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So I wanted to try put this into perspective since "a penny per stream" is intentionally meant to sound insignificant. This seems like it would roughly double

• wilde 6y ago
  Spotify doesn’t want to take the risk, but there’s probably money on the table from all the small gyms, coffee shops, etc that should be paying commercial rates.
  • jsiepkes 6y ago
    I don't know about other countries but in the Netherlands companies already pay an additional fee which ends-up with the royalty holders [1]. Meaning you have to pay a special license fee when playing music in venue's such as stores, cafe's and even a common office work space. [1] https://www.bumastemra.nl/en/everything-for-music-users/types-of-users/ https://www.bumastemra.nl/en/everything-for-music-users/type...
    • aksss 6y ago
      I think that technically one is supposed to do that in commercial spaces in the US as well, but there’s an enforcement issue. Small businesses aren’t really at the mercy of roaming enforcement agents, but there are services businesses can subscribe to that cover the costs of royalties for playing in commercial spaces.
    • m000 6y ago
      They're everywhere in Europe I believe. In Greece there was the notorious AEPI [1] that was collecting fees from both stores, as well as subscriptions from artists so they can "represent" them. They were demanding fees even when a store owner was listening privately in their shop (e.g. they had a radio behind the counter). They were dismantled after a corruption scandal: most of the collected money ended up as exorbitant salaries for the board of directors, with the artists again receiving pennies. [1] https://web.archive.org/web/20170128110611/http://www.aepi.gr/ https://web.archive.org/web/20170128110611/http://www.aepi.g...
• capableweb 6y ago
  I seem to understand that they want "a penny per stream" to go to the actual artists, which sometimes are not the royalty holders. So paying out less to the royalty holders and more to the artists sound like it could work.
  • nindalf 6y ago
    So the artists have a contract with the record labels to share revenue. How is it possible for Spotify to decide to split that revenue differently? Or is the demand to increase payout to the point that artists make $0.01 per stream?
    • capableweb 6y ago
      I assume Spotify has agreements with the record labels about how much the royalty owner gets for each stream. Spotify could argue to change that so it's now 50/50 between the royalty holder and the artist. Depending on how much leverage Spotify actually has here, they can of course try to change the existing agreements they have. Nothing in impossible and harder things have changed before.
      • baobabKoodaa 6y ago
        That's not how any of this works. The split between artist and record company is defined in a contract that Spotify is not a party to.
• barbazoo 6y ago
  It makes me sad to time and time again learn that the low prices of services I love are unsustainable and instead subsidized by treating someone unfairly downstream. I wish I could be told what the ethical price for something is and I might actually pay it. And if that price is too high, then maybe that service shouldn't exist in the first place.
  • jsiepkes 6y ago
    I think the 90's (Napster, Kazaa, etc.) has proven people are simply not going to pay that kind of money for the product (music). The music industry also seems a bit like a "winner takes all" market where there are a bunch of top grossing artists which make an insane amount of money and a much, much larger part which can't make a decent living out of it.
    • ampdepolymerase 6y ago
      Almost every major internet content industry is winner takes all. That is just the nature of power law distributions. Ask your average social media influencer how much they make. Also your average YouTuber/Twitch streamer. It is not unique to the music industry, just that the music industry is older and has more inefficiencies in the form of middle man that don't contribute much in value production but still takes a large cut.
      • ProofByAccident 6y ago
        > has more inefficiencies in the form of middle man that don't contribute much in value production but still takes a large cut. Not to go laser-eyes Marx, but this is definitely not unique to the music industry either
  • kfwerf 6y ago
    I think it is sustainable if we can cut out the middle man, the royalties go mainly to labels and less so to artists. E.g. if an artist doesnt use a label on Spotify im sure his revenue will be higher and the current price would be sustainable. I think the royalties that go to labels are unsustainable
• cratermoon 6y ago
  > And Spotify is already paying out 75% of it's revenue to royalty holders Realize that the royalty holders are not the musicians, but typically the major labels. The musicians get virtually nothing.
  • antihero 6y ago
    Isn't that a problem generally in the music industry?
    • metajack 6y ago
      Music rights are split into two traditionally, the songwriting copyright and the mechanical reproduction right. Previous to the internet, media sales mostly went to the labels who held hte mechanical rights and songwriting copyright was earned directly to the artist. So if you bought a CD the label gets paid, if you play a song on the radio an artist gets paid. The music industry lawyers were incredibly smart when they passed the DMCA back before online music was much at all, and got internet streaming defined as mechanical reproduction so they got dealt in on streaming. ASCAP, BMI, and SESAC, et al, which give large blanket licenses to cover most copyrights for songs charged well known quantity for licenses, and early music streaming services paid those. Harry Fox (at least at the time) was the clearing house for mechanical rights and there was actually no set rate or anything. DMCA created a compulsory license that Harry FOx would have to give, but the rates were not known at the time, so everyone was getting VC funding without knowing what anything would cost. That rate is probably much higher than the songwriting royalties, so the music industry has succeeding in getting ahold of most of the money in a new format that was poised to benefit the artists directly. I guess we should just be glad it didn't happen like video streaming and there are actually rights clearing houses so companies like Spotify and others can make compelling streaming services with very large catalogs, unlike the city-state video steaming where you need 3-4 services combined to get access to most of the mainstream stuff.
