Apps & Mobile

This Label Earns Almost 80% Of Revenue From Spotify

Kalle_magnusson_hybris_spotifyGuest post by Eliot Van Buskirk of Evolver.fm.

When a Swede talks about Spotify, it helps to have a grain of salt nearby. The freemium streaming service seems to be something of a matter of national pride over there.

Some places, like England or Jamaica, invent major musical styles that traverse the world. Sweden produced the means with which some of the world’s most fervent music fans now listen to that music.

According to Swedish pop label Hybris, over the course of the last six months – the same six months for which many recording artists aren’t seeing royalties yet – Spotify’s current payouts to the label for a 2005 hit single have eclipsed what it made selling the song on CD, back when it was a top ten radio hit. According to the head of that label, this doesn’t quite represent a return to the glory days of the ’90s before the internets stole everybody’s candy, but it adds to our mounting pile of evidence (tag: $potify) that streaming music can pay.

In a blog post excerpted from Media Evolution’s “Access Over Ownership” report, Hybris head Kalle Magnusson (pictured above) claims the following:

  • The label’s revenue per play from Spotify has tripled in the past year.
  • For a single that was released in 2005 that was a top ten radio hit (listen below), Hybris receives more money from Spotify per quarter than it sold in the entire year after the single’s release. Keep in mind that this song is seven years old, and no longer receives heavy radio airplay or other promotion.
  • Spotify is “by far” the label’s largest source of cash, providing “almost 80 percent” of its overall revenue.
  • In addition, Spotify’s payments to the label are “increasing all the time” (something we also heard from a guy who manages the distribution of over 10,000 labels, most of them not Swedish, to Spotify and other services).
  • Four out of five Spotify-using Swedes now pay for the app. Again, some of this is a matter of national pride, and Hybris puts out Swedish music. However, the population of Sweden is just north of 9.3 million, which is about three percent of the U.S. population, so even with a much lower conversion rate here, overall payments to artists and labels from the U.S. could be as significant.
  • Perhaps even more encouraging, his data backs up our widely-circulated theory that streaming music will improve culture: ”As of spring 2012, Vapnet [the band that recorded the above-mentioned single] has not released an album for four years. ‘Kalla mig’ hasn’t received a big boost, hasn’t been part of an ad campaign, or used in an awesome TV show. But it’s still a good song, and people have continued to listen to it and it’s attracted new listeners.”

We’ve focused a lot on Spotify during our investigation into how much artists are making from streaming. It’s the most popular on-demand subscription service. If you are a label, publisher, or artist with something to tell us about another service — or about how much you are making from all the streaming services combined — please let us know. We’re hoping to keep looking into how much artists are really making from streaming. Every bit of evidence, in either direction, counts.

 

Share on:

12 Comments

  1. “According to Swedish pop label Hybris, over the course of the last six months – the same six months for which many recording artists aren’t seeing royalties yet – Spotify’s current payouts to the label for a 2005 hit single have eclipsed what it made selling the song on CD, back when it was a top ten radio hit.”
    What is the correlation between CD sales and Singles Sales?
    Why are you going back to 2005?
    “The label’s revenue per play from Spotify has tripled in the past year.”
    What are those numbers?
    Eliot, the number we are really missing is in the years before Spotify what was the gross revenue for music sales.
    In other words does Spotify now have 80% of a $20 million dollar industry, but before they existed it was a $50 million dollar industry. in other words have they brought value to the business or merely decimated revenue to gain market share?
    Without that information, your entire article is worthless. So go home, do your homework and let us know what you find out.

  2. what does he make????? seriously, if you want to have any credibility, you should tell us some figures like this.
    fuck spotify. and fuck this website for obsessing about it at the expense of real progress in the industry.

  3. Chris, your article says $20,000 but it is even better. I have found the original Börsen article. The revenue in that month was 200,000 Swedish kronor = 28,910 U.S. dollars!!

  4. @ TearDropCity – are you fucking mad?
    The Beatles/ Stones/ Who – invented guitar pop
    That should be enough,
    but i’ll also add Punk,
    and Acid House/ Dance/ Drum and Bass/ Dubstep etc.
    And all art is derivative of something else, so yes they were all influenced from somewhere else too.
    Tit.

  5. I think this sort of article is a bit misleading in the way the language often used in politics is misleading. “Label earns 80% of its revenue from Spotify” doesn’t mean anything really, unless you say what its annual revenue is. If it’s an indie, maybe the guy does it on the side and makes $5k/year from it, so 80% of that $5k is what comes from Spotify. The headline alone, not to mention the article itself, implies that there is huge money being made here. This article could be made better by wrapping it in the proper context: how much does this label make annually, how much of that comes from sales and how much of that comes from Spotify streaming revenue.

  6. Besides the fact that Eliot will probably never even see these comments, the thing everybody including Eliot is missing is that the situation in Sweden related to Spotify is unlike any other nation in the world and is unlikely to ever be like any other nation in the world:
    Look at this article from last fall which is pulling info bites from a survey done in Sweden:
    http://paidcontent.org/2011/11/17/419-big-in-sweden-spotify-crazy-youngsters-are-bellwether-for-music-biz/
    “Amongst those aged 16 to 25 years, almost 9 out of 10 (85%) are on Spotify and half (55%) listen daily.”
    “In Sweden, Spotify usage is even running ahead of use of community sites, IM, blog reading and game playing.”
    This may be the future of streaming music but I don’t think Spotify will have the worldwide dominance it has in Sweden.
    And, yeah, I’d like all the other stats you guys ask for but you know what the other problem is, in a blogging context nobody makes enough money to do all the work you want them to do.
    The people that have all the stats you want are mostly consulting big corporations and companies hoping to be big corporations. Or you have to pay hundreds of dollars for the research reports.
    And we all know that people commenting on blogs aren’t spending money on research. The people that spend that money don’t comment on blogs unless they’re defending their own company or trying to build their own consulting brand.
    ~end of rant~

  7. Here in The Netherlands Spotify has 1.6 million users. That’s 10 % of the population. It took 2 years to reach this market share.
    We may not reach the same percentages as Sweden, but streaming is still growing fast. We are getting close. iTunes sales versus streams are now 1 : 200 a business insider told me.

  8. My last Spotify accounting for NL shows net income of $ 0.29, so I think “free” is still triumphant in your country.
    As my label has not even seen a Spotify accounting for the last 3 accounting cycles, I’d say there’s trouble brewing between Spotify and certain aggregators.
    Even the notoriously under-reporting YouTube managed to best Spotify by 50% in the USA, looking at their respective last months of reporting.

  9. Could be, but my aggregator Zimbalam pays the same rate regardless if it is a free or paid user. $0.005 at the time.
    Which aggregator do you use?
    The 1 iTunes sale : 200 Spotify streams is for Top50 music BTW. My source is responsible for the top lists.

Comments are closed.