
Why Spotify Pays So Little - kfor
http://lit.vulf.de/spotify-so-little/
======
mortenjorck
Like others in this thread, I naively assumed this was how Spotify already
worked, and wondered why the payouts tended to be so low. Now it makes sense,
and puts the numbers here ([http://www.spotifyartists.com/spotify-
explained/](http://www.spotifyartists.com/spotify-explained/)) in context.

Realistically, it would be both hard to change structurally and a hard sell
for major labels to give up what is effectively _a subsidy of popular music by
indie fans._ Let’s take the author’s thought experiment to its logical
extreme:

Imagine “Terry” listened to just one obscure band for the entire month of
February. $7 of his $10 subscription fee is going to artists, but let’s say
he’s also the only fan of that band on Spotify. So that band has effectively
zero percent of Spotify’s plays for the month, meaning that the band gets
effectively zero percent of Spotify’s monthly revenue.

Terry thinks $7 went to his favorite band, but it actually got divided up
among February’s top 40, with only a fraction of a fraction of a cent going to
the band!

~~~
pjc50
But there's an impedance mismatch here. The copyright holders are being paid
per-play but the users are paying all-you-can-eat. That's always going to be
an imbalance. The only way to "fix" that would be to charge "Terry" a cent per
listen like a jukebox.

This is a bit like being a vegetarian at a buffet and complaining about your
admission fee paying for steak which all those other people are eating. It's
true, but you came to the buffet because it was _much cheaper_ than a la carte
with better service.

~~~
mortenjorck
That’s not how Spotify works, though. According to the link above:

    
    
      Every time somebody listens to a song on Spotify it generates payments, but Spotify does not calculate royalties based upon a fixed “per play” rate.
    

Unless there are some secret deals being struck for fixed per-stream royalties
that Spotify isn’t admitting to publicly, every rightsholder gets a percentage
of monthly revenue. Which sounds fair, until you consider long-tail producers
and consumers, for whom the marketplace is distorted by this model.

Your buffet analogy isn’t really apt here because streams aren’t limited
resources, and they all have the same effective wholesale cost to Spotify
(again, assuming no secret deals).

~~~
avn2109
>> "...assuming no secret deals..."

You're totally right on the merits, but it's worth noting that the big record
labels are composed entirely of and built their empire solely upon unjust-
seeming secret deals, and we have no reason to believe that they've stopped
that modus operandi now merely because they're dealing with Spotify.

~~~
detail3
Indeed, there were secret deals with record labels in which Spotify gave up
'some amount' of equity to majors in order to be able to stream their
catalogs....along with an upfront sum of course.

I think the real problem that isn't being discussed is the fact that on a
service such as Spotify it is impossible for an artist to be independent,
his/her efforts WILL support majors via their equity in streaming services.

------
genericuser
His proposition may sound simple to him, but it really isn't.

It becomes very hard to ensure you are being paid properly in his proposed
scenario, I would personally expect it would create even more controversy, or
extremely long payment records every month for artists.

For instance say we have 500 paid users. Lets call them user1 through user500.
Each user listens to the same number of songs a month as the value following
the word user in their name. Then we have 500 different rates at which artists
are paid for their song playing ranging from the entire monthly fee to 1/500th
the monthly fee. Therefore providing a full accounting of each of those rates
would be necessary for an artist to understand why they got paid more the
month they had a single play than the month they had 400 plays.

To be fair assuming the minimum song length on Spotify is 30 seconds this
record provided to artists would have a max length of (31 * 24 * 60 * 2)+1 =
89281 items for premium users plus items for add supported users if they did
not overlap exactly in rate. Assuming all Premium users paid the same rate,
which is not the case.

Edit: I ignored the 0 listen use case, as well as spotify's 30% cut to
simplify an already complicated 'simple proposal'. I also forgot to account
for daylight savings time in which a day can have 25 hours.

~~~
mkolodny
Complex accounting isn't a good reason to pay artists unfairly.

Having said that, the accounting doesn't have to be that complex:

1\. When paying out an artist, list out the (anonymous) users who listened to
their music on Spotify.

2\. For each user:

a) Show the what percent of the user's total listening was spent listening to
that artist. (e.g. 40%)

b) Multiply the amount the user paid by the percentage from (a). (e.g.
$10/month * 40% = $4)

3\. Sum all of the amounts from #2. (e.g. $4 + $3 + ... = $total)

Also, accounting would only be a problem for Spotify. 99% of artists would
prefer this model, even if it meant more complex accounting.

~~~
ignostic
It might not be complicated, but it's cumbersome as hell: "Hey, Rhianna,
here's your 65-million line payment breakdown for the week! I know it used to
just be one simple intuitive calculation, but isn't this great!?"

> 99% of artists would prefer this model, even if it meant more complex
> accounting.

What are you basing that on?

Artists paid more might not complain, and those paid less (likely the more
popular artists) would complain. Then there are new artists, growing artists,
and people who would just be annoyed by the complexity.

The theory is simple, but the implementation is a complete nightmare.

~~~
pfraze
If only we had some kind of machine that was capable of computing these
complex models for us...

EDIT: my point being, if the model is fairer, we can deal with a little extra
complexity.

~~~
mark-r
It's a zero sum game. Spotify isn't going to pay any more in total, no matter
how the rules change. That means for every winner under a new scheme, there
will be a loser. If those losers are the popular artists that the service
can't exist without, you have a non-starter.

~~~
freyr
> _That means for every winner under a new scheme, there will be a loser._

No, that doesn't follow. Imagine one artist is receiving all the money, and
the other 10,000 artists are receiving none. Spotify could move to another
payment model that would result in 10,000 winners and one loser.

