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Many of the artists I discovered via Spotify / Google Music make pennies from these sites. Yet Spotify is not only still unprofitable, they're still all but se

Many of the artists I discovered via Spotify / Google Music make pennies from these sites. Yet Spotify is not only still unprofitable, they're still all but setting money on fire. Some of the more recent reports I've seen are that they're trying to negotiate for lower music royalties. I can't help but wonder if the ultimate problem here isn't with the idea of all-you-can-eat streaming, but with the idea that all-you-can-eat streaming is only worth $10 a month. What if the earliest services in this space had priced their services at $20 a month? I know, the immediate reaction is "they would have had no customers and it would be a death knell because no one would possibly pay that much," but is it possible we have that reaction because we've just internalized the notion that "$10 per month" is the "proper" price? Back in the Dark Ages--the 1990s and early 2000s--I knew many, many people who were spending $20 or more a month buying individual CDs. If in 1994 I'd have been told, "Hey, what if you could listen to nearly every song ever recorded for the price of only two CDs a month!?" then I'd have been on board.

jakelazaroff 9y ago
All four major record labels are investors in Spotify, so the lack of profitability isn't a huge issue if you look at it from their perspective. Since Spotify wields an enormous influence over what music becomes popular, labels can treat it as a loss leader and keep pumping money into it that they make back from album sales/tours/merch/etc on their top artists. The issue with this is that it vastly favors labels who can leverage this economy of scale, and independent labels for whom album sales are a larger slice of their income can't weather the decrease in payment as well. This is further exacerbated by the fact that Spotify divides payment per stream up by the total number of streams. Simplified example: if I stream two songs in one month, an indie artist once and a major artist once, they'll each get $5 of my $10. If I stream the indie artist once but the major artist twice, however, they get $6.66 and the indie artist only gets $3.33, even though I the amount I listened to them didn't change. (edit, the pool is actually comprised of all users, I just used one in this example for simplicity) All this adds up to a system that is heavily stacked in favor of major labels and their respective artists at the expense of independent ones.
- calt 9y ago
  As of a while ago (they took down the page explaining it), it's not even split up per user. It's split up per total Spotify streams. Those people that leave their Spotify playing Muzak all day long are diluting your dollars. https://web.archive.org/web/20150219221341/http://www.spotifyartists.com/spotify-explained/ https://web.archive.org/web/20150219221341/http://www.spotif... The "Royalties in Detail" section.
  - eric_h 9y ago
    > Those people that leave their Spotify playing Muzak all day long are diluting your dollars. /me gives a sidelong glance at every WeWork streaming Spotify 24/7
- patrickyeon 9y ago
  So first, why does that not seem like the right way to you? Paying per-play is generally how I would expect broadcast/performance payments to work. The bigger problem though, is that's not how it works. You may expect those two artists to split your 10$ (ignoring everybody else's cut for simplicity), but what actually happens is the sum total of the revenue that Spotify gets in a month is split up across all of the plays that month[0]. So what actually happens is the two artists you've streamed get paid a few pennies out of your subscription fee, and the rest of it goes to subsidize the streams of other people (heavy users, and/or business that leave it playing all day). [0]: https://www.stereogum.com/1587932/spotify-explains-royalty-payments/news/ https://www.stereogum.com/1587932/spotify-explains-royalty-p...
  - jakelazaroff 9y ago
    Sorry, didn't mean to cause confusion. I know the pool includes all subscribers; I was also just ignoring everyone else for simplicity. But that just exacerbates how hostile the system is toward independent labels and artists. To clarify further, my issue isn't that payment is calculated per play, but that it's measured relative to other artists instead of absolutely. Put another way: an artist that that gets X plays shouldn't make more one month than the next, just because the next month they have to compete with a new album by Taylor Swift. Edit: to clarify even further, I'm not saying they shouldn't be allowed to do this or even that it's immoral. All I'm saying is that it's a system that's heavily biased in favor of major labels at the expense of independent ones.

jakelazaroff 9y ago

All four major record labels are investors in Spotify, so the lack of profitability isn't a huge issue if you look at it from their perspective. Since Spotify wields an enormous influence over what music becomes popular, labels can treat it as a loss leader and keep pumping money into it that they make back from album sales/tours/merch/etc on their top artists. The issue with this is that it vastly favors labels who can leverage this economy of scale, and independent labels for whom album sales are a larger slice of their income can't weather the decrease in payment as well. This is further exacerbated by the fact that Spotify divides payment per stream up by the total number of streams. Simplified example: if I stream two songs in one month, an indie artist once and a major artist once, they'll each get $5 of my $10. If I stream the indie artist once but the major artist twice, however, they get $6.66 and the indie artist only gets $3.33, even though I the amount I listened to them didn't change. (edit, the pool is actually comprised of all users, I just used one in this example for simplicity) All this adds up to a system that is heavily stacked in favor of major labels and their respective artists at the expense of independent ones.

calt 9y ago
As of a while ago (they took down the page explaining it), it's not even split up per user. It's split up per total Spotify streams. Those people that leave their Spotify playing Muzak all day long are diluting your dollars. https://web.archive.org/web/20150219221341/http://www.spotifyartists.com/spotify-explained/ https://web.archive.org/web/20150219221341/http://www.spotif... The "Royalties in Detail" section.
- eric_h 9y ago
  > Those people that leave their Spotify playing Muzak all day long are diluting your dollars. /me gives a sidelong glance at every WeWork streaming Spotify 24/7
patrickyeon 9y ago
So first, why does that not seem like the right way to you? Paying per-play is generally how I would expect broadcast/performance payments to work. The bigger problem though, is that's not how it works. You may expect those two artists to split your 10$ (ignoring everybody else's cut for simplicity), but what actually happens is the sum total of the revenue that Spotify gets in a month is split up across all of the plays that month[0]. So what actually happens is the two artists you've streamed get paid a few pennies out of your subscription fee, and the rest of it goes to subsidize the streams of other people (heavy users, and/or business that leave it playing all day). [0]: https://www.stereogum.com/1587932/spotify-explains-royalty-payments/news/ https://www.stereogum.com/1587932/spotify-explains-royalty-p...
- jakelazaroff 9y ago
  Sorry, didn't mean to cause confusion. I know the pool includes all subscribers; I was also just ignoring everyone else for simplicity. But that just exacerbates how hostile the system is toward independent labels and artists. To clarify further, my issue isn't that payment is calculated per play, but that it's measured relative to other artists instead of absolutely. Put another way: an artist that that gets X plays shouldn't make more one month than the next, just because the next month they have to compete with a new album by Taylor Swift. Edit: to clarify even further, I'm not saying they shouldn't be allowed to do this or even that it's immoral. All I'm saying is that it's a system that's heavily biased in favor of major labels at the expense of independent ones.