91–100 of 146 posts
Earlier quoted context omitted.
Ironically it's widely known that the labels get 70% of all music revenue and Spotify gets to keep 30% for itself (which famously hasn't been enough to even turn a profit). You couldn't be more wrong.
You're right, I didn't know this. I was under the impression that Spotify self-reported its split and that it wasn't really auditable in any way. Can you link to a source?
I think a better payout structure for Spotify would be to go per-user. For example, for each subscriber a given amount from their subscription plan is earmarked for payouts. Let's say about 4$ per user. We divide that amount by the number of streams the user had that month, and we simply pay that amount to the artist. Examples: - I only listened to one song this month? The full 4$ go to that artist. - I listened to 2…
This seems a better approach, but in reality I don't know if it is actually better.
Per-stream rates are actually similar to the per-listen equivalent for CDs, and the revenue difference is because listeners have different behavior now that music is less scarce and is a la carte.
In the CD era, artists earned more revenue because listeners had to buy whole albums, even if only a few of the tracks were worth listening to.
People also listened to fewer artists, because listening to something new was expensive.
Some napkin math:
Say a CD costs $18, the artist gets 6.6% of that, it has 12 tracks, and you listen to the whole CD 30 times while you own it. That gets you $0.0033 per track listen.
(Thinking of how I listened to CDs twenty years ago, an average of 30 listens feels like an okay estimate. Some albums more, some less.)
Gizmodo reports Spotify pays $0.003 per stream.
While there's some wiggle room in my CD calculations, I don't think they're off by e.g., 10x.
And yes, best way to support artist is live shows that aren't run by Ticketmaster.
I think a better payout structure for Spotify would be to go per-user. For example, for each subscriber a given amount from their subscription plan is earmarked for payouts. Let's say about 4$ per user. We divide that amount by the number of streams the user had that month, and we simply pay that amount to the artist. Examples: - I only listened to one song this month? The full 4$ go to that artist. - I listened to 2…
This would incentivize artists to release more, shorter tracks.
Shorter tracks would also mean users have more opportunity for listening to a variety of songs/artists. A single user can only listen so much in a day (capped at 24 hours, and more likely 12 hours if they aren't doing some kind of phantom streaming). This would then ultimately dilute the payments to artists releasing a large number of shorter tracks.
The funniest thing about Spotify was that so many people stopped downloading illegal content because all of a sudden they could legally pay for it and support artists. Now it looks like that supposed deal was a sham and the money doesn't make its way to the artists just the distributors and middle men (classic tech move). And yes, best way to support artist is live shows that aren't run by Ticketmaster.
I'm not familiar with the structure of stream payouts on Spotify, but if 80 million streams gives 12 dollars, that means Taylor Swift's 26.1B streams give ~4k? I knew the rates were bad but damn...
Taylor Swift is also a fun example as she refused to be on Spotify for some time because of “artists get paid pennies” reason. But then she signed some deal eventually to increase payouts basically for everyone. Now it’s been a while, and Spotify is way more used nowadays, so I’m not sure where the power balance is anymore.
https://www.theverge.com/2023/11/20/23969690/google-spotify-...
I think a better payout structure for Spotify would be to go per-user. For example, for each subscriber a given amount from their subscription plan is earmarked for payouts. Let's say about 4$ per user. We divide that amount by the number of streams the user had that month, and we simply pay that amount to the artist. Examples: - I only listened to one song this month? The full 4$ go to that artist. - I listened to 2…
Also, would law of big numbers make it so that this kinda evens out like this anyways with today's system?
I think a better payout structure for Spotify would be to go per-user. For example, for each subscriber a given amount from their subscription plan is earmarked for payouts. Let's say about 4$ per user. We divide that amount by the number of streams the user had that month, and we simply pay that amount to the artist. Examples: - I only listened to one song this month? The full 4$ go to that artist. - I listened to 2…
Your idea has been suggested many times but as other sibling comments already noted, Spotify didn't have the leverage in business negotiations to implement that type of payout.
In other words, Spotify needed the vast song catalogs from the Universal + Sony + Warner -- more than those Big 3 Labels needed Spotify.
Your idea has higher payouts (i.e. "more fair") for independent musicians at the expense of less payout for the Big 3 Major Labels. In contrast, the current payout system favors the Big Labels at the expense of independents. Why did this happen? Because the Big Labels have more leverage.
Some factors leading up to the Big Labels negotiating from a position of strength to get more favorable treatment from the "weaker" Spotify:
- 2000: Napster lost its case against Metallica and RIAA
- 2000: mp3.com lost its case for "users CD-ownership-verify-then-playback service"
- 2003: Big Major Labels felt they got screwed by Apple & Steve Jobs iTunes deal with the flat 99 cents pricing.
By the time of 2011 licensing negotiations, they were already winning their lawsuits against the internet "stealing" their music. They were in no mood to give Spotify a sweet deal for access to their song catalogs.
This is why the no-name artists get fractions of pennies adding up a few dollars while Taylor Swift gets millions from Spotify. This unbalanced financial arrangement was the carrot to help get the Big Labels on board. To add to this, Spotify also gave the labels part ownership stock[1]. In contrast, smaller independents like CDBaby and TuneCore didn't get offered Spotify stock. Examples like that should give an idea of how much leverage the Big Labels had.
[1] https://thehustle.co/the-economics-of-spotify/#:~:text=The%2....
I think a better payout structure for Spotify would be to go per-user. For example, for each subscriber a given amount from their subscription plan is earmarked for payouts. Let's say about 4$ per user. We divide that amount by the number of streams the user had that month, and we simply pay that amount to the artist. Examples: - I only listened to one song this month? The full 4$ go to that artist. - I listened to 2…
It does create weird incentives though. You make more money not by people listening to your music more but buy the people that do listen to you listening to other artists less. I can already see the internet: "Don't listen to your discover weekly or new music friday it hurts the artists you like."
The first $4 of your monthly sub is divided amongst all artists you listen to based on time spent listening, and any additional money you decide to add to your subscription is distributed to artists as you see fit. You can elect to use the same distribution algorithm as the first $4 of your subscription, use the same algorithm with different weights (e.g. your favorite artists listen time is doubled before payout is computed) or you can choose to have an arbitrary percent of it go to whatever artists you want, even if you don't listen to any of their music. Spotify already has to have a payment engine to support paying all the artists anyway, generalizing it beyond fixed subscriptions seems like an organic way to address the issue of unfair income distribution if they were interested in doing so (I don't think they are).
In the above system, the issue of "don't listen to other artists" only comes up if you don't have enough money to give to the artists you want to support, no different than the incentives of "don't buy the CD of artist A or you won't be able to afford the CD of artist B, who you like and wish to support more."