Why does Spotify pay artists so little

Why Does Spotify Pay So Little? [An Analysis]

Both 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.

Normal 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.•

— Jack Stratton

Guest Post on 03/23/2015 in D.I.Y. | Permalink | Comments (1)

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