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Why Spotify Pays So Little (vulf.de)
613 points by kfor on March 18, 2015 | hide | past | favorite | 295 comments

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/) 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!

> A subsidy of popular music by indie fans

That's an interesting problem — this is only true if indie fans listen to less music than pop fans.

Imagine there are 10 users, 9 of whom only listen to pop, one only listens to indy, all of whom pay 10$. Now consider two scenarios: A. everybody listens to 100 tracks per month, or B. pop listeners stream 110 tracks per month, and the indy listener streams 10 track per month

Scenario A:

    9 pop *  100 tracks =  900 tracks streamed
    1 indy * 100 tracks =  100 tracks streamed
    total                 1000 tracks streamed

    total to pop artists  = 900/1000 * 100$ = 90$
    total to indy artists = 100/1000 * 100$ = 10$
Scenario B:

    9 pop *  110 tracks =  990 tracks streamed
    1 indy *  10 tracks =   10 tracks streamed
    total                 1000 tracks streamed

    total to pop artists  = 990/1000 * 100$ = 99$
    total to indy artists =  10/1000 * 100$ =  1$
The argument remains that you'd expect your money to go to the artists you listen to, but the payment arrangements don't necessarily benefit mainstream artists over indies, unless indie fans listen to less music than mainstream music fans.

EDIT: Now that I think of it, it probably benefits pop music over metal and progressive rock (or, worse still, classical music), because pop tends towards short songs, so more tracks played over the same period of time.

>unless indie fans listen to less music than mainstream music fans

That point is explicitly addressed in the post. Mainstream users listen more because mainstream users are gyms etc. that just let the top 40 run in shuffle 24/7.

Wouldn't that use be both against Spotify's EULA [0] and be illegal without a PPL [1] (in the UK at least).

[0] https://www.spotify.com/uk/legal/end-user-agreement/#s4 [1] http://www.ppluk.com/

Yes, but at worst bars and venues like this end up paying the flat fee to the recording cartels to basically have unlimited plays of whatever they want and none of that really goes to the artists in any significant way.

And in most cases, it doesn't really come up until they're audited at least once, which might be never.

I know that calling them recording cartels is making a certain point, but the licensing companies in the US are ASCAP and BMI and they don't really have anything to do with actually recording music. They collect royalties on behalf of the artists.

I happen to know because I was once in a band and the only money I really ever received for our recordings after the label advance was from ASCAP. Even years later I get a check every few months for a few bucks, whereas I get nothing from spotify or any other music service (even though my music is on there).

So at least for me, I appreciate ASCAP and BMI, even though it is not a lot of money, they are the only ones who have ever paid me royalties as an artist - and their service is free to all artists no matter how small.

In Germany, you'd have to pay the cartel for performing YOUR OWN music.

Spotify pays them, they get yet another cut and pays you.

at least that's how it goes for my friends receiving via bmi

Fair enough, sorry for being quite so editorial about it. My impression was that only an extremely small percentage goes to actual artists, and probably weighted towards popular ones in much the same way Spotify does.

Their service isn't free, they charge an administration fee of 3-7% (depending upon the organization we are talking about). It just comes out before you get your check.

They are 'non-profits' but so is the NFL.


It still happens though. I can't find any instances any stories being written about this condition being enforced.

[1] https://support.spotify.com/au/learn-more/faq/#!/article/pub...

In terms of small bars, hairdressers, co-working spaces, yoga studios, mik bars, etc... probably, but no one's going to tackle the small fries. Large chains tend to have their own corporate-mandated "radio" playlists for this reason, though (supermarkets and gyms)

From what I recall, the PPL is pretty aggressive about going after small venues. e.g.:


As a side note, there is infact a "commercial"-version of Spotify[0], even though i'm not sure whether its available outside of Sweden yet.


I have trouble believing that commercial venues make the majority of the plays on Spotify.

Here in Melbourne it's very common for venues to use Spotify - almost ubiquitous, in fact. The bar that I moonlight at used CDs for the longest time but eventually made the switch last year.

Most venues don't want to spend time carefully selecting music when they could instead be focusing on customer service.

