Spotify Paid Out Over A Billion To Labels This Year
Streaming services in general tend to take a lot of heat from record labels, and Spotify is no exception, but is this attitude justified? According to new information, the streaming platform has already shelled out 1.2 billion in royalties this year, suggesting it may be benefiting the industry more than previously thought.
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Guest Post by Bobby Owsinski on Music 3.0
The major record labels seem to have it out for Spotify, but the platform is contributing mightily to their bottom lines. It’s been reported that the company has already paid $1.2 billion dollars in royalties to the music industry this year, and over $5 billion lifetime. The platform is paying out around $133 million per month, and over $4.4 million a day, according to Music Business Worldwide.
Spotify recently announced that it now has 40 million paid subscribers, which goes a long way to contributing to that royalty payout. Apple Music, the next most popular streaming music platform, has less than half that at 16 million. The music industry currently favors Apple Music because it doesn’t offer a free ad-supported tier like Spotify. Allowing users to access music for free, even with ads and listening limitations has been ridiculed by artists, songwriters, publishers and labels, but many platforms, including Spotify, feel that it’s important to introduce users to the the value of streaming music first before asking them to pay. That said, many users are now hip to the the benefits of streaming music and that introduction may no longer be as necessary as it was previously.
Regardless, Spotify’s royalty payments are now a huge part of the revenue stream for most labels. Even though that amount still doesn’t make up for declining CD and download sales, the streaming user numbers are steadily rising, and many feel that it’s only a matter of time until streaming makes up the largest segment of recorded music industry income. Spotify might be leading the way, but until it eliminates its free tier (which has been rumored), the company will still receive the wrath of the industry. It won’t be alone, however, as other companies offering the same free tier will be lumped in the same boat, as the industry tries to move away from anything free.
I don’t see the big labels complaining about streaming services much. They receive their upfront payments to make their catalogs available and the $billions of royalties but they don’t pass that money to the artists in a way that is a fair compensation for the artists being streamed.
The labels own Spotify.
I’m just hoping that the growth in streaming outpaces, or at least keeps up with, the declines in what’s left of CD sales and download sales. I know our overall income from iTunes/Apple Music is lower than it was for just downloads before the launch of Apple Music. If the whole industry just keeps cannibalizing and shrinking for the next few years that’s gonna be rough… If it at least treads water throughout the transition that’s not GREAT, but it’s not bad.
Lord forbid the industry actually gets a break and overall revenue grows. I don’t know if I trust that 8% increase in the first half of 2016 figure, but I’m keeping my fingers crossed.