      • rsstack 6y ago
        Can you, or someone, share a source for the first paragraph? It completely changes my perception of music royalties and I'd like to be sure before I repeat it :)
• kle 6y ago
  While I agree more money should be sent towards small artists and I really hate to see myself defending a giant tech company, the demands of "x per stream" always makes me a bit confused. Since spotify already pay out the vast majority of their revenue, there is not really much more room for increase there, at best 5-10% which likely wouldn't settle the case. Reasonable suggestions would be that either: 1. labels should get less, 2. top artists should get less or 3. consumers should pay more. Or am I missing something?
  • jessriedel 6y ago
    Maybe the artists think consumers should pay more. If Spotify wasn't a quasi-monopoly, it would seem silly for artists to demand consumers pay more only on the Spotify platform, but since Spotify is, the argument is at least prima facie reasonable?
    • mattnewton 6y ago
      Spotify doesn’t seem like a monopoly that has pricing power; they are in tight competition with multiple streaming services like Apple Music and amazon close behind and catching up. There are some sources that have Apple Music already with more paid subscribers than Spotify, and Spotify definitely can’t pay a penny per stream of their free ad users. https://www.statista.com/statistics/653926/music-streaming-service-subscriber-share/ https://www.statista.com/statistics/653926/music-streaming-s... https://www.businessofapps.com/data/spotify-statistics/ https://www.businessofapps.com/data/spotify-statistics/
      • _jstreet 6y ago
        > Spotify doesn’t seem like a monopoly that has pricing power I'd argue that all music-streaming services have very little pricing power! Streaming services rely on being an easier/friction-free option as opposed to piracy (or alternatively, buying the copies directly from the musicians). Your point is still valid though, the competition is still fierce; Amazon, Tidal, Apple.. etc.
• ArkanExplorer 6y ago
  Are there any figures on the % of overall Spotify revenue taken by platform owners ie. Apple and Google?
  • Eridrus 6y ago
    None. Spotify doesn't use any of the platform mechanisms for monetization that take fractions of revenue. This is why you have to sign up on the web for Spotify.
• Cthulhu_ 6y ago
  According to one source [1], Spotify users stream on average 25 hours a month. Assuming an average song is 3 minutes [2], that's 500 streams per month. Going with the $9.99 per month rate, users pay about $0.02 per stream. Currently, the artists see only $0.0038 per stream, or less than 1/5th of what Spotify makes. I think that with a 50% profit margin, Spotify should be very happy. Of course, it's not that easy / straightforward, all conditions and caveats apply, etc etc. [1]: https://www.businessofapps.com/data/spotify-statistics/ https://www.businessofapps.com/data/spotify-statistics/ [2]: https://www.music-jobs.com/uk/article/news/news-pop-songs-are-getting-shorter-a-new-study-finds https://www.music-jobs.com/uk/article/news/news-pop-songs-ar...
  • NopeNotToday 6y ago
    How much of Spotify's revenue goes towards songwriters, labels, distributors, publishers, as opposed to the artist?
    • Denvercoder9 6y ago
      The quoted $0.0038 is the total of what Spotify pays out to the distributor, who then distributes it between themselves, the artist, songwriters, their labels, etc.
      • deleted 6y ago
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    • UnpossibleJim 6y ago
      I tried to look into what radio paid out to these same people as a comparison, but the information I found seemed to be purposefully obtuse: https://soundcharts.com/blog/radio-royalties https://soundcharts.com/blog/radio-royalties I couldn't actually find out what was paid, but it did look to be that, artists weren't really paid. It was song writers and publishers who were paid. Performing artists, however, only generated word of mouth which generated ticket sales - so far as I could garner.
  • smachiz 6y ago
• MomoXenosaga 6y ago
  Isn't Spotify barely making a profit? I think the real issue here is that people just don't want to pay as much for music like they did during the golden age of the CD. Most Spotify users are still on the free tier. Blaming streaming companies isn't gonna change that.
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  • hansvm 6y ago
    Last I checked that wasn't exactly the problem, at least not by itself -- even accounting for inflation we're spending several times more per capita per month on music than we used to "during the golden age of the CD." Moreover, a much higher percentage of that revenue is actually going to artists than in years past. Faced with that reality, it would be interesting to know what is actually going on. Is total dollars spent on music not reflective of what artists used to make? Are there just that many more musicians than there used to be? Was it way harder to make a living making music in years past than we're giving it credit for? Are artifacts of pay-per-listen rather than pay-per-song causing a different payout distribution impacting the majority of musicians (e.g., you used to have to buy a CD to listen to a song just once)?