Sure, but what is the total market size of businesses versus individuals?

I agree. Even if 100% of commercial properties that play music was using Spotify behind the scenes 24/7 that's still got to be only a small percentage of total Spotify plays.

Don't businesses also pay a lot more than individuals. I know here in Sweden playing music as part of your business is licensed differently than playing music in your living room. Commercial properties pay about 10 times as much pr. month for Spotify to cover commercial licensing of the music.

That was a really good question so I looked it up. Apparently commercial use of Spotify is against their TOS. So while some businesses certainly do use Spotify illegally, it's not a piece of business they are trying to get. https://support.spotify.com/us/learn-more/faq/#!/article/pub...

Agreed, but a business that plays spotify likely plays it for the entire time said business is open. Very few individual users will listen to spotify for 15 hours a day like a business (bar) that plays spotify would.

[Edit] just read the earlier sibling comment. I'm informing my theory based on my own very occasional usage of spotify. I suspect I'm in the long tail of their business, and I would imagine that the aggregate of businesses that play spotify all day matches up with a good portion of that long tail.

The problem is it's all speculation. We don't have any hard numbers to tell us how any given revenue split policy would affect payouts to different artists. My instinct (and I'm the Co-Founder of a streaming service that does revenue share FWIW) is that the reason so little is paid is because there are just a lot of streams period, and changing the algorithm around to try to make it "more fair" might shift the distribution a bit, but it won't really move the needle for anyone. The fact is that when people had to buy music they were spending a lot more on it than they do on Spotify for the same quantity. It's just like Netflix vs cable—you can play shell games all day long, but the minute you go to raise the price from $9.99 to $11.99 the entire customer base flips their lid. So you'll never monetize like you could in the past, and this is a permanent change because there is no limit on supply anymore.

It seems inevitable at this point that if most or all plays are done through streaming services the only thing we will have available to stream are top 40 singles.

For most of humanity musicians have earned their living through live performance. The last 70 years have been an extreme outlier as recording and playback technology has matured, but now the novelty and barrier to entries are gone, and the supply is flooded. I don't see any shortage of new artists willing to give their music away to get discovered. I also don't see streaming services succeeding with just Top 40 (diversity of music has never been higher). Sure some artists will pull their catalog or straight up retire out of spite, but I don't see any trends or market forces pointing to this "inevitable" outcome.

This also assumes that the balance of venues playing indie/alternative music versus those playing "mainstream" music tilts further than the balance of individual users doing the same.

I have a limited set of datapoints, but most if not all of the venues in which I encounter Spotify playlists are playing indie/alternative/etc. music, rather than "mainstream" music - places like my local coffeeshop and game shop, for example.

Isn't that illegal? Does a spotify license include broadcast rights?

That would be an interesting spotify hack. Start recording 2 minute tracks. Would be a similar situation to 50s and 60s radio.

About your point with indie artists vs top 40- it seems to me to be a problem with fragmentation. Top 40 has much more overlap between listeners and casual music fans vs a much more curated play list for the indie music lover. So out of 100 casual music/top 40 fans the playlist is more or less the same. However two indie rock fans have a higher probability of having fewer tracks overlap in their playlist.

Yes, the article really missed this point.

One could also mentioned some sort of tiered payout scheme or a non-linear minimum after a certain amount of plays plus a percentage above that. Likely something that Spotify will experiment with over the years.

I doubt it. The business overhead of distributing payment this way is enormous. Right now, Spotify just runs a report that takes some top level numbers, splits them out by copyright owner and divides a single pool of money. This means they manage only as many pools of money as they have copyright owners.

If they start doing it the way OP suggests, they DRAMATICALLY increase the number of pools of money they manage (and thus, would need to audit). They'd now be managing (number of copyright owners) * (number of subscribers) pools of money, which is a lot more. Additionally, they likely have some errors in their data, and the impact of an error in this scheme is huge.

tldr: It's too much work for too little money. Improved technology will not change anything because it's a finance process problem, and finance processes have to be regularly audited. The more complicated it is, the more expensive it is to audit.

