Why Does Spotify Pay So Little? [An Analysis]

Spotify_650Both artists and their loyal listeners have expressed disdain about artist payouts (or lack thereof) – but why are streaming services like Spotify, who are seemingly so successful, paying the artists that attract listeners so little? Jack Stratton tries to calculate an answer.

Take a single stream of "The Birdwatcher" in March 2014. Terry, the user, lives in the US and pays $9.99/month for Spotify. I, the artist, receive a total of $0.00786 over the next nine months:

                      Licensed Use of Master — $0.00668
Writer’s Performance Royalty — $0.00030
Publisher’s Performance Royalty — $0.00030
Streaming Mechanical Royalty — $0.00058
Total — $0.00786

Less than a cent. How did Spotify get this number?

Spotify pools its revenue for March, gives 70% to artists and takes 30%. This is based on iTunes’ 70/30 split.

Spotify splits up the artists money based on percentage of total streams on the platform.

                 total US revenue: $300M
all artists                           spotify

My proposition is simple and will never happen.

Instead of pooling all subscription money and distributing to the entire pool of artists, do it individually.

                  terry’s revenue: $10
artists terry listened to            spotify

Working backwards the average US listener logs 890 streams per month.

Terry is below average. In 2014 he averaged 350 streams per month. If his subscription money only went to artists he listened to, it would’ve been $0.02 per stream.

Instead it was $0.00786.

Spotify_LogoNormal listeners are subsidizing yoga studios that play Spotify all day. Catalog artists have to compete with Top 40 for the same pot of money. If someone likes Vulfpeck and Daft Punk on iTunes, they spend a dollar on Vulfpeck and a dollar on Daft Punk.

I resent Daft Punk’s summer hit on Spotify. 

Splitting money up individually also eliminates Sleepify.

The individual model is a step forward for subscription, but Daniel Ek reminds us there’s simply not much money in music (Charlie Rose introduces Ek as being worth $300M).

Artists are frustrated. And lite listeners should be too.•

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1 Comment

  1. That would be a far better model. They really should only pay for the paid user’s streams while strictly limiting free subscribers plays.
    They could also add an option to download a song or album for a fee or the ability to donate to artists.
    Ultimately, Spotify doesn’t care about artists, only money. They are killing music.

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