This post is by Faza at The Cynical Musician.
When I originally wrote about the Spotify payouts for my music, I noted the large divergence between the minimum and maximum amounts paid per play.
From what I’ve read elsewhere, nobody really has a clue as to how the rate per-stream is calculated (other than Spotify, of course).
I was mystified as to the spread of the numbers at the time of writing the previous post and, if anything, I’m even more confused now that I have the benefit of a much greater sample of accounting statements.
One thing that hasn’t changed over the past months is the average rate per-stream, which tends to hover around 0.16 cents. However, this is an arithmetic mean that really tells us nothing of the kind of money we can expect from having a play on Spotify.
To give you an example of how wacky things get, one of my most recent statements – for last December – shows 25 plays rated at around $0.0005 each for a total revenue of $0.0136 and two plays of the same track rated at $0.0066 each, giving a revenue of $0.0132 for those two plays. Based on that statement alone, one might infer that 25 plays are worth the same amount as 2 – again emphasising that we’re talking about plays of the same track in the same period of time.
As mentioned, the mean rate isn’t really reflective of typical Spotify payouts, so I took some extra effort to analyse all data I have so far. First off, the median rate is just over $0.0006 per play, less than one-half of the mean rate. Worse still, the modal rate is only around $0.0005, confirming what we’ve suspected thus far – the majority of your Spotify plays will pay peanut crumbs. The minimum rate-per-stream I’ve recorded was $0.00019 – I shall henceforth refer to it as the Lady Gaga rate.
However, these laughable amounts are partly offset by much higher rates that crop up every now and again. We’ve seen an example of that previously, so for completeness let me also quote the highest rate I’ve recorded, which is $0.0085. Now, that’s a different matter entirely. Such rates are comparable to Rhapsody (by far the best-paying streaming service I’ve seen to date) and would actually render Spotify meaningful as a revenue source. At such rates, you’d only require around 75 streams to generate the same revenue as a single download of the song – for heavily listened-to material, it might actually make streaming the more advantageous option.
Nevertheless, such high rates-per-stream remain the exception. It remains to be seen whether the growing number of Spotify’s paying subscribers will lead to an increase of their rates-per-play. As things stand, I’m willing to give them the benefit of a doubt, though I would appreciate more transparency regarding how much they pay and why.
If your music still isn’t being distributed to Spotify, I see little reason for you to hurry. The only scenario where Spotify availability makes real sense is if you’ve got a ton of fans who are Spotify subscribers, but aren’t buying any recordings from you at present. Otherwise, you might as well wait and see if the situation improves. Aside from the whole issue of rates, Spotify probably won’t do much for your exposure either. It’s an on-demand service and while it does offer some discovery tools (such as playlist sharing, Facebook connection and a related artist feature), it’s unlikely that these will be of much benefit to you unless you already have a sizeable audience using the service.
Taking everything into account, the evolution of Spotify may prove the most interesting new music business case study in the coming years.