~~~
majani
Not really. Right now streaming services barely manage to pay even the top
artists anything meaningful. This scheme would mean everyone gets paid barely
anything, and the bigger artists may leave, which is an existential threat to
the business.

------
kfor
Vulfpeck is also the band behind Sleepify[1], the album of ten silent 30s
songs which fans looped on Spotify while they slept. Vulfpeck earned $20k as a
result and used it to organize a tour.

[1]
[http://en.wikipedia.org/wiki/Sleepify](http://en.wikipedia.org/wiki/Sleepify)

~~~
mod
Wouldn't you have had to (if a free user) listen to commercials during this?
Wouldn't that sort-of defeat the purpose of the silence?

May as well ask people to play some more normal 30s songs and turn off their
speakers, avoid being delisted as a non-album.

~~~
kfor
Agreed that having fans play your music on mute would be just as - if not more
- effective, and would work without creating a prime target for banning. But I
think in this case it made for a very effective "statement", even if it
could've been a more efficient hack.

~~~
djloche
At least for the desktop software, they detect if you turn the volume down
quickly, and pause the commercial. Spotify has pretty rude behavior towards
their free users, but I suppose they want to push everyone to subscribe.

~~~
theg2
I think it's pretty telling that comments surrounding an article about artists
not complaining about getting paid enough people complain about the only
method Spotify can implement other than charging you money for the service.

It's not a rude behavior and is within their right when you utilize their
service for free.

~~~
djloche
Commercials/advertisements are fine. Allowing over compressed, perceivably
louder sounding commercials on their system is annoying. Recognizing that
people hate this and trying to prevent people from turning down the volume in
reaction to a jarring change in sound is rude.

Being rude to your free users in order to get them to upgrade is a strategy
that works (nagware), but is it a better than other strategies?

------
mbesto
Two things:

1) I think Ek is right - there isn't much money in the consumption of music. I
do believe music is extremely effective at getting people's attention, but
outside of that, it's value is much lower than we currently give it credit
for.

2) I'm reminded of the TED Talk by Clay Shirky on institutions vs
collaboration[0] where he explains power law distribution (watch from 6:01
onward specifically) with regard to photos of Iraq on Flickr. He says
(paraphrased) "that figure at the bottom at 10 photos per photographer is a
lie. it doesn't matter...the top 10% of the most prolific photographers
account for almost 75% of the photos. 80% of the contributors are below the
average amount of contributions" This is Spotify in a nutshell. People wan't
access to all of the rap music in the world even if they are only going to
actually consume 20% of it, so that in the rare chance they listen to one song
of the other 80% that it's still made available. In other words, the overall
utility of Spotify's system is only valid when it's whole, but the individuals
who are necessary for it to be whole are unevenly distributed (in this case
number of plays). So the argument then becomes who needs who more?

[0] -
[https://www.youtube.com/watch?v=sPQViNNOAkw&t=361](https://www.youtube.com/watch?v=sPQViNNOAkw&t=361)

~~~
tim333
> there isn't much money in the consumption of music

Depends how you consume it. I had to pay nearly £100 to see the Stones live.
Online of course you can download it for nothing.

------
tpeaton
Spotify has been villified since the beginning, and I certainly want a more
fair system to exist for artists.

That said, has there EVER been a business model in the US that was profitable
for artists? I don't think there was ever money in music for artists from
album sales.

The cost of distributing and promoting music is just more expensive than
making an album.

~~~
afarrell
Is it actually the case that signing record contracts was always a bad deal
for artists? I was under the impression that they reduced risk for artists who
could then use money from the contract as a more stable source of income to
pay for, say, childcare expenses.

~~~
6stringmerc
No, whatever money is paid up front for the expenses (recording, shooting
music video, child care while doing such things) must be repaid to the label.
If you don't "recoup" enough through album sales, you have to pay them back
out of touring...and on and on and on...Basically, just have a look at the
following article by Steve Albini:

[http://www.negativland.com/news/?page_id=17](http://www.negativland.com/news/?page_id=17)

~~~
snowwrestler
My brother has been a professional rock musician for almost two decades.
Several of his bands have broken up after one or two albums, the recording of
which was financed by their label. In those cases, the label simply takes a
loss. They're not sending debt collectors out or something.

The recouping terms are set in the contract. It's not conceptually different
from the term sheets that govern how and when investors will be paid back when
they invest in Internet startups.

There are examples of bad labels screwing artists, and there are examples of
good labels supporting artists. The terms, not the concept, of recouping are
what it make it good or bad.

Ironically, the more exploitative labels are the ones that have done _better_
under the pressure of piracy, because they are more willing to force bands
into "360" deals where every revenue stream is subject to recouping: merch,
sync, publishing, tours...basically they own the artist. So they're not hurt
much by piracy.

But this is not how all label deals are done. Many smaller and mid-size labels
have historically limited their deals and depended more on album revenue.
These are the folks--the good, artist-supporting folks--who are being most
hurt by piracy.

~~~
bsder
> These are the folks--the good, artist-supporting folks--who are being most
> hurt by piracy.

As much as I hate pirates, it isn't the pirates that killed the music
industry.

Look at this thread. Most of the people here are not going to spend more than
$100 per year on music. That's simply too small a pool for the number of
artists that exist.

Think about these same people. They are willing to pay more than $100 for
_two_ video games.

Guess which industry is doing better?

------
ilamont
_Artists are frustrated. And lite listeners should be too._

Artists who don’t like it or aren’t getting enough value — either through
payouts or marketing - should simply opt out of the system (if they can; in
many cases control might rest with their record label or another rights
holder). Some artists never opted in (the last time I checked, this included
AC/DC) or withdrew part or all of their collections (Taylor Swift).

