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Music Businesses The Almighty Buck

Spotify's Own Math Suggests Musicians Are Still Getting Hosed 244

Posted by Soulskill
from the go-put-your-favorite-band-on-repeat dept.
Nerval's Lobster writes "Spotify wants to change the perception that it's killing artists' ability to make a living off music. In a new posting on its Website, the streaming-music hub suggests that songs' rights-holders earn between $0.006 and $0.0084 per stream, on average, and that a niche indie album on the service could earn an artist roughly $3,300 per month (a global hit album, on the other hand, would rack up $425,000 per month). 'We have succeeded in growing revenues for artists and labels in every country where we operate, and have now paid out over $1 billion USD in royalties to-date ($500 million of which we paid in 2013 alone),' the company wrote. 'We have proudly achieved these payouts despite having relatively few users compared to radio, iTunes or Pandora, and as we continue to grow we expect that we will generate many billions more in royalties.' But does that really counter all those artists (including Grizzly Bear and Damon Krukowski of Galaxie 500) who are on the record as saying that Spotify streaming only earns them a handful of dollars for tens of thousands of streaming plays? Let's say an artist earns $0.0084 per stream; it would still take 400,000 'plays' per month in order to reach that indie-album threshold of approximately $3,300. (At $0.006 per stream, it would take 550,000 streams to reach that baseline.) If Spotify's 'specific payment figures' with regard to albums are correct, that means its subscribers are listening to a lot of music on repeat. And granted, those calculations are rough, but even if they're relatively ballpark, they end up supporting artists' grousing that streaming music doesn't pay them nearly enough. But squeezed between labels and publishers that demand lots of money for licensing rights, and in-house expenses such as salaries and infrastructure, companies such as Spotify may have little choice but to keep the current payment model for the time being."
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Spotify's Own Math Suggests Musicians Are Still Getting Hosed

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  • by future assassin (639396) on Tuesday December 03, 2013 @11:18PM (#45591515) Homepage

    > (Grizzly Bear and Damon Krukowski of Galaxie 500) who are on the record as saying that Spotify streaming only earns them a handful of dollars for tens of thousands of streaming plays?

    So why don't you pull your songs from Spotify? Why not put them where you'll make bags of money? Wait you probably can't as you don't own the rights/distribution rights to your music?

    Seriously you'd thin by now, and by that I mean ( its not 1997 and the technology has been there for years) the artists as a collective would have created their own distribution service and raked in the dough.

  • by EmperorOfCanada (1332175) on Tuesday December 03, 2013 @11:27PM (#45591581) Homepage
    I am not saying that spotify money is enough. If anything it sounds like they are just another group exploiting artists but if I understand they are still a goldmine compared to radio. These artists are saying that they got some crappy little payment for 1 MILLION listens making it seem like they were ripped off and that 1 million is a huge number. But 1 million would be a normal number listening to a NY radio station at primetime and the same artist would be all chuffed that they are in a NY radio station's prime time rotation. But that radio station would be paying peanuts for that.

    I suspect that this is why some of the more "successful" (I'm not saying good) artists just tour tour tour and can barely be bothered to politic their way in to the top 10 charts. This way they have much more control over the money. If some promoter tries to set up a concert where the artist is getting shafted then they just won't show up. Worst case contractually they will just get "laryngitis".

    I have read an interesting thing about iTunes though. Many dead music libraries from decades ago suddenly became viable with iTunes. Some artists who charted in the 60's and 70's said, "I haven't had a royalty check in 15 years even though I hear my stuff on radio every now and then. But after I put my stuff on iTunes I'm now getting around $30,000 a year."

    So one of the things with Spotify being ragged on by the artists might come from the fact that the numbers are presented to the artist making it clear that they aren't getting much money. Whereas their other distribution channels are much cloudier so they don't know how badly they are being screwed.
  • Well... (Score:2, Interesting)

    by Anonymous Coward on Tuesday December 03, 2013 @11:27PM (#45591583)

    How do Spotify royalties compare to broadcast royalties []? Which at least in the U.S. apparently amount to 18 cents per 1000 listeners (or $0.00018/listener, or if my napkin math is right... 1/33 of what Spotify pays per listener?)

    Doesn't seem like new media's getting rich, either. Do any of these services turn a profit?