They likely already record and store all the necessary data (and more) in order to build out people's listener profiles.

Pools of money is not really a relevant metric. They collect all the subscription premiums and pay a portion of them out according to their contractual agreements.

Pay(artist_i) = 0.7 * sum_j [ premium(viever_j) * ratio_ji ]

is not that much harder to do.

I agree that auditing would be more complicated, but usually one does selective audits anyway. I doubt this would be a show stopper.

The confusion on the receivers' side would increase massively though. As someone else has pointed out, there would be a lot less correlation between #plays and payout.

(To be clear, I have no real opinion on whether this would be a better schema.)

Actually, it is computationally much more difficult. You're masking another step in that the "ratio_ji" has to be calculated and stored for every artist-subscriber combination, which is significantly more complicated than calculating a percentage overall. Since they are almost certainly using map-reduce to calculate these metrics, you're basically running a nested map-reduce. I mean, it's not an unsolvable problem, but it takes a non-trivial amount compute resources that aren't free to solve a problem that isn't really a problem.

But yeah, there are many reasons its not calculated this way. Revenue predictability is another reason - companies like to be able to forecast revenue and that's hard if revenue has only a tenuous link to the other KPIs you use to run your business (which is the point you made).

Honestly, the current payout scheme makes more sense. Is it totally fair to the labels? Maybe not; but the labels it's most unfair to aren't making enough under either scenario for it to matter much. Would it really matter to an indie label if their monthly payout was $20 instead of $5? Once you get bigger than a few hundred listeners, the law of large numbers kicks in.

> The business overhead of distributing payment this way is enormous. Right now, Spotify just runs a report that takes some top level numbers, splits them out by copyright owner and divides a single pool of money.

Unless they are doing something special, they are actually just taking a bucket of money and sending it to SoundExchange or ASCAP/BMI (for the US at least) and letting the do the actual distribution. ASCAP/BMI are very used to distributing payments based on plays (they do it for radio, concerts, etc.).

It would really just be a matter of including the play counts for each song every month.

I imagine Spotify cares more about not being sued by the majors than distributing money to smaller artists (without legal teams behind them).

Also, isn't a big chunk of Spotify owned by the major labels anyway?

Yes, though what size chunk is not clear. So certainly 'a' chunk.

If Spotify wants to send me a representative, scrubbed dump of their streams table (id, userid, trackid, artistid), we could run some interesting what-if scenarios rather than guessing.

It's an interesting trade-off: "punishing" artists with fans who only listen to a small amount of music, but who are dedicated to that artist vs. artists with fans who listen to a LOT of music.

My gut is that very few artists are getting "screwed", and those who are represent artists with very few streams (at which point the net revenues are very small and who cares about the difference between 2 cents and .7 cents). For most "edge cases" like the one in the article, there's a user on the opposite end of the spectrum who would balance them out.

That's my hypothesis, anyway.

The real issue is simply that anything other than Top 40 isn't relevant to the public at large (power law). I don't really know how you correct that.

Even if the indie artists created their own service, several orders of magnitude less people would listen to it.

> My gut is that very few artists are getting "screwed"

Huh? How does that follow?

My gut is that a LOT of artists are getting screwed for exactly the reasons mentioned in the article.

This payment scheme isn't an accident. It favors the big, popular copyright holders to keep them off of Spotfy's back.

Of course, those big copyrights are also who bring in the majority of revenue for Spotify.

> My gut is that a LOT of artists are getting screwed for exactly the reasons mentioned in the article.

The article makes the hypothesis that people who listen to "indie" music also listen to less music. I don't think that's true.

(I don't have hard evidence to back up the counter-factual, but neither does the author in proving the hypothesis. He just sets up a straw man example, then bashes yoga studios, Daft Punk, and the idea of a subscription model as a whole.)

Right, the key numbers that you've implied are that Scenario A pays out the same whether you use the current artist payment scheme or the one suggested in the post.

It becomes clear that the scheme suggested in the post doesn't make sense either... so I accidentally left "Everything is Awesome" on repeat all night and now this month indie band X gets 1c from me instead of $5, even though I still listened to their album 20 times like usual?

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.

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).

>> "...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.

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.

So I prefer non-lyrical trip-hop. I wouldn't know I have that preference without discovering it through Spotify. You're telling me I should now start buying those albums on iTunes if I want to actually vector money toward those artists? But I can get most of them for almost free on Amazon Prime. So why not just send money to the artist directly?

I listen to Spotify and Pandora almost exclusively. Mainly Spotify. I probably listened to 300 tracks of Emancipator a month on Spotify. At 0.00786 per play, that works out to 2.85. For the last 2 years: 2.85 * 24. That's $56.59. I seriously doubt I would have spent that much on iTunes. In fact, from their site, I can only spend $46 on their music.


In the long run, it seems to me that Emancipator is winning on Spotify, even if I overestimated by a factor of 3 and only listen to 100 tracks a month. Presumably, I will be listening to Emancipator for a long time.

I probably listened to 300 tracks of Emancipator a month on Spotify. At 0.00786 per play, that works out to 2.85. For the last 2 years: 2.85 24. That's $56.59.*

I don't think most people listen to 300 tracks of any artist per month consecutively. Say you are doing 30 tracks per month on average by an artist, that's $5.66, less than buying three 10 track albums.

I have hundreds of albums on CD (I'd guess ~500 or 600). There are many that I probably only listened to five times.

I don't have to listen to it consecutively. But I listen while driving, while studying, while working. I certainly fall in the category of indie fan listening to a lot of music from catalog artists, not hit makers.

Another checking in. Guilty as charged.

My main gripe is that because of this stupid model, it pushes a lot of the artists I would listen to away from spotify because it doesn't connect them directly with the revenue stream they should be getting from their true fans. Artists have a hard time surviving without that.

That's because the indie artists aren't looking at the big picture. They would be getting less than they hoped for from the Spotify model, but now you will likely never even hear about them. They're significantly hindering their growth potential and ability to sell concert tickets.

This. I think one issue is that the music industry pegged the price of CDs at around $18. But that was for hit maker CDs sold to mass market listeners.

But there's a separate listener: the explorer. The value of any given track is exceedingly low, but these are the people you depend on for the discovery function. Personally, I prefer that role, but the cost before Spotify was exorbitant unless you were an industry insider.

It doesn't negate the validity of wanting compensation for Spotify plays. Not being on a music service is one way to let your listeners know that the system is fucked and maybe make it change.

The system isn't fucked. Those bands used to NEVER get radio play except from the occasional college radio station that almost nobody listened to. And many of those bands never even made it that big. Now they have listeners all over the world. And if there's a decent market for their music they will get concert ticket sales. Spotify has got to be the best marketing a small band can get, and Spotify pays you for the privilege of marketing for you.

Just because situation is better doesn't mean it can't be further improved. You're considering 'No Spotify' vs 'Spotify' instead of 'Spotify' vs 'A better Spotify'.

If you think on principles, Spotify should in the long term aim for maximum customer satisfaction. This means optimizing the satisfaction per customer instead of per music play, seems to be currently done. By concentrating money on bands each user listens to each of those bands (getting more money) should theoretically improve in quality (and give Spotify more attention), increasing overall user satisfaction. It's a simple reasoning.

Never mind the fact that it's just plain wrong to assume that "those bands NEVER used to get airplay". E.g. there are a number of significant artists on the label Drag City, such as Ty Segall and White, both of which get plenty of radio play, and most of the label's catalogue is not available to stream.

> 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.

Or split Terry's money between the artists they actually listen to.

There's another option, which is to calculate the "per play" rate differently for each listener. If one user plays 300 tracks per month (one 10-track album per day), and another user plays music 24/7 (the gyms that have been mentioned before), why should the per-play fee be the same in both cases? If this was a pay-per-play model that would be fine, but this is all-you-can-eat streaming. Users that listen to a disproportionately high number of songs should not dictate which artists get money. That awards those users far more than their normal $10/mo purchasing power.

This scheme is similar to the proposal to calculate artist pay independently for each user, but I think it's a little simpler, since you still only calculate the artist pay out of the global pot, you're just weighing each play by the user's total monthly plays. And you can put a minimum on it too, so the per-play weighting doesn't take effect until the user listens to more than a given number of tracks per month (this way the user who has a subscription but just occasionally listens to a song here and there isn't paying the artist $1 per play, which is to say, until you reach a certain point, listening to other songs won't "devalue" your previous tracks).

Can someone please glue this to the top? The whole discussion here is one big straw-man.

This is the same problem that any unlimited service has to deal with. Why does a user who downloads 10GB of data per month on their cable modem have to pay the same price as a user who downloads 300GB? They're subsidizing his usage! Why should I have to pay the same price as everyone else for Netflix when I really only ever watch House of Cards?

The reason Spotify specifically works this way is because any other reimbursement model is untenable in the streaming world. Rev share works "off the top" because the overhead of managing reimbursement (specifically the audit overhead) at the subscriber level would wipe away too much margin. Pandora had an overly complicated revenue sharing scheme and it nearly bankrupted the company until they moved to a model closer to Spotify's.

But more specifically, revenue share works this way because that's how it's defined in the contracts that both the major label and the indie label signed. If the indie labels thought it was a terrible idea, they wouldn't have signed it. Most indie artists anymore simply expect to make next to nothing on distribution and playback of their music: they make their money on the live shows.

I always thought bands make their money on tour. live shows & merch; and the label makes more money from CD & song sells. I guess there is a new type of indie. Those that don't go on tour much and want money?

Not unprecedented - The Beatles didn't tour their last 7 studio albums (and on their own label, so they were arguably "indie")

That was a different era in music. Technology has made it a lot easier to create and distribute music, so there is a lot more music out there, which means the value of the recording is less than it was prior to the 2000s. The Beatles were also an anomaly in the music industry; they were so popular they basically WERE the industry. Music today is much more of a long-tail market now that there's not a bottleneck in the recording and distribution functions.

This can't be all that new. I feel pretty sure that the group of bands who don't go on tour much, and still want money, is basically the same group as "bands who don't go on tour much".

I'm a bit confused by the reasoning here. It's clear that light users are subsidizing heavy users, but why are we assuming that light users prefer indie bands and heavy users prefer pop music?

I think we're assuming that the many users who listen to indie bands spread their listening among many different bands (each use has a difference preference) whereas users who listen to top 40 all listen to the same artists.

There is also the idea that some "users" are businesses playing background music all day, and that they are more likely to all choose the same pop songs (which the most people are familiar with) and to play them all day everyday. Unlike a normal user who typically listens to a wider variety and for fewer hours a day.

> why are we assuming that light users prefer indie bands and heavy users prefer pop music?

The article explained this - because heavy users are playing music 24/7 at gyms, etc., and never play the smaller groups or genres that only some individuals like (and would like to support).

Interesting. I'm sure people are doing this illegally, but technically you're supposed to buy a commercial Spotify license for public performance.

"Spotify Free, Unlimited, and Premium accounts are for personal, non-commercial use only."

I can't imagine it's being done illegally regularly. It would be way to easy to identify by stream behavior.

Don't CD's say the same thing?

I think it depends on local copyright laws, but I think in most places you buy a license to play music publicly and with that license you are allowed to play any music legally acquired.

It's not that -- it's all about the impact of a larger denominator. Individually, the pro-rata share of one user's $9/mo for indie bands (say 1/100 plays = $0.09) will be larger than the 1/2,000,000 (worth $0.0000005) plays in the aggregate.

So basically, my dad, who listens to 60s and 70s music all day on Spotify is mostly compensating top-40 stuff. In the olden days of FM, his listening habits were paid for by the sponsors of the oldies station.

This is how a large chunk of music royalty distribution works. For example, fees collected from restaurants, shops and other public places basically ends up in a large bucket.

Later the funds are being distributed after "market share", which means most of it will be sent to Taylor Swift or the Michael Jackson estate, even if the restaurant played nothing but epic fusion mathcore.

I'm guessing that the "big five" asked for a model similar to this when Spotify started, because it was a model they understood.

> Realistically, it would be both hard to change structurally

Perhaps there is a simpler solution. Here's one idea: for accounting purposes, only count a limited number of plays per month, per user. It can be the first 100 plays, or if you want to prevent any biasing, it can be a random sample of 100 of each user's plays.

A random sampling can even be audited to prove that it was fair.

I don't think sampling's even necessary. Presumably Spotify log every play. If they pushed their logs into BigQuery or something similar, it would be trivial to calculate the revenue breakdown the way the OP describes. 'Big data' is here, and it works. With 100 million users at 1000 tracks per month, we're 'only' talking about 100 billion or so rows to process each month.

Why do we consider that the places who play 24/7 of pop music are biasing the system? If it were 1 cent per play, and Mickael Jackson was played 100 times during the day in one shop... shouldn't they get $1?

If you consider two types of users - average users (10-20 plays a day?) and power users (500-1000 plays per day), both users contribute $10 to the system. Most of the money that the average users contribute ends up sent to the authors of songs that the power users play.

Well put. I'd like to further the notion that major labels / legacy businesses do their best to eat all the pie and only leave crumbs for the rest of the community. Put in a metaphor, when gorillas fight, nobody cares about the ants until enough of them start stinging together. Not perfect, but hopefully you get the point.

My source is the following article over at Complete Music Update, which elaborates on the tactics employed by YouTube in their goal of competing with Spotify:


Indeed, a casual listener like myself is basically paying money to the top artists while not listening which is a bit absurd. It is a problem that should be possible to at least partly resolve by calculating artist market share without a bias towards users that have Shopify open all the time. Incidentally, I blogged about this some time ago: https://davidlebech.com/thoughtflow/spotify-royalties/

So, under your model, Terry's band gets $7. Total. It's not even worth bothering to get involved with spotify if you only get one single cheap lunch out of it.

As it currently stands, Terry's band also gets a small amount of money from people who aren't listening to it, which is something you didn't include in your argument. There's really not going to be much difference for the tiny artists, however you carve it up. $7 is 'effectively zero percent of Spotify's monthly revenue' as well.

I believe this is how radio works too; my friend had some records of his played on the radio and got together a list of when they were, date time and all and approached the BBC about getting payments; based on the same reasoning/calculations as above he got a big fat £0.00.

Grooveshark supports Flattr which does exactly what this article proposes, if the user opts in.


Wouldn't it be a fraction of a fraction of a cent for every subscriber going to the band?

It's easier to understand if you remember the major labels got 18% of spotify for their licensing deal. A payment scheme that preferentially paid major labels would then be stunning...

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.

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.

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.

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.

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.

> 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.

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.

It would be up to the smaller artists and their fans to pressure this change, and I'd bet there are some popular artists willing to join the cause at a small personal loss. It's good to consider the incentives, but people are invested in having an equitable society as well.

Wow great catch on the the fact that any system that results in necessary artists being payed less, simply won't happen if Spotify wants to continue existing. Really applies to the entire scope of the article and not just the comment you replied to.

That assumes that those artists are already on the verge of quitting spotify, which is a bad omen for the continued existence no matter what.

>> 99% of artists would prefer this model, even if it meant more complex accounting. > What are you basing that on?

Simple, artists who are paid penauts would prefer getting paid more. We just released an album but we are not putting it on Spotify. Why bother.

i treat rdio like a collection of full length previews that allow me to discover a lot of new music. stuff i like gets my money for tickets, merch and vinyl. i do not understand why anyone would pay $10 a month to listen to the same shit they have on their ipod.

Same here, rdio is a giant preview platform for me, and it's a surprisingly great experience when you follow a bunch of people with good taste (heavy rotation section, collaborative playlists, etc.) - however everything I like gets bought since I want to own my music and prefer to keep it even if the licensing deals or the service itself changes. However, that means that there's actually a lot of overlap between my own personal (digital, lossless) collection and the one I have on rdio.

> 99% of artists would prefer this model

I mean that objectively, based on how much money they would make.

99% of artists would make more money in this model.

And, again, cumbersome accounting is a bad excuse for unfair pay.

> 99% of artists would make more money in this model.

You just shifted which number you pulled out of thin air, not the fact that you did so. Do you secretly have Spotify's streams database?

I never said it was a reason to. I simply said this method is anything but simple, as the author called it. Your method would require even more potential lines on the monthly report than the nearly identical method I described above. As yours would require a per user line, even though many of them would have duplicate rates.

Keep in mind things would still need to be split per song also, as rights holders vary per song.

Do you really think giving every artist that many potential lines of accounting every month can be called simple?

Exactly. Based on data from Spotify[1] and taking an average payment[2] of $.0052, I calculated Spotify would be storing about 20 BILLION accounting records PER MONTH.

Showing my work: 15m paying subscribers = ~150m per month, ~105m paid to artists @ .0052 per song = 20.154 million songs in a month.

[1]https://press.spotify.com/us/information/ [2]http://thetrichordist.com/2014/11/12/the-streaming-price-bib...

20 billion records per month is still reasonable, there are hundreds (maybe thousands) of businesses storing a multiple of that amount of data daily.

So your argument is that it's unreasonable to store a list of every song play, even though they already do so?

Or that it's unreasonable to make them "accounting records"? Not a problem. They aggregate using the current method to limit the number of "accounting records", they can aggregate just fine using the new method. Have "accounting" start with revenue per song the same way it used to start with listens per song, after asking the database to process its 20 BILLION records.

The model is extremely simple. The number of formulaic, near-identical lines on an arbitrary report has nothing to do with complexity.

Splitting per song already has to be done. This just gives you a different amount of money to split per song with the existing mechanisms.

Implementation and adoption are part of the complexity of a solution, in my book at least. I assume those who do not consider implementation and adoption part of the complexity have either come up with genuinely simple solutions to problems or never had to complete those portions of the task when they were not simple.

Implementation is one paragraph of SQL or statistical code, given access to the data set and a few minutes to execute.

This change in how revenue per song is calculated is truly simple.

The only hard part is convincing people it's better.

Adoption has nothing at all to do with complexity. Be careful you're not moving the goalposts.

Bill gates giving me a billion dollars to screw around with is extremely simple, and also will never be adopted.

Adoption is directly effected by the implementation and design you choose. If your app is nothing more than a table and some aggregate statistics, because you just made the simple implementation with absolutely no design, then good luck getting musicians especially older ones who probably still rely on paper copies of their monthly records being gasp mailed to them to adopt the app.

It is not moving goal posts its considering whether the 'solution' will actually work given circumstances outside the technical feasibility.

The old method mailed them revenue taken in per song. The new method will do the same. You mail them the same sheet as before, but it's probably more fair.

The old method mailed them how many times a song was played and total revenue for that song. Therefore it was easy to see the rates. With what you are describing they would only see average rate if you mail them the same sheet. It is not the same.

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

But is it Spotify that pays the artists unfairly? AFAIK, Spotify pays to the record labels, and then it is up to the record label, how they distribute the money to the artists? (Also some of the money, the labels keep them selves, and do not distribute to artists.)

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

That wasn't ever mentioned or implied. The point was, the author doesn't understand how complex his simple solution is.

This is a very good point. I'm sure that Spotify could encode the rules and accurately calculate what each artists was owed under such a model, but it would be far more complicated to communicate to people.

There are already a bunch of assumptions in the payment model, do you pay per track? (In which case, the artists could game it by sticking in 30 second intro tracks and things like that). Do you pay per minute? (In which case, artists can increase their revenue by putting in dead time in "bonus tracks").

It would be an interesting experiment for Spotify to calculate what the payouts would be given the proposed scheme, and compare the differences.

Anecdotally, the people I have met that work at Spotify are a lot more sympathetic to the indie artist and non-Top 40 music than the average person listening to Spotify. There is a reason they keep building ways to discover non-Top 40 music. I'm sure they are interested in making things better for these types of artists.

It gets even more complex if you take the fairness he's suggesting to it's logical conclusion. The system proposed still values playing each song equally, but shorter songs comprise less of a user's streaming activity.

So the per play rate should be determined by taking 70% of the user's subscription, dividing that by the number of seconds of streaming that user streamed that month and then multiplying that by the number of seconds that user streamed the artist's song (since songs can be stopped mid-song).

Regardless of how they bill, it's likely that artists will have to, for the most part, just trust Spotify. There can, and should, be independent audits of the billing code. It seems an analogous situation to what the NGC does around computerized gaming systems. Users have to trust that the system is fair, but the NGC is very thorough about checking that code complies with applicable laws.

Do you artists would prefer being underpaid to getting extremely long payment records? I really don't see the issue.

Right now the payment is easy to understand why you were paid as you were. Listens * payment * .7 = my check.

If the proposal were followed, all transparency is lost.

"Extremely long payment records" is quite an under-statement. Imagine sending a popular artist a 27-million line breakdown (you'd need a LINE PER LISTEN, and what % of a listeners listens that was). That's absurd, and STILL less transparent.

I understand the problem, but this is actually a pretty terrible solution. Future complexities build on existing complexity. I can't even imagine the monstrous data, business, and programming nightmares that would arise from breaking payment down in the proposed manner.

I am not sure which payment model I prefer, but I don't buy the technical reason against the OP's proposed solution.

I imagine Spotify already maintains a list of songs played by each user (to build their recommendation engine).

You could report to the artist using a histogram (bucket the listen by the percentage of user's listens they represent).

Also, Spotify could build a nice web interface that allows artists to understand their revenue stream, with various aggregated stats and graphs.

SO that's what, a few gigabytes? Takes 30 seconds to download? Then run some stats, get some totals and compare it to your check. What's the problem? Its the 3rd Millennium, get with it.

> "Its the 3rd Millennium, get with it."

No need to be condescending. People can disagree with you without being technically stupid.

> "SO that's what, a few gigabytes? Takes 30 seconds to download? Then run some stats, get some totals and compare it to your check. What's the problem?"

I think you underestimate the complexity of a database that grows by 20 million records per month, but let's say you solve the technical, computational, and programming issues. It's still a bad idea.

Most of Spotify's customers can open and understand their Spotify payment today. Your customers are not database experts. Most people have rudimentary Excel skills at best. Talk down to them all you want, but they won't know what to do.

So what, they should all hire data analysts? To understand their Spotify invoice?? You know you're using technology wrong when you take something your customers currently understand intuitively, and alter it in a way that requires technology. I understand that you're trying to fix a problem, but you're actually introducing new problems that are far more significant.

Don't let the love of nuance override your customer's experience. That's how you build "perfect" products no one wants.

> I think you underestimate the complexity of a database that grows by 20 million records per month

Why does it need to grow per month? Create a new database each month and archive.

> So what, they should all hire data analysts? To understand their Spotify invoice??

There must be some misunderstanding here. The customer's invoice is for $10 per month regardless of invoice complexity. The record of accounting that goes to the artists is what's being discussed.

It seems very simple to provide a database to artists, then also provide an open source database analyzer that will verify your pay check is accurate.

I want the broadband connection you've got.

No, but I believe humanity in general wants things to be beneficial to them AND simple. Hell most Americans (being one myself) don't just 'want' they feel entitled to. Because of that, I believe a huge number of artists would not bother to make sense of monthly records which could reach 1800 pages, and would complain even though they were presented with such records explaining why their 50000 plays this month were less valuable than their 3 plays the prior month.

I am not saying the Spotify method should not be changed just showing that the proposal at hand should not be called 'simple'.

> I believe a huge number of artists would not bother to make sense of monthly records which could reach 1800 pages

I don't understand this argument at all, which suggests that reviewing a monthly report is an O(n) task. Spotify, if they chose this route, trivially solves this with a simple open source app that analyzes your monthly report making it, basically, an O(1) task.

And gets every artist to happily learn how to use that app to examine 90000 entries in it? My whole argument is that his solution is not simple, while I agree designing, making, and getting artists to use this app which could be made, is indeed possible, would you not acknowledge it makes his