(Illustrated by Lauren Wade)

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Is Spotify Killing Music?

Some artists say the music business has finally figured out a way to survive the Internet: Don't pay the musicians.

Kathleen Sharp has written for The New York Times, Vanity Fair, Fortune, and Elle and is the author of four nonfiction books. A former correspondent for the Los Angeles Times and The Boston Globe, she now lives in Santa Barbara, Calif.

“We have a new album,” the long-haired, tobacco-toned singer and guitarist tells the small nightclub audience. It’s a foggy night 15 blocks from the beach in Central California.

“Actually, we have a new download,” corrects his younger partner.

A moment ago, her clear soprano was floating toward the rafters of this old brick building, joined in harmony by her husband. The pair leads a folk-rock band of two guitars, a piano, and the occasional harmonica. Come intermission, a few of the 150 or so in attendance will lay down $15 for the duo’s latest CD, or download a song for 99 cents, or maybe even pay $25 for a T-shirt off a table at the rear.

The two songwriters need every dollar they can make. Ask almost any working musician, and he’ll say the same thing: Never in the history of rock and roll has it been as tough for a musician to make a living as it is today (no matter what Taylor Swift may have to say about it). It’s no coincidence that album sales peaked, at $14.9 billion, in 1999—the year Napster ushered in the digital era of music by effectively making all recorded music free to anyone with an Internet connection. By 2009 album sales had fallen by more than half, to $6.3 billion. For a while, digital music sales, chiefly through iTunes, made up some of the difference. But after half a decade of consistent growth, downloads of individual tracks declined for the first time in 2013, by 5.7 percent, and by 13 percent in the first six months of this year, according to Nielsen SoundScan. Streaming music over the Internet via services like Spotify, Rdio, and Pandora, by contrast, is up 42 percent between the first half of 2013 and the first half of this year.   

The duo onstage at Soho Restaurant and Music Club in Santa Barbara shouldn’t have to worry about such statistics. Johnny Irion and Sarah Lee Guthrie are the great-nephew of John Steinbeck and the granddaughter of Woody Guthrie, two of the most influential American artists of the 20th century. Steinbeck won the Nobel Prize in Literature; his books have sold more than 70 million copies. Guthrie wrote more than 3,000 songs and recorded 300, and many continue to be covered by contemporary artists, earning his estate—but not his granddaughter Sarah Lee—a pretty penny every year.

Neither she nor Irion shares in the royalty earnings that flow from their forebears’ work. Many of Woody Guthrie’s songs are owned by people or entities other than his relatives, including the Woody Guthrie Center. Gail Steinbeck, the wife of the author's son Thomas, says she has calculated that Steinbeck’s works are worth about $4 million a year in royalties but that her family doesn’t see much of that. (Elda Rotor, associate publisher and editorial director for Penguin Classics, wouldn’t confirm the figure; messages left for a publicity manager at the company were not returned.)

But the experience of Steinbeck’s heirs shows that the intricacies of the law can complicate the ownership and transfer of copyrights. Despite years of litigation, copyrights to many of Steinbeck’s most famous—and valuable—works are held by his third wife Elaine’s assignees, one of whom has called the author “a toad,” and most of whom never met him. The legal battle has nearly broken Thom financially and emotionally.

“Thom got boondoggled into a bad deal,” said Irion. But it’s not something the two musicians dwell on. “People think we’re rich because of that legacy, but we set our own path,” said Guthrie.

Gail, whose sister is Irion’s mother, sees things a little differently. “It’s been heartbreaking,” she said.

Indeed, what’s happened to the families of two American icons is an object lesson for musicians and writers today. The Steinbeck case, wrote Adam R. Blankenheimer in the Berkeley Technology Law Journal in February, “interprets…the Copyright Act to favor the publisher, despite Congress's desire to protect authors and their heirs.” And while music streaming services pay copyright owners a small fraction of what the songwriters earn from physical sales and downloads, companies including Google and Amazon have been accused of stealing authors’ properties, both written and spoken, and the conditions Instagram and Facebook users agree to grab the rights to their posted photos. (Disclosure: Kathleen Sharp has joined an Authors Guild suit against Google for copying one of her books without her permission.)

Today’s creative class may be doomed to live the kind of hobo’s life Woody Guthrie and John Steinbeck wrote about.

John Steinbeck's great-nephew, Johnny Irion, and Woody Guthrie's granddaughter, Sarah Lee Guthrie, are a musical duo. Neither sees much revenue from their forebears' copyrighted works, and they find it harder to earn a living as musicians in the digital era. (Photo: Courtesy Sarah Lee and Johnny Irion)

The launch of iTunes in 2003 by what was then called Apple Computer set off a decade of tension between the recording industry and technology companies as the two negotiated payment structures for digital downloads. The new system of music streaming has ingredients that make both sides happy: For tech, it’s a chance at a lasting, legal foothold in the industry, while the music business sees consistent revenue from consumers, billed in such a way that they hardly notice. The revenue structure insulates labels from having to consistently sign and promote new talent, or working to get the best from their existing stable of artists: Whether you love or hate your favorite band’s next album, Spotify will still be getting your $10 a month.

Artists are not so sanguine. A growing chorus of musicians say they are seeing little revenue from streaming services.

“Music is being treated as digital trash,” said Rebecca Gates, one-half of the ’90s indie band the Spinanes who now records as a solo artist. “But companies are getting money and building their identities on it. It’s horrifying.”

Musicians’ argument isn’t with streaming per se. “It’s the fact that everyone gets paid except the music creators,” said country singer-songwriter Rosanne Cash, who has recorded 13 albums since the 1970s. “We are creating a culture where content creators are a new servant class, and paid as such.”

We are creating a culture where content creators are a new servant class, and paid as such.

— Rosanne Cash

Each time a subscriber hears a song on a streaming service, the artist gets only a fraction of a penny. For instance, Spotify, which now lists more than 10 million subscribers, pays a song’s copyright holder on average less than $.007 per play, only a portion of which reaches the artist. Last year, David Lowery of the indie rock bands Camper Van Beethoven and Cracker posted on the Trichordist blog a royalty statement showing that more than a million Pandora plays of the song “Low” earned him, the recording’s lead vocalist and one of the song’s composers, $16.98. Cash has done a little better: She told a House subcommittee she was paid $114 for 600,000 plays on a site she didn’t name.

Lowery and others have also denounced the way the payout formulas benefit blockbuster acts at the expense of emerging bands: “New artists get fuck-all with this model,” tweeted Nigel Godrich, producer of albums by Radiohead, Beck, and others. Musicians are now incensed over the planned launch of a YouTube service, to be integrated with Google Play, with royalty rates that many musicians fear could make Spotify’s look lavish and which could block videos by artists on independent labels that don’t agree to its terms for streaming, according to a trade group, the Worldwide Independent Network, representing indie labels. British singer-songwriter Billy Bragg has compared YouTube to Big Brother. “Rather than a huge boot stamping on a human face forever,” he said at a London press conference in June, “it’s a corporation that changes its logo every week.” (Amazon launched its streaming service, Prime Music, in July, to the apprehension of musicians.) David Byrne, Radiohead’s Thom Yorke, and others have spoken out as well; Yorke has pulled his solo work and the album by a side project, Atoms for Peace, from Spotify. Byrne, Aimee Mann, and the Black Keys have withdrawn some or all of their recordings from various services. Johnny Irion and Sarah Lee Guthrie are threatening to pull all their songs off these sites too. But that’s not an option for most musicians: While individual contracts vary almost artist by artist, generally it’s up to the labels whether to make music they sell available on a streaming service.

British singer-songwriter Billy Bragg has spoken out against royalty rates and structures established by music-streaming companies. (Photo: Joseph Okpako/Getty Images)

Musicians are also frustrated that the financial deals between the music streamers and the labels (which pay the musicians) are opaque, leaving the artists in the dark about how the money flows. “It wasn’t until there was pressure put on the services—a lot of vocal frustration from musicians—that one of the services, Spotify, released information about how they calculate payments and pay royalties,” said Kristin Thomson, a veteran indie rocker and label owner who tracks artist revenues for Future of Music Coalition. Jazz and classical artists complain that because of the way most streamers’ search functions work, their music is all but invisible. Perhaps most troubling for fans of independent or less-accessible music is that royalty rates are often higher for bigger-selling acts. That incentivizes labels to sign and promote acts that appeal to the broadest range of tastes—more Katy Perry, less PJ Harvey; more “Roar,” less Gwar.

Today Johnny Irion and Sarah Lee Guthrie live with their two daughters in a cottage behind the home of Thom and Gail Steinbeck in Montecito, an enclave just down the coast from Santa Barbara. “It’s fun to be co-parenting,” Gail says. The children give Thom, who has written three critically acclaimed books, including 2010’s In the Shadow of the Cypress, inspiration to continue writing despite declining health. “I’m blessed to have them as part of my family,” he says. He suffered permanent lung damage from spraying Agent Orange during the Vietnam War, but at 69, he’s still barrel-chested, with a booming voice and startling blue eyes.

The Steinbecks’ house is a white board-and-batten structure built in the ’20s for the servants who worked on nearby estates. Inside, family photos line those walls that aren’t lined with bookshelves. A picture of a 14-year-old Thom standing next to his proud father hangs below a photograph taken by Richard Avedon of Thom’s younger brother, John IV, now deceased.

Thom’s parents divorced soon after he was born. When Thom was five, his father married Elaine Scott. “Once, I misbehaved and Elaine took me aside,” Thom recalled. She bent down and asked the boy if he knew the story about Cinderella? Yes, he answered.

“Well, I’m the evil stepmother,” she said.

That set the tone for their relationship. Thom and his dad, however, remained close. In the 1950s, John took Thom and John IV on summer trips to Europe, Greece, and North Africa. Thom says his fondest childhood memories are of family vacations spent in a cottage built by his paternal grandfather in the Monterey Bay, Calif., area his dad made famous with his writing. Thom went on to study at the Chouinard Art Institute in Los Angeles, now called CalArts, and UCLA’s film school.

The Vietnam War cut his studies short. While serving overseas, Thom heard on the news one day that his father was ill. Ordered to fly home, he arrived at the great man’s bedside on Dec. 19, 1968.

It was a much better deal when people bought CDs and albums. Today it’s just harder all the way around.

— Johnny Irion, singer-songwriter

He found his dad comfortable and sitting up, reading a manuscript John IV had written. “He thought it was good,” said Thom. The man died a few hours later.

Steinbeck didn’t make specific bequests in his will regarding who would inherit his copyrights, though he did bequeath “all the rest, remainder, and residue of my property…real or personal” to Elaine. Each of his sons received $50,000.

One of the most powerful tools in copyright law is the prerogative of rights holders, including descendants of the content creators, to terminate contracts and negotiate terms reflecting the current value of old work. Several sections of the Copyright Act stipulate that when a grant of rights has occurred, heirs can give notice of termination within a certain time frame “notwithstanding any agreement to the contrary.” Elaine died in 2003. Thom believed that because he was Steinbeck’s son, his father’s copyrights would flow to him and the other descendants—a long-established standard in copyright law. He contacted Steinbeck’s longtime publisher, Penguin, with a notice to terminate.

But Elaine had already renegotiated the deal with Penguin, and she left all her rights to her own children and grandchildren. Penguin sued, asking the court to declare that Thom’s termination notice didn’t hold water.

In June 2006, Judge Richard Owen in the U.S. District for the Southern District of New York ruled in favor of Thom and his blood relatives, granting termination rights for all of Steinbeck’s books to the blood heirs. But the Second Circuit Court of Appeals overturned the ruling.

Many experts thought that this decision stripped copyright law of one of its most basic principles—an author’s or a musician’s copyright benefits should pass to the biological family. In 2009, Ted Olson, a former U.S. solicitor general who in 2012 successfully argued a same-sex marriage case, Perry v. Schwarzenegger, before the U.S. Supreme Court, agreed to take the Steinbeck case. But his plea to the high court was denied.

Though the Steinbeck case has since been cited in other court decisions, there remains “some debate within copyright circles about whether it was correctly decided,” said Aaron J. Moss, an attorney with the entertainment law firm Greenberg Glusker who specializes in copyright law.

Gail says she crunched the numbers in royalty statements acquired over the course of the long court battle and found that since Elaine’s death, Thom and his family have lost about $50 million in book royalties and fees from In Dubious Battle, Of Mice and Men, The Grapes of Wrath, and most of Steinbeck’s other iconic works. (Penguin declined to comment.) The couple has spent about $3 million on lawyers fighting for the Steinbeck biological family, with little to show for it.

The Steinbeck litigation has made a huge impression on the Irion and Guthrie family. Guthrie’s father, Arlo, urged her and Irion to keep their master recordings and not sell publishing rights, a common way for musicians who don’t sell a lot of albums to generate extra income. “We fought him on that at first,” said Guthrie. “But he showed us that our work is our biggest asset.” The two issued their fourth album, Wassaic Way, produced by their friend Jeff Tweedy of Wilco (with Patrick Sansone), on their own label, Rte 8 Records.


Irion has been in the music business since 1990; bands he was part of in the pre-Internet days were signed to Sony and one toured with the Black Crowes. At that time, he said, even small bands could earn a living. “It was a much better deal when people bought CDs and albums.” Today, he said, “it’s just harder all the way around.”

The duo receives regular checks from SoundExchange, the nonprofit, independent service that distributes and collects digital royalties for musicians. “But it’s about half of what we used to get” for album sales, Irion said.

Copyrights to John Steinbeck's novels were the subject of a precedent-setting case in copyright law fought by his descendants. (Photo: Mondadori Portfolio/Getty Images)

For consumers, services such as Spotify and Pandora are cheap and convenient ways to hear new music, especially with record stores closing nationwide. Some of those who defend streaming say that it works like radio: Direct per-play payment may not amount to much, but the “exposure” benefits the artists.

To Marc Ribot, the eclectic guitarist who has played with Tom Waits, Elvis Costello, and many others, that’s “a completely false analogy. Radio boosted the sales of records and CDs; streaming services are what people do instead of buying records and CDs.” Even streaming’s defenders, such as Gang of Four bassist Dave Allen, who now works for streamer Beats Music, admit this. “The shrinking of the recorded music industry…suggests that the future looks dire for physical sales,” he said. “People have clearly moved to streaming services.” Terrestrial radio’s royalty rates are also significantly higher than Web rates. In the end, Irion said, “no one is getting paid any real money.”

Many musicians have become much more. Irion and Guthrie not only write songs and perform; they issue their work on their own label, which allows them to keep their master recordings and more of their royalties. They operate their own website and use social media for promotion. They handle the details of their products’ design, merchandise orders, and press releases. They’ve developed a network of musician friends who help produce, promote, and market their work, returning the favor when their friends come out with an album or tour. They tour constantly in North America and Europe, doing as many as 185 shows a year, or three a week, often with their two young children in tow. While on the road, the family stays with friends or fans to save on expenses. “We used to be able to sell enough [albums] to buy gas and maybe have a nice dinner one night because we’d been eating like shit for the whole tour,” Irion said.

“The gig used to be our bread and our record sales were the butter,” he said. “Now it’s mostly bread.”

The blood heirs of James Brown share in the sales of music made by the Godfather of Soul. But Irion shakes his head at the prospect. “We don’t want anything,” he said.

“Oh, I don’t know,” said Guthrie. “I wouldn’t turn it down.”

For some artists, the situation is all too much. “There are tons of musicians who are leaving the business,” said Rebecca Gates. “In droves.” In the long term, the exodus will hurt us all, from musicians to consumers to the streaming services, according to some.                                          

“We’ll get the culture we pay for,” Ribot said. “I don’t think people will care if it’s just artists getting hurt. But this is going to be destructive to our culture.”

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