  • What's a stream? (Score:5, Interesting)

    by Solandri (704621) on Tuesday December 03, 2013 @11:33PM (#45591617)

    Let's say an artist earns $0.0084 per stream; it would still take 400,000 'plays' per month in order to reach that indie-album threshold of approximately $3,300.

    If a "stream" is a single person who listens to the artist in a month, then yeah 400,000 'plays' is a bit onerous.

    If a "stream" is a single song listened to once, and the artist has (say) 10 reasonably popular songs, then only 4,000 fans worldwide listening to each of those songs once every 3 days would be enough for the artist to live comfortably. That doesn't sound too bad.

  • by radarskiy (2874255) on Tuesday December 03, 2013 @11:38PM (#45591635)

    a) Radio pays 0 performance royalties, only publishing royalties.

    b) The publishing rights clearinghouses distribute royalties based on sampling, despite the fact that radio stations are required to submit their complete logs books. So if you're far enough down the long tail they may never recognize your play count.

  • by Sarten-X (1102295) on Wednesday December 04, 2013 @12:28AM (#45591835) Homepage

    Copyright is only a recent phenomena.

    That's because mass copying is a recent phenomenon. Before easy copying techniques, art was promoted by patronage, as the GP suggests. It's still the effective system in small theaters and galleries around the world, and of course all manner of "arts" online. Get rid of copyright, and the patronage would still exist... it'd just be much more difficult for an artist to rely on an income, because there'd be no middlemen absorbing the financial risk.

  • Re:Your call (Score:5, Interesting)

    by fermion (181285) on Wednesday December 04, 2013 @01:41AM (#45592153) Homepage Journal
    My understanding is that much of this is based on compulsory licensing. This means that if you record music, and sell music, then it fair game for broadcast. This has been the model for a long time. And it has worked. One wonders if the Beatles or Elvis would be successful if the radio did not pay to advertise their music. Yet much of the current issue we have from streaming is because many labels and artist think they left a lot of money on the table when the licensing for radio was established. Many labels and artist seem to believe that radio is stealing money from them, although one wonders how a hit can be generated more cheaply than through airplay. Airplay that depends on broadband owned by the public, BTW.

    Here is why internet radio is not stealing money from artist. Because it pays more. My understanding is that it pays directly to artists, not through middlemen who manipulate the numbers to pay royalties to artists based on fictional 'credits'. So if an artist is to get $100 from spotify, that is $100 that they would have never gotten through radio, and part of the money is not being diverted to more 'popular' artists or just not paid at all because you do not meet the quarterly threshold.

    I also think that the labels might be making a long term mistake by believing they need to maximize upfront profits in streaming instead of looking at the promotional possibilities. As an example I look at Eminem. He got really pissed off at Napster when his music was on the site back in 2000. However, his music was not playing on the major young peoples stations in 2000. He was playing on some stations I listened to, in particular a hybrid english/spanish/hip hop(ther is fair amount of really good spanish hip top) station, but was not at all what the 'in crowd' listened to. Suburban parents were not comfortable with rap. But kids were hearing the music, and I wonder where from. Could it be they were downloading it to the computers? From Napster. I recall when he broke through to mainstream stations. For instance I was in the gym and the DJ(they still existed back then) was pleading with listeners to stop calling requested 'Stan' as they were going to get it on the air as fast as they could. As I said, most stations were not playing it, it was listener demand.

    This has all been rehashed millions of times. That the artists are being robbed by streaming. I don't know. In the US minimum wage is less than $8 and hour, so if you spend 40 hours on a song, and get $300 in royalties, I am not sure who you are behind. If I spend 40 hours coding, and someone uses it once, am I entitled to $300? The reality is that recording music, like coding or anything else, is a speculative enterprise. Unless you create some work for hire, where someone else is going to take the risk and gain the majority of the reward, there is no entitlement to pay.

    Frankly, if all the big talent that wouldn't work for less than a million dollars a year, I am sure that we would be back to days where most work was done 'for hire' and the artists were paid the absolute minimum possible.

  • Re:are you kidding? (Score:2, Interesting)

    by Anonymous Coward on Wednesday December 04, 2013 @02:07AM (#45592269)

    some quick math.....
    Numbers pulled from the web, SEC etc.

    24million active users
    Assume advertising covers itself for free users.

    6,000,000 active monthly pay users

    $15,000,000 @ $5 a month (assuming 3,000,000)
    $30,000,000 @ $10 a month (assuming 3,000,000)
    $45,000,000 / month in cash

    20,000,000 song database

    $2.25 per song per month to split up

    Figure a bell curve distribution of popularity and its easy to see that the vast majority of songs in their library aren't getting much at all.

    48 songs per day (assuming 4 hours of listening)

    Please check out the still relevant info graphic from InformationIsBeautiful.

    My friends have a fairly successful religious music group that is not signed to a label. They make enough to have 4 members happily employed and have houses paid off etc. in their first 4 years.
    They say that in the last year, there has been a sharp down turn in digital purchases through iTunes amazon etc.
    Most of their money comes through song licensing these days instead of sales and they are having to rethink their whole business model to keep it going.
    they have always made a laughable amount of money through streaming. Last year was $28 for spotify.

    People pay for a streaming service and then they reach a content saturation point.
    They also consume their content differently, nobody i know uses spotify/pandora and then switches to play an mp3 on their device for 1 song and then back, they are locked in, they just press "next" until something comes up.

    It is obvious that it is hurting artists bottom line.

    Some may say "Who do these bastards think they are to earn so much for so little?" let me tell you, for an indy band it is years of work to finally make it. so you have to aggregate the cost over the time it took to master your songwriting and musicianship at high financial risk. working at a factory for years to pay the bills so you can come home and write. If you spread the money they've made over the past 4 years over the 11 that they have put in to "Get there", it's more of a median wage with a high faillue risk.

    That said, there are a lot of undeserving whiny jackoffs out there regardless of profession.

  • by russbutton (675993) <> on Wednesday December 04, 2013 @03:04AM (#45592459) Homepage
    There are a lot of scientists and engineers who are also very fine musicians. The difference is that they are capable of doing something other than music. I'm one such person. I've been playing trumpet all my life. I've just never had any illusions about doing it for a living. I make my money as a Linux sysadmin. Been in the UNIX/Linux biz since '89.

    People who make their living in music do so because they really aren't cut out to do anything else. I know. I'm married to one. She owns about $100,000 in instruments and makes about $45,000/year as a professional violinist.

    I don't know ANY musicians who think they are due Great Wealth. They just want to make a living and pay the rent like the rest.

    What's kind of funny in this discussion is that in the San Francisco area, the general population is complaining about all the techies at companies like Twitter, Zynga, etc who have taken over much of the city. Rents are going through the roof. $2500/month gets you a 2 bedroom 1 bath apartment these days. More in better neighborhoods. Folks here are talking about how the techies are all self-indulgent and act entitled. Pretty much the same way you talk about artists.
  • Re:Your call (Score:4, Interesting)

    by gl4ss (559668) on Wednesday December 04, 2013 @07:23AM (#45593329) Homepage Journal

    there's a difference in creating something and hoping to get paid than creating the work for hire(which is most work). if you're pouring your soul into something just for the monetary reward expectation.. what kind of soul is it?

    fyi, practically all the composers prior to modern copyright lived off from doing works for hire. you wanted something cool for your 1700's wedding, you paid some dude to compose it.

    just because you can create something doesn't mean that others are obligated to feel like paying for it... a lot of music people poured their hearts into is just pure shit. some of it is good. how would you know without hearing it though? pay upfront 20 cent per listen(stream)? ? fuck no.

    let's say that some dude can create 20 soul crunching songs in a year, does he deserve to be paid for them just because he creates them? why? what about if he creates 200? is he going to go on a strike if we don't pay up despite us not even wanting to listen to his songs?

    I think the people bitching the most are people who are not being listened on spotify at all - and wouldn't be getting any radio plays either in a demand driven radio culture(demand creating radio culture not counting).

  • Re:Your call (Score:2, Interesting)

    by peragrin (659227) on Wednesday December 04, 2013 @08:05AM (#45593487)

    you are missing the point. the recording studios killed the album for sales. they did this in the 80's and 90's. Sure a couple of groups put together actual albums but mainly they are just a group of randomly selected 3 minute clips like custom mix tapes only containing one artist.(sorry custom mix playlists containing one artist, for those born after 1990) People got used to buying singles, and albums for one track long before napster was ever dreamed up. So when mass distribution of music started happening singles was how it was done.

    Besides 90% of the music today are 3 minute pieces that have no bearing on anything else produced but the teams of writers. Every once in a while you get an album thoughtfully put together, but mostly it is just random songs stuck together so they can sell another "album"

"If that makes any sense to you, you have a big problem." -- C. Durance, Computer Science 234