I’ve watched the Spotify model appear in the ebooks marketplace, through
services such as Oyster and Scribd. They target readers, and ultimately seek
to ensure large payouts to investors, platform owners, and large publishing
partners. Authors have largely been treated as an afterthought. Kindle
Unlimited is even worse, demanding exclusivity and lowering sales of many
authors.(1)

I believe the time has come for recording artists, filmmakers, authors, and
other media producers to band together to fight unfair or predatory platform
practices. Subscription services may be great for consumers, but they don’t
pay enough to the people who are creating the products that draw audiences in
the first place.

1\.
[http://www.kboards.com/index.php?topic=202571.0](http://www.kboards.com/index.php?topic=202571.0)

------
Flimm
Jack Stratton is correct in pointing out that less active users are
subsidising active users.

However, he then makes the leap that that means that less popular artists are
subsidising the popular ones, which has yet to be proved.

~~~
nharada
I suspect that the paying users are more likely to listen to more obscure
indie artists, simply based on the people I know who pay for premium. Anyone
interested in listening to only top 40 likely won't see the value in paying
$9.99 a month for it. Thus the less popular artists are bringing in the
revenue but the big artists keep more money.

That being said, there's no proof of this without data to back it up.

~~~
maurits
If I were to speculate, I would expect the number of times a song is played
most likely to adhere to a power law and therefor this average number of
streams is not an ideal measure.

And yes, I'd would expect the tail to be fragmented. Lots of people listening
to but a small and mutual exclusive set of bands. Next to the odd main stream
one.

So perhaps it is not really a question of light users sponsoring heavy ones,
but more the banality of average taste.

Would love to see some stats.

------
kazinator
The proposition in the article only works because users pay a fixed monthly
rate for unlimited listening, rather than a charge that is metered based on
how much they stream.

Jack Stratton's proposition is wagered on the proposition that the users who
listen to his tracks are ones who don't listen to very much other stuff. His
listeners pay $9.99 per months, but don't stream very much, and a big chunk of
what they do stream is Stratton's material. He doesn't want most of that $9.99
going to those other damn artists, who are just random junk whose material
isn't sought out by anyone, but streamed randomly in Yoga classes, elevators,
supermarkets or wherever.

If there is some user who paid $9.99, 70% of which is $7 going to the artists,
and half of what that user listened to was Stratton's tracks, Stratton wants
$3.50 for that month, for that user alone. Add to that other similar users,
and extrapolate to twelve months and you have some non-negligible cash at the
end of the year: better than a fraction of a cent.

Problem is, no matter how you slice the pie, it is a zero-sum game. There is
so much revenue and so many artists. Most artists, likely including Stratton,
will lose this zero-sum game no matter how the pie is carved.

There is little difference between 99% of the artists getting peanuts, and
100% of the artists getting peanuts. The proposed rule would just create a
tiny group which gets quite a lot more revenue than the rest, at the cost of
slightly impoverishing every member of the remaining group, who then gets a
slightly smaller fraction of a cent.

It's actually a good rule from Spotify's POV because this tiny group would
represent "success stories" which Spotify could use for promotion.

On a different topic, this kind of reminds me of the whiners who complain
about online dating sites. _" I'm obviously a more qualified bachelor than
most of the losers who make profiles on this site, so if only the
implementation of the site were based on somewhat different rules, then I
would easily get replies from the women I'm interested in. I might have found
a girlfriend long ago if it weren't for this damn dating site. Waaaah ...
sniff!"_

~~~
pqomdv
3.5$ per user(!, or should I say a fan ) is significantly more than just
negligible compared with fractions of a cent for every user.

It is also more correct, your subscription is distributed to artists whose
music you actually listened to. It repeat listens are accounted for, then it
would be even more fair, since you usually listen more to your favorite
artists.

Currently the distribution just isn't correct. This is probably because of
technical reasons.

~~~
tomjen3
Agreed. It would make it possible for a much more democratic music system
where the dedication of your fans matters more than sheer numbers.

------
nicpottier
Is the description of Spotify's model to pay artists accurate? It sounds
suspiciously simple, free of any special deals with labels to get artists on
board etc... (which I had just assumed was a necessary evil)

And do total stream divisions take into account only premium accounts? Or do
they also include free ones? Because ya, as a premium user, I really do want
(and perhaps naively expected) my $9/mo split between the artists I listen to,
which certainly seems the fairest.

~~~
cwyers
Money to pay the artists listened to by free users needs to come from
somewhere. I don't think artists and rightsholders are willing to accept a
lower per-play revenue from free users. Which means I doubt that the ad
revenue is enough to support the free accounts without subsidy from paid
users. (The ad revenue isn't nothing, and the ads helps encourage conversion
to paid user, so they're not without value to Spotify, but I suspect actual
paying customers are worth more than free users even though they stream more.)
So if you take these two assumptions:

* A stream from a free user pays the same as a stream from a paid user, and

* Paid users bring in more than free users

I don't think Vulf's idea works.

~~~
Guvante
You could merge the two ideas to meet in the middle. 35% based on total
revenue and 35% based on used revenue.

~~~
cwyers
You could, I guess. Why would you want to, if you're Spotify? It's more
bookkeeping for no benefit to them. The author believes he's getting hosed
because gyms and nail salons are playing Spotify all day over their PAs,
but... I'm not sure that's true, and even if they are, those are still plays
Spotify has to pay for.

------
weissadam
I think the problem is that there is no distinction made between computer
generated playlists (eg: Yoga Radio) and listener initiated streams.

Why not keep the existing royalty structure, but split the royalty pie based
on user initiated streams and computer generated streams. If someone buys
premium and only listens to Yoga Radio:

    
    
      30% Spotify
      70% Existing Yoga Radio Big Pool Royalty Structure
    

But if 50% of their listening is actual artists they have chosen (download to
phone, click on artist/album or song/shared playlist from someone else/own
playlist):

    
    
      30% Spotify
      35% Existing Yoga Radio Big Pool
      35% Direct cut determined by per-listener chart
    

Or if Mom signs up and only listens to her kid:

    
    
      30% Spotify
      0% Yoga Radio
      70% Direct cut determined by per-listener chart (all to one with love from Mom)
    

This not only rewards artists with loyal fanbases, but it also fairly
compensates artists who compete in the mass market where people just listen to
the radio and don't care.

Best of both worlds, no?

------
cordite
I thought this (what is proposed) is how they already do it.

I guess not.

It does seem more fair for the artist this way, though it probably means they
need to do more crunching with map reduce or something.

------
thomasahle
> Terry is below average. In 2014 he averaged 350 streams per month. If his
> subscription money only went to artists he listened to, it would’ve been
> $0.02 per stream.

> Instead it was $0.00786.

This sounds like a much better way to do it. The artists should ask Spotify to
change it. However I guess the big players don't really want it changed.

~~~
TheHypnotist
I wonder what the average is? Because that per stream rate obviously changes
depending on how many streams you listen to. 350 sounds rather small. I listen
at work, in the car, sometimes I listen to comedy. I might double that number
in which case the difference becomes more and more negligible until I get to
the point where I'm paying less per stream then what spotify currently pays. I
can see this getting extremely complex.

------
adamc
Old geezer here: Does anyone know how often the songs on a CD are played? If I
spent $10 on a CD, what was that likely to generate per-play? (I'm old enough
that I remember taping LPs and then listening to the tapes -- which was a
near-universal practice amongst the folks I knew.)

My guess is that great albums got listened to a lot -- driving down the
revenue "per play" but generating great word of mouth and lots of net
record/cd sales. How much of that applies to Spotify?

~~~
ScottWhigham
I'm happy to play along but first can you give us an idea of the answer(s)
will relate to the topic at hand? I'm struggling to find a correlation.

~~~
adamc
I thought it would be interesting to get some kind of historical fix on
whether this is really an unfair rate per song, and if so by how much. I'm
also curious as to whether "per play" is really the right metric: if I sold
you a CD and it sucked, you'd almost never play it so that rate might seem
high... but be unimportant because you'd sell so few CDs. How does that
translate to the Spotify model?

Maybe this is obvious to others? But not to me.

~~~
KFW504
One thing to focus on is that the rate per song in the CD era can't fairly be
compared to the rate per song today - particularly for popular songs that have
a global reach. I would agree that "per play" is only a partial metric, but
would caution against trying to compare too much over time.

~~~
adamc
Then how do we evaluate musicians' claims of not being paid fairly?

~~~
KFW504
at the end of the day, it's art...'fair value' is a very unique construct

the main point I was making was that comparing 20 years ago to today in this
case is likely not equivalent (at best I would say it's an incomplete view)

------
Animats
Spotify's "all you can listen to" model inherently implies they're going to be
used as background music.

Could be worse. They could have their own musicians record popular songs and
classics, and just pay the statutory royalty to the composer. Seeburg did that
in the 1950s.[1] They sold the Seeburg 1000 background music system, and
rented out phonograph records of background music, all recorded by Seeburg
musicians. Stores rented and serviced the simple record changer, which
endlessly played a stack of 25 records (both sides), about 50 hours of music.
It's not a jukebox; it's much simpler.

Instead of copyrighting the disks (back then you had to register a copyright
and pay for renewals), they used a primitive form of DRM - the records are 16
2/3 RPM, 9 inch diameter, 2 inch center hole, 0.005" stylus width, mono. This
is incompatible with everything except a Seeburg 1000, though it's not hard to
adapt a turntable to play them.

Someone has digitized the available Seeburg 1000 records, and you can listen
to about 6000 songs of '50s - 70s background music.

[1] [http://radiocoast.com/](http://radiocoast.com/)

------
breyten
1\. As soon as I'm playing more tracks than the number of tracks an average
user pays I'm actually paying less than what Spotify currently pays. 2\.
People who do not play much music will probably not be exposed to much else
than well know artists (Ie. Top 40). Or otherwise said: if I'm into music and
spend time discovering not-so well known bands I'll probably play more tracks
than the average user. 3\. The number of people who will play less than the
average number of tracks will be bigger than the number who play more.

The end result is that rich and well known artists will end up getting more
money, and lesser known artists less.

------
malloreon
If someone started a service that did exactly this, would artists take their
music off spotify and onto this new service?

Would the users follow?

~~~
protomyth
I have no idea and that is a really good question. So, let's round and say
$7.00 a month goes to artists[1]. What is an expected percentage of time fans
will listen to the artist's music (25%?) and how many thousand fans does the
artist have?

I would imagine Taylor Swift with Blank Space might have cleaned up. Is there
a source of public data on this?

1) as in all the people who get paid off the artist's music including,
hopefully, the artist

------
yermoshin
This is an interesting proposition, and one which I'm sure has been thought
about and considered by the labels. However, I think people who think this
would be better for indie artists are misguided.

The reason this change would very likely not benefit indie artists is simple:

 _People who listen to more music are more likely to have a high proportion of
their music listening being "indie" than those people listening to less._

Pdpi's example explains very nicely how this would benefit pop artists over
indie.

 _Does this system have other benefits?_

Yes, a wonderful inadvertent thing you get for free is eliminating fraud
listening. People would be unable to create accounts to listen to one artist
on repeat all month long and laugh six months later when the checks come in
(see the Vulfpeck story for those unfamiliar)

 _Would some indie artists benefit from the change?_

Yes, of course some artists wouldbenefit, that's pretty much inevitable under
any calculation methodology change.

None of this addresses the issue of time spent listening. Classical and Jazz
payouts will consistently under-index people's time spent listening simply
because the track recordings are so much longer than the average recording
length. A time spent listening payout system would be a huge improvement, but
then you can imagine people trying to manipulate this (throwing 25 minutes of
silence on the last track of the album anyone?). Smoke and mirrors...

------
baristaGeek
It's incredible that there's no money in a thing that has been a need for the
human being for centuries. Actually entertainment in general, has been a need
since the origin of our species.

The indie music industry as a whole is already selling more than the 3 major
record labels together in the US. Once that 20th century model is 100% over,
we will see technology doing really cool things in collaboration with music.

~~~
beat
Technology collaborations are limited to a very narrow subset of music. As an
often acoustic/folk musician, I expect collaboration to be a same-space
realtime thing. Classical, jazz, and most rock musicians have the same
limitations. You need very high bandwidth communication - subtle visual cues
as well as audio cues.

------
cmdrfred
The real truth here is music is becoming cheaper and cheaper to make. A few
grand worth of equipment is all that is required to generate most of the stuff
you probably listen to, and if that isn't the case now it will be in what 5?
10 years?

Also think about the talent pool. The only longer line at the job fair is
probably for playboy photographer.

Tons of people wanting to make music + low barrier to entry = Cheap music

The only thing attempting to hold this dinosaur market afloat is monolithic
record companies, and their stranglehold on the popular genre seems to give
them enough leverage to arrange a deal in their favor. Hence what we observe
here.

What will likely end up happening is the next cost of music will become zero
to the end user and bands and artists will find new revenue streams. Such as
live performances, or perhaps product placement. Or does economics not apply
to art?*

*I'm the weird guy who doesn't like music so I may be entirely wrong.

------
prostoalex
There's some audio content that fits Spotify model better, since it's
optimized for endless replays

* dance/electronic

* elevator music

* toddler songs (audience loves hearing that same song for 1,000th time)

On the other end of the spectrum you have audio content that is intended to be
listened to once, with extremes being audio books and radio news.

An artist optimizing for endless replays would do well on Spotify: "E.D.M.
artists like Avicii and David Guetta are seeing payouts in the millions.
Avicii’s “Wake Me Up,” the most streamed song on Spotify, has more than three
hundred million spins, which, using Spotify’s benchmark per-stream rate, would
be worth about two million dollars to the rights holders."
[http://www.newyorker.com/magazine/2014/11/24/revenue-
streams](http://www.newyorker.com/magazine/2014/11/24/revenue-streams)

But it's not perfect model for every artist out there.

~~~
hussong
I love you you put dance/eletronic, elevator music and toddler songs in one
bucket. I never thought of it that way and I think you're spot on. I guess we
could add most of the music played on commercial radio stations (from top 40
to soft rock) as well?

------
patmcc
Why are light listeners like the example paying for Spotify? Shouldn't they
just stick to the free version rather than going for premium?

Following this suggested model, free users listening wouldn't help the artists
at all - is that really desirable?

~~~
jaynos
To answer your first question, mobile usability is limited with the free
version (e.g. can only shuffle play, can't play straight through an album).
Should they stick to the free version? That's a value proposition that can
only be answered by the user.

>Following this suggested model, free users listening wouldn't help the
artists at all - is that really desirable? I doubt it. Paid users are usually
free users first. No free users means fewer paid users down the line.

------
rorykoehler
Spotify should set aside X% of their equity and distribute it to artists. Each
full play of a track would generate one 'artist' share. Then when they exit
each artist gets their fair share. For example (to keep it simple I will use
small numbers) let's say there are 100 plays in total on Spotify before they
sell up, 1 of which belongs to Vulpeck (awesome band) then Vulpeck get 1% of
X%. This way everyone gets paid fairly. The way it is now Spotify are
basically monetising piracy. All the major labels have invested and are
waiting for their pay day while the people who produce the content get
shafted.

------
sgwealti
I don't see much discussion of Spotify's role in setting their subscription
pricing. I think this is an area where artists have a legitimate gripe.

For example, in a hypothetical world let's say Spotify could capture a high
amount of market share and still be profitable at $0.10/month. If they had the
same revenue split they could say that they are giving artists 70%
(0.07/month). I think the artists would rightfully complain that Spotify is
devaluing their product.

Artists like Taylor Swift are starting to catch on but people act like she's
greedy and out of touch when she pulls her catalog.

------
dandare
Am I the only one here who is tired by artist complaining that we don't
sufficiently support their preferred lifestyle? Also, the whole argument is
straw-man, read what "pjc50" wrote.

~~~
IkmoIkmo
> Am I the only one here who is tired by artist complaining that we don't
> sufficiently support their preferred lifestyle? Also, the whole argument is
> straw-man, read what "pjc50" wrote.

No, it's completely irrelevant. This is a discussion about a pricing model,
not about an artists' lifestyle. Unless you want to think of the choices of
artists whether to distribute on Spotify or not, depending on the pricing
model, to be a 'lifestyle'.

As for what pjc50 wrote, no, he didn't quite get the point of the article.

Yes, perhaps the most equitable way to charge is for artists to set a price
for 1 stream, or 1 permanent download (iTunes).

But the Copyright holders are NOT being paid 'per-play'. Sure, they're paid
more when the plays go up, but that's not necessarily indicative or a 'per
play' model. Just like your gas station doesn't sell gas 'per mile' you drive,
yet if you drive an extra mile you obviously pay more at the gas station than
if you didn't drive that mile.

Spotify is not a pay per play model for copyright holders. It's a pay-by-share
model. This means that if 10 people are subscribed, and they all play two
songs 10 times, the copyright holder gets as much money as when these 10
people played both songs 100 times each.

Both songs get 50% of the artist revenue each, in both cases, which is 70% of
10x $10 subscriptions worth, which is $35 each per song, whether both are
played once, or 10 times, or 100 times, no difference.

Obviously NOT pay-per-play but pay-by-share.

If it was pay-per-play then there'd be an actual difference in the songs'
revenue if both songs were played 10 times or 100 times. Not the case with
Spotify.

Now, this is what the article is about:

There are multiple (here just 2) ways to implement pay-by-share.

1) You total up ALL plays on Spotify, and ALL revenue. So say you have $1m of
subscription revenue, and 1 million song plays in total. You then pay out
artists the fraction of their plays. Got 10 plays? 10 plays / 10m total plays
* 1m revenue = $1, that's your revenue.

2) PER USER, you total all the user plays, and take the $10 subscription, and
then pay out the artists as a fraction of how much the artist listened to that
particular user. Artist got 30 plays, user played songs 100 times? You take 30
user-plays / 100 user-plays * $10 = $3, that's the artist's revenue.

Is there a difference? The assumption is yes.

The assumption is that some music, like classical music, gets fewer average
plays by classical music lovers, than an average pop song. i.e. a classic
music lover might listen intently to a 15 minute song, and then another, and
have 30 minutes of music, and generate 2 plays.

And a pop song that's 3 minutes long, will get played 5x in that 15 minute
period. And instead of 30 minutes of conscious listening, it'll be on in the
background for hours and hours as it's made for radio. So you get 4 hours of 3
minute songs, that's 80 plays.

Now say there's 1 pop lover, and 1 classic music lover. And say both
categories have 2 artists that get listened equally.

In model 1, you'd have 1 classic music lover listening to 2 classic artists
and generate 2x 2 plays per day = 4 plays. And the pop lover generates 2x 80
plays is 160 plays, for a total of 164 plays. The two music lovers both pay
$10, so you get $20, and the two pop artists both take home their 80 play
share out of a total of 164 plays on $20, or: $9.75. The classic music artists
take home 2 plays / 164 total plays * $20 each = 24c.

In this model 1, we see that the classic music lover that pay $10, is
subsidizing the pop artists with a huge fraction of his $10, despite the fact
he only listens to classical music.

But in pricing model 2, the two classic artists would each get 50% of the
share of the classic music lover: $5. And the pop artists would both get $5,
too. Only there'd still be more pop song lovers, so they'd still make a ton
more money because which is fine, as again there are more pop song lovers. But
then there'd also be more pop artists, so there'd be more competition.

Neither models are pay-per-play. They're both pay-per-share. But in model two,
the classic music lover who plays 0 pop music, is paying 0% of his money to
pop songs. While in model 1, over 90% of his money goes to pop songs which is
being called a subsidy for songs that are shorter, more culturally fit to play
as background music/noise.

In model 2, obscure, less popular, longer songs, songs with fewer average
plays etc, get a decent bit of revenue, because they compete for revenue
shares of users who listen to other like minded music, and thus they compete
against other obscure, less popular (in absolute numbers), longer songs, songs
with fewer average plays etc.

I think it's clearly a more fair approach. And I think it's clear it has
nothing to do with 'preferred lifestyle', and the argument is certainly no
straw hat.

------
Tarang
I think it depends on who the artist is. For the most popular the artists
wouldn't be complaining about being paid too little.

Either way if a formula change, distributing earnings based on an individual
user instead of the whole pool, means the popular songs would earn far less.

It also means if someone listens to one song that would earn more than someone
who loves music and pays the same thing!

I would argue the formula isn't wrong its difficult comparing an total Audio
CD sales vs a lifetime NPV of music played on Spotify for an author.

~~~
ssharp
> For the most popular the artists wouldn't be complaining about being paid
> too little.

Taylor Swift did just that recently and pulled her music from Spotify because
she didn't feel she was fairly compensated.

------
pjc50
I'm not clear on what the difference would be, from his explanation. Is he
splitting by "artists listened to ignoring count of times streamed"? (So
someone who listens to _only_ vulfpeck 1000 times and Daft Punk once pays each
$5)

Or is it "for each user, divide their $10 by the number of streams they played
and pay that to the copyright holder of the streams played?" So the more
streams you listen to the less artists get paid for that?

~~~
rodly
> Or is it "for each user, divide their $10 by the number of streams they
> played and pay that to the copyright holder of the streams played?" So the
> more streams you listen to the less artists get paid for that?

I think his solution works like this:

Lets say you listen to Beck for 50 times, Beyonce 50 times, and Drake 100
times. That gives you 200 total streams, which a respective stream
distribution of 25%, 25% and 50%. We can assume you enjoyed Drake more since
you listened to him more so he should get more money obviously. So Beck and
Beyonce each get $7 * (0.25) = $1.75 and Drake gets $3.50 for the month.

------
ericdykstra
If you want to support your favorite music artists, send them money directly.
That's basically the only way you can ensure a reasonable portion goes into
their pocket.

Services like Spotify don't support independent, awesome musicians that you
love enough to give them even a bad living. If someone creates art that
touches you and improves your life, figure out a way to support them in a way
that actually makes a difference.

------
codyb
His final comment "and listeners should be to0.", I'm not sure I understand?

How does Terry's subsidization of yoga studios make any difference for Terry's
listening experience?

Unless it's a very deep point in that Terry's subsidization, if it didn't
happen, would cause more small artists to pop up onto the scene thus
increasing the diversity of the catalog.

------
kudu
This is a terrible idea, in my opinion. It would effectively cause users to
"budget" the music they play, e.g.: "If I play that Rihanna song after playing
10 songs from my favorite indie band this month, it'll severely dilute the
money going to them." The last thing Spotify wants is people not playing music
for moral reasons.

~~~
Nemcue
I'd suggest that almost none of the users would be aware of this anyway, so
their usage patterns wouldn't in any way shift.

------
bbarn
Any discussion of how to split revenues is pointless without data about what
paying users listen to. Top 40 listeners may percentage-wise be a much lower
paying audience. Lots of the top 40 is aimed at teen/youth users, who have
lots of hardware given to them, but not lots of subscription revenue or credit
cards necessarily.

------
higherpurpose
Spotify should create app store-like programs, where artists can choose to
"self-publish" and get 70 percent of the revenue. If they are already doing
that, then maybe they should promote it more, because I'm not hearing about
too many artists joining such a program. Most still use Spotify through
labels.

------
kfor
Site appears to be buckling under the load, here's the Google cache:
[http://webcache.googleusercontent.com/search?q=cache:JiivGj-...](http://webcache.googleusercontent.com/search?q=cache:JiivGj-
Vg10J:lit.vulf.de/spotify-so-little/+&cd=1&hl=en&ct=clnk&gl=us)

------
nacho2sweet
Splitting with everyone is better because it gets the majors on Spotify which
you need to give the service legitimacy.

Major studios are bringing brands to Spotify, indies are draws but aren't big
draws. They will put their stuff on Soundcloud and stream it for free to get
ears to get concerts.

~~~
ScottWhigham
I don't follow. Why does splitting revenue amongst millions of people provide
a boon for the major studios (thus making splitting everyone better)? You say
it's better but I don't see the an elaboration on the why.

~~~
likeclockwork
I'm pretty sure the commenter meant better for Spotify's bottom line.

------
rainmaking
I have started a petition on change.org for this, please sign it:

[https://www.change.org/p/spotify-ltd-pay-artists-from-the-
pe...](https://www.change.org/p/spotify-ltd-pay-artists-from-the-people-that-
listen-to-them)

Suggestions for improvements welcome.

------
owly
Question: If spotify isn't a good deal for indy artist, why don't they all
abandon the platform and use an alternative? Like Bandcamp, which you
mentioned pays 8x. Come on artists, I dare you to?! :) Or are you afraid of
subverting the dominant paradigm?

~~~
rthomas6
Because they can use both?

------
pbreit
The OP's idea does make some sense but so does Spotify's current scheme. The
one area where there should absolutely be differentiated pricing is "radio-
style" listens vs on demand listens (which should generate much more revenue
for artist).

------
nickbaum
I would love for a portion of my Spotify subscription to be discretionary, so
I could proactively reward bands I love. In fact, I would gladly pay $2-5
extra a month for this feature.

Here's how it could work. Every month, I'd get an email with the top 20
artists I listened to that month (stats! fun!). By default, my contribution
goes to my most listened artist. I don't need to do a thing.

If I want, I can manually go in and change the contribution to another artist
– say I listened to the new Kanye album a ton, but would rather give my extra
dollars to my second-most-listened, way-less-famous artist.

I believe a lot of people get real personal value out of supporting artists
they believe in. Right now, the best way to do this is to go to shows and buy
merch.

Optional donations as describe above are an opportunity for Spotify to
increase the amount of money spent on music, while generating lots of goodwill
from users and artists alike.

------
aczerepinski
In the 90s I bought hundreds of CDs that cost $20-$25 each, inflation
adjusted. Now albums are delivered at better than CD quality, and cost only
$10. Supporting the music you love is cheaper than it's ever been. Why opt out
of it?

------
hobarrera
> Normal listeners are subsidizing yoga studios that play Spotify all day.

I didn't go thorugh Spotify's TOS, but is it allowed for commercial settings
such as stores, studios, etc? I'd think the price would be for personal use
only.

------
bake
From another perspective, should artists all artists give up the same 30% to
Spotify? Or should artists who benefit disproportionately from services like
Discovery and Radio, presumably lesser-known artists, pay more?

------
SyncTheory13
If Spotify or Google Music switched to the suggested model, or at least 50/50
suggested/current way - I'd happily subscribe IMMEDIATELY - probably even pay
a family plan. Please?

------
jpalomaki
The Top-40 pop song probably has quite limited shelf life. It gets lots of
plays for now, but some other track can make money for next 20-50+ years.

------
rgj
Venues playing music to their customers have to pay public performance license
fees as well, so that skews the popular music subsidies even more?

------
B4CKlash
Licensed Use of Master — $0.00668

I can imagine this licensing fee differs largely and contributes heavily to
Vulfpeck's anecdote.

------
Sevzinn
At least for google play music, it will pop up a window if you don't interact
with the web page for a few hours.

------
corndoge
Streaming:

\+ Huge catalogue on-demand

\- Lower quality

\- Latency, dropped streams

\- Monthly subscription

\- Artists get next to nothing

\- Player lock-in

Hard disk:

\+ Zero latency

\+ Highest quality

\+ Artists get everything

\+ Any player

\- Device storage limitations

\- Heavy file transfers

I never understood why streaming caught on to begin with.

~~~
robwilliams
For streaming you forgot:

\+ Easy discovery (find an artist and play instantly without any download)

\+ Your saved albums are available on any device instantly

\+ No catalog/file management (important for mobile listening, as transferring
new music was always a hassle)

\+ Professional curation, social playlists

------
decisiveness
Why not charge the listener per song play and pay the artist 70% of each play?

------
powatom
I can't help but feel that all of these complaints about low pay etc are just
a symptom of the new reality. I don't really understand what people are
expecting here. Distribution costs are minimal, audience is (kind-of) locked-
in, discovery is relatively simple. The risk is almost entirely on Spotify's
end of things, rather than the artists. Yes, without the artists, Spotify
doesn't have a business - but without digital streaming services like Spotify,
users could easily end up under an iTunes monopoly which probably wouldn't be
good for anybody (although I believe - may be wrong, but please correct me -
that iTunes does give artists a better deal currently?). The world is going
digital, and people want to stream stuff. That's just a fact. Sure, many
people will always buy CDs and LPs, but there being 'no money' in recording
music is hardly a new phenomenon - people have complained about it for years
before digital streaming was even a thing.

I really do have sympathy that there isn't much money in recorded music, but I
do struggle to find a justification for why artists seem to think Spotify
should be paying them more other than the fact that they just 'want' it and
need to make a living. I understand that completely - and honestly I'd
probably pay a higher price for Spotify if they demanded it and the extra
money went to artists.

I think the problem is this: the music industry in general has exploited
artists for years. It is not a business that works in the artist's favour,
unless those artists are extremely popular (and even then, labels can
seriously fuck artists over if they want to). Outside of the superstars,
musicians may (not always, but often) fare better when they organise their own
affairs - live performances, commissions for work, appearances, media,
collaborations etc. They probably won't get super-rich doing this, but it
could be a decent income for the right artists. What we have instead is a
situation where artists create music for a (more or less) one time cost
(recording, mastering, equipment, studio time etc) and then hope to make the
money back through physical sales, royalties, and performances. The problem, I
feel, is that the initial costs of production are still high, but the
distribution costs are now incredibly low, which means end-consumers are
reluctant to pay higher prices. I don't see any way around this other than
altering the nature of the business itself. If production is always going to
be a costly affair in the music world, then income from royalties through
services like Spotify are destined to be considered low.

I honestly think there's no real hope for any significant increase in income
through digital services. Why should there be? There's no technical reason to
increase fees - distribution gets cheaper all the time. The only way to
increase royalty payments generally is to either cut into profits, or pass the
increase on to the customer - neither of which are sensible business decisions
unless Spotify's hand is forced.

We don't really have a profitable relationship with music - the value we
attach to a single track on iTunes or Spotify doesn't reflect at all the costs
to the artist - but unless artists can convince consumers to start paying a
lot more, I just don't think they'll see significant returns from recorded
music any time in the forseeable future. It's just not an industry that pays
particularly well. Production costs are high, distribution costs are low.
Unless we alter the way music is produced, performed, and experienced, people
won't feel like paying more gives them any extra value. It's an uphill battle.

I wish things were better for artists, but I just don't see a way out of this
is that doesn't involve massively increasing price at the point of
consumption.

------
diminoten
Does anyone have any information on how Google Music does it?

I love Google Music, and don't understand why everyone's so hopped up on
Spotify, just because they were "first" to market (and they weren't).

~~~
21echoes
Google Music does it the same way:
[https://play.google.com/intl/ALL_ALL/about/artist-
terms.html](https://play.google.com/intl/ALL_ALL/about/artist-terms.html)

""" (a) “Subscription Fees” shall be the greater of:

(A): Monthly Subscription Minimum * number of Google Play music subscription
service subscribers on the last day of such month * Your Subscription Activity
Ratio

\-- OR --

(B): Subscription Revenue Share * Music Subscription Revenue * Your
Subscription Activity Ratio """

B is exactly what is laid out in the parent article, A is a subtle twist on
it. Both of them are still [Google's revenue] * Your Subscription Activity
Ratio, where "Your Subscription Activity Ratio" == "the fraction: (i) the
numerator of which shall be the total number of streams and plays of Your
Tracks from the Google Play music subscription service; and (ii) the
denominator of which will be the total number of streams and plays of all
tracks from the Google Play music subscription service."

~~~
mytochar
So does this mean that an artist makes more money when I /don't/ choose Google
Music, because they get paid per advertisement shown when I load their video?

... this makes me sad.

~~~
21echoes
not even close! you'd have to watch the video more than a thousand times, each
of those views having a pre-roll video ad before it, and never skipping thru
the pre-roll video ad.

realistically, this means the artist would have to get more than fifty
thousand streams _per month_ to equal just _one_ subscriber.

~~~
21echoes
It won't let me edit, but I realized my comment is not clearly worded. You, as
a listener, would have to listen to more than fifty thousand streams in one
month to "pay" Google an amount of ad revenue equivalent to the Google Music
monthly subscription rate. So unless you listen to more than 1500 YouTube
tracks per day, you're better off paying (if your goal is to support the
artist).

There's just not enough money in ads. This is why things like Patreon exist.

------
ebbv
Radio never paid much for users either. The problem is nobody buys albums any
more.

I think that's because buying a digital album has so far been really
unrewarding.

Artists need to come up with a package for their music that people actually
want to buy.

~~~
hussong
As a start, correct ID3 tags and an album cover bigger than the size of a
thumbnail would be great. Bonus points for configurable folder and file naming
scheme and playlists generation upon download.

I always felt kinda stupid paying 10 Euros for an album, then spending 10
minutes fixing metadata and downloading a halfway decent cover image from
discogs.

You'd get better data quality from filesharing sources, since fans obviously
care more about releases than labels. Same goes for movie releases btw.

------
Dewie
Conventional music albums were known for only giving a small percentage of its
sale value (minus retail and such, of course) to the actual artists. There
didn't seem to be much fuss around that. But now that artists are getting a
raw deal when it comes to streaming their music, it's practically a crime
against humanity.

I guess the "artists are being ripped off when it comes to record sales" blew
over several decades ago.

------
gcb0
anecdote time: recently i my closest friends happen to be all musicians. I
often try to get their opinion on piracy and online radios while selfishly
trying to see a product idea... and their general opinion on online radios is
that spotify is the god among them and that i'm evil and killing their
industry for using pandora.

