Watch Sean Parker & Daniel Ek Dance Around What Artists Get Paid On Spotify (VIDEO)

image from www.google.comWhen asked whether Spotify pays artists fairly, my answer has always been and remains that it's too early to tell.  Startup music services, particularly those built on new revenue models, need a great deal of time to develop.  Spotify is relatively new in the U.S. and most other markets, but many artists and labels in Scandinavia, who have known the service the longest, seem pleased with payments.  But watching Spotify CEO Daniel EK and investor Sean "Napster" Parker dancing around what artists get paid left me uncomforable.

image from www.google.comYes, Spotify payments are made via labels and distributors; and they vary depend on revenue. But what prevents Spotify from releasing quarterly numbers that, for example, show total revenue paid vs. total streams?

After watching the company since its inception, it appears that Spotify's silence is part of the very complex and uncomfortable dance that they're forced to dance with major labels and publishers.  The unsatisfying answers that these two smart entrepreneurs gave at AllThingsD sadly seem to confirm that.  They left me wary: Are artists ever going to be paid fairly? Has Spotify been co-opted by the labels? 

We're all waiting for answers. How long should we wait?

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  1. co-oped by major labels?
    major labels own spotify, both in terms of ownership and in upfront advances.
    artists should be punks and say fuck you and pull out in protest!

  2. Interesting talk. Actually Sean Parker is admitting that the recording industry is much smaller than 12 years ago, even with the addition of the streaming model, which remains an anecdote when compared to bigger ventures. He’s in because it’s cool to be in music but he would certainly prefer to be a major stakeholder at Apple 😉

  3. The truth is basically very simple. How many songs do people stream in a month? I guess the average is about 700 a month. You pay $10 a month, 70% is for royalties, so $7 is paid out to labels and artists. Now let’s do the math:
    $7 for 700 streams means $0,01 per stream
    Okay, this is in a perfect world where every user pays 10 bucks a month. You know that is not the case, only 20 % is paying. Still Spotify was able to pay $ 0.0048 per stream in December 2011. Not that bad if you ask me, advertising revenues are quite well I take it. And because the number of streams in a month varies the pay out rate also varies.
    I do realize that this calculation is oversimplified, but it explains why Spotify just cannot pay more per stream. No streaming service can pay more without raising subscription fees or limitations on the number of streams.
    And it doesn’t matter if Spotify has a thousand or a trillion paying users. The revenue may rise but the number of streams will rise in the same proportion. The per stream payment will always be a fraction of a penny.
    Why doesn’t Ek or Parker grab a marker and writes this calculation on the white-board?
    Beats me!

  4. The labels have a minority interest. Ek and Parker are 1 Percenters. They don’t care about artists, they don’t care about music, they don’t care about changing the world.
    It is all about getting that company to the IPO and cashing out at the top. Have your learned nothing from the Facebook situation? Despite the share price drop Zuckerbum and company are laughing all the way to the bank. These guys are the next generation Robber Barons, and the sooner you realize that and pull your music the better.

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