cover story, the label is thrilled, and everyone is signing up for Sporkify, the exclusive home of streaming’s breakout new star, so Egg is also thrilled.

But wait! Some newsletter dork has suggested that this might be a little fishy. I’m not gonna make it public yet, but between us, I took a look at the breakdown if we were to recalculate this on a user-centric basis, and the results were surprising. It turns out that only ten users are responsible for all of DJ Spiders Georg’s streams. And since all of DJ S.G.’s songs are exactly 30 seconds long, to reach 864,000 streams each of these ten users is streaming DJ S.G. literally 24 hours a day, 30 days a month, nonstop. The other 90 users are all pretty big Portishead fans, but only average a normal human quantity of just over 13 streams a day each. When we recalculate the shares distributed per-user, suddenly Beth Gibbons & Co are taking home 90 users worth of $10 monthly fees, or $900, and DJ Spiders Georg is trying to figure out how to make his Lambo payment on only $100.

Of course looking at the client IPs, it’s obvious now that DJ Spiders Georg paid a bot service for all of his streams. They charged him double the monthly fee for each of ten dedicated accounts, or $200. On a pro-rata basis, that $200 investment in streams earned him $760 in profit. On a user-centric basis, it’s a dead loss of $100.

Obviously in my fake example, the results are stark. Portishead makes over 22 times as much money with user-centric accounting. In the real world, returning to Krukowski again:

Spotify is (probably?) not 10% bots. But right now, even if we keep all the bots, pro-rata accounting appears to be slicing off a portion of every user’s monthly bill and funneling it away from the long tail to subsidize the head of the snake, where the biggest labels and the biggest stars sit, as well as potentially all the fake streams. Notorious music industry curmudgeon Steve Albini thought the internet had solved “The Problem With Music” by 2014, when he told Quartz’s John McDuling:

And a decade earlier, in Wired magazine in 2004, Chris Anderson predicted:

Here we are in the future, and it turns out to be the exact opposite: pro-rata stream accounting and fake streams are squeezing millions from the niche markets to inflate the earnings of a few megahits at the top of the charts.

Big shout @imbeccable for fact checking this, and sam3K in the Discord for the Dada Drummer link. Coming next week: more Tabs, I bet. If you liked this post: