Spotify's Own Math Suggests Musicians Are Still Getting Hosed

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."

Comments

Your call

[oldhack]

Pull your tunes out of their service if you don't like it.

Re:Your call

[Entropy98]

It actually doesn't sound that bad, 400,000 web pageviews pays nowhere near $3,000.

Re:Your call

[Z34107]

You're comparing three minutes of frivolous background noise to the written word as if they were of equivalent value?

Seriously?

Re:Your call

[fermion]

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:Your call

[mjwx]

Pull your tunes out of their service if you don't like it.

You do know that most "artists" dont have that control.

The reason writers and singers are getting screwed has nothing to do with Spotify, rather it's the system set up by the music industry to ensure that most cant profit or control their own works.

Spotify is the player, however it is the game that's rigged.

Re:Your call

[Anonymous Coward]

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.

The problem is that Elvis and the Beatles et. al. were successful because their music got played on radio which then contributed to sell their albums. The problem is that nowadays hardly anybody buys albums if they can avoid it, they just use Spotify instead or simply torrent the music and that trend will increase. If we are to regard Spotify as a modern equivalent of the radio stations of the 1960s (and some music industry person actually commented you should regard Spotify as a publicity mechanism, not as a way to make money off of music) then my local Pirate party is in trouble because they have been billing Spotify as an example of a __replacement__ for the old outmoded business model of selling records/CDs. I just witnessed a lengthy debate between a local Pirate party politician and a rather well known musician where the musician presented real world figures over the pitiful amounts of money he made off of his more popular songs on Spotify as opposed to CDs. He was trying to voice the exact opinion being voiced in this article, i.e. that musicians are getting hosed way worse by Spotify and similar services than they ever were by the old Studios (who are major shareholders in Spotify by the way). Meanwhile the Pirate just kept harping on about Spotify and others being the new business model and ignoring his argument and his experience completely. The whole debate reminded me of the total disconnect between Democrats and Republicans in the US. I don't really disagree with the Pirates on this particular issue, there is a pressing need for new business models that are fair to musicians and not just the gatekeepers of distribution services. Some of these Pirates genuinely seem to be trying to solve the quandary of creating a new business model to enable Musicians to earn a living in the internet age. Their problem is that they just keep coming across as arguing that (and I get this a lot when talking to people about political parties): 'we are entitled to pirate because we can and therefore we are entitled to get stuff for free'. This is probably not the impression Pirate parties want to project since it tends make them look like freeloaders and freeloading in my experience tends to piss off large portions of the electorate. Holding Spotify up as an example isn't helping either.

Re:Your call

[gl4ss]

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

[GrumpySteen]

The problem is that nowadays hardly anybody buys albums if they can avoid it

Your "hardly anybody" bought 204.8 million albums and 1.34 billion individual songs last year.

the musician presented real world figures over the pitiful amounts of money he made off of his more popular songs on Spotify as opposed to CD

Would you pay $20,000 to rent a car for one trip to the store?

No? Then why would you think that people should pay as much to listen to a song one time as they would to buy it on CD? Yet that seems to be the argument the musician was making.

Money Paid != Artist Paid

[elmer at web-axis]

Lots of middle men still exist between a artist and the end listener. All with very sticky fingers handling the money.

Are they really being hosed?

[Runaway1956]

What is there that dictates that an artist should be compensated every time a song is played? The rest of us are paid by the hour, by the job, under contract, or whatever. What is so special about artists, that they should be paid in perpetuity for having done a performance?

The REAL problem is, the artists get such a small piece of the pie, in comparison to the major labels. When a song becomes a global hit, the label makes billions, the artist gets a few million as a reward for enriching the label. And, all the REST of the artists are left believing that entertainment should pay big.

Dude - if you love music, play your music. If you love money more than you love music, maybe you should lay your guitar aside, and learn how to make a living. Musicians are cool and all, but FFS, we don't owe you a living for singing and playing.

Re:Are they really being hosed?

[viperidaenz]

That's why artists tour. They make shit all on album sales. Especially if they didn't write all the songs they sing. They make lots more with ticket sales.

Re:Are they really being hosed?

[Sarten-X]

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:Are they really being hosed?

[ApplePy]

This is absurd. Do you not value music? Maybe you don't listen to music. How is an artist supposed to go on about creating music and making a living with no financial support.

Try local music for a change. Really local. Like those guys you never heard of down at the corner pub on Friday night. They're not U2 or Garth Brooks, but hey, for a $5 cover charge and $3 beers, who's complaining?