    • FalconSensei 6y ago
      I think focusing on cents per stream is a bit complicated. In the end, are artists making more or less money than before? Because before people would record songs from the radio on tape and listen to those. They would buy used CDs, pirate. Radio would stream the song, but you didn't know exactly how many people were listening. I used to spend $0 on music. Now I have spotify duo for me and my wife. I also started buying vinyl records, but my bet is that the artists makes way less money from my vinyl collection than from my Spotify account
• soperj 6y ago
  Their business isn't to support Spotify, their business is to make money making music. If they can't do that with Spotify, then it would be better for them for Spotify to not exist.
• bogomipz 6y ago
  >"And Spotify is already paying out 75% of it's revenue to royalty holders' "Royalty holders" is not even an actual term. Copyright holders are the owners of master recording - often a record company. Streaming services license entire catalogs for a fixed price for a fixed period of time. Streaming service don't pay record labels royalties. Royalties of which there are two in the context of streaming are a) performance royalty and b) a mechanical royalty both of which are paid out to the publisher and songwriter. >"So unless you believe that Spotify is bad at business and there's an extra ~75% of revenue Spotify could pull out of a hat, this is basically impossible to satisfy without cratering the total revenue by doubling prices, which is probably not in artist's interests." The whole argument that the current predominant streaming model is the only viable business model is flawed. This seems to presume that the "pro-rata" distribution model that Spotify uses is the only distribution model. There is an alternative model that many artists are pushing for which is a the "user centric' distribution model. In that model the calculation of payments is based on the listening habits of each individual user. A simplified examples is that I only listen to one artist in a given month. In the user centric model the entire 10% of record labels 70% usually allocated to the artist cut is paid to that artist rather than those streams being calculated as percentage of all songs streamed from that one of the big 3's record label's massive catalogs.
  • Eridrus 6y ago
    > There is an alternative model that many artists are pushing for which is a the "user centric' distribution model. In that model the calculation of payments is based on the listening habits of each individual user. A simplified examples is that I only listen to one artist in a given month. In the user centric model the entire 10% of record labels 70% usually allocated to the artist cut is paid to that artist rather than those streams being calculated as percentage of all songs streamed from that one of the big 3's record label's massive catalogs. Then they should push for that specifically, but it would not change the average rate paid per stream, but rebalance payments away from artists which are listened to by heavy music users towards artists which are listened to light music users.
    • bogomipz 6y ago
• Tenal 6y ago
  Do you have any idea how much bloat Spotify has that it can cut? Have you ever seen the NYC office? It's padded with hundreds of overpaid "creatives" poached from every NY agency who do nothing more than create unnecessary traditional marketing campaigns, all of which serve no one, while spending 80% of the day snacking on premium goods and watching insider music acts in their gigantic, swanky, luxury office space. Source: Been there, seen it, a long time. Spotify needs to be nothing more than a functioning music utility. Instead their US offices are structured like a massive, bloated, 90's style agency party zone. Trust me. There is room to cut costs.
• pwinnski 6y ago
  Is "charging so little you can't cover your rightful costs" bad at business? Then yes, I believe that Spotify is bad at business. Hypothetically, my profit margin making widgets would be better if I could just pay my raw material provider half-price. I could pay them half-price, add, say, another one-third of that to cover other costs and overhead, and probably dominate the market since I could charge less for my widgets than any competitors who have to pay the full raw material costs. Again, bad at business? Depends on who you're asking.
• ksec 6y ago
  And that is 75% to Labels. Why aren't these people targeting those labels? Why aren't these people targeting others like Apple? Or they want Spotify to operate as a Non-Profit because Apple is currently making Apple Music a Net Zero Profit business? ( Diluting there services revenue margin )
• cwkoss 6y ago
  The pricing section seems incredibly naive. Why should streams be valued at a penny? Why not a tenth of a penny? I don't care how many streams it takes to buy a cup of coffee. What is the argument that 786 streams per cup of coffee is unfair? (I don't think it is) Being a full time professional musician has only been a means to wealth for a handful of people through history. Most professional musicians, even successful ones, are unable to earn their lifetime expenses from their profession: they make some good money if they have a hit and then fade away and have to get another job. Or they have capitalize on their brand externally to the music market. Has there been any time period in the past several centuries when the average musician earned a living wage? The goal of a million full-time professional musicians seems arbitrary and I'm not sure why it is necessarily desirable. Music is a passion, so people are willing to spend time making music below market labor rates. With modern digital reproduction and ease of recording, demand will never exceed supply. I believe the cost of music can and should asymptotically approach zero over time as an ever-growing public domain becomes good enough for most uses.
• deleted 6y ago
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