Those guys aren't in it for the money. They have real day jobs (mostly) and play on weekends because they love music. They know they are never going to play to a stadium, and they don't care.

Do you get what you pay for? Maybe. Can you have a beer with the band after the gig? Yep! Try that with the stars.

Thing is, people who really love to play music don't care about money for it. Sure, it's nice to keep them in beer and guitar strings, and they get that. But I just don't go along with your premise that good music can only come from people who are *lucky* enough to make a living at it.

Re:Are they really being hosed?

[russbutton]

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:Are they really being hosed?

[CastrTroy]

I think the real issue with doing music, or writing, or basketball (any sport) for a living is that there is a very small job market when you think about it. Sure everybody listens to music, but everyone tends to listen to the same 20 musicians. Same with basketball, there's only 30 teams, and 15 players per team, that's about 450 players. There's an extremely small number of people who make money in any of these professions, and the rest of the people make little to no money A "programmer" who can't even program fizz-buzz can easily make a decent salary but the equivalent of a musician or athlete with that level of talent is basically worthless. So sure, there's a lot of programmers (millions) who are making a lot of money, but that's because there's an actual demand for that many programmers. There isn't a demand for a million musicians, a million basketball players, or a million writers. There's a demand for millions of shelf stockers, but there's 10's of millions of people who are capable of doing the job. With programming, the demand for people outnumbers the number of people qualified to do the job. So of course they're going to get paid a lot.

So what you gonna do?

[future assassin]

> (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.

Re:So what you gonna do?

[UnknownSoldier]

Concur 100%.

The artist don't want to admit that they need to pay for popularity which is no different from the existing system.

Real bands just work hard their entire life to expand their fanbase instead of whining about it.

Hosed compared to what?

[EvilSS]

One of the articles today covering this compared the royalty rates to those paid by radio, which were about 10x what spotify pays. The problem is a) how many indie artists get ANY radio play and b) Radio royalties are per play, spotify royalties are per play per user. Sounds to me like radio stations are the ones giving them the shaft.

Re:Hosed compared to what?

[radarskiy]

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.

Useless without context

[Just Some Guy]

So, how much does an artist make per single over-the-air play on a station with 550,000 listeners? If as many people listened to Spotify as to broadcast radio, half a million plays per month seems absolutely trivial.

Without knowing how Spotify's pay compares to radio, this sounds like little more than an emotional rant from Clear Channel.

30/70 split spotify/rights holders

[Anonymous Coward]

Summary fails to mention that the payout is 70% of Spotify's monthly revenue divided by number of tracks played in that time period, distributed to the rights holders (BMG/EMI/Warner/maybe even you, puny indy guy) based on play count. If you're under a label, you then apply your contract rate and finally get your cut of the proceeds, which is probably not a lot.

Ben Folds on the issue...

[Anonymous Coward]

Ben Folds, one of my favorite artists, spoke on the issue and said essentially... "I think people are going to look back on this time 50 years from now and say, wow, people could become millionaires just by playing music".

It is really only the last 50 years or so that groups became enormously wealthy based on the music they perform, and now things are returning back to normal.

Goldmine compared to radio

[EmperorOfCanada]

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.

What's a stream?

[Solandri]

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.

Content ID

[tepples]

What does Youtube pay for 400,000 page views?

I was under the impression that revenue from YouTube's Content ID program was under nondisclosure agreement.

Our Spotify Experience

[dizzywiggle]

Spotify has been an interesting experiment for my band, The Wee Lollies (shameless plug - www.theweelollies.com). A single stream garners us a mere $0.0046. Three streams pays out $0.0199. I don't really understand that math, but it is what it is I guess.

All told for 2013, we've earned about 28 cents from Spotify. Granted, we're not a national band, we're not on a label, and we're probably mediocre by most folks' standards. So people aren't rushing to add us to their playlists.

So the takeaway for us is that Spotify isn't really an income tool for new bands. You already have to be quite successful for Spotify to give you enough plays to earn enough to pay for, say, lunch at Taco Bell. It's not even a decent exposure tool as our stream count is way low. We really expected more organic plays. We're kind of surprised that that didn't happen.

At this point we're still on Spotify because, well, why not? As an artist, you want to make it easy for folks to hear your material. But the reality is from a business perspective, it doesn't make sense. After you account for your own time and energy keeping track of everything, it's really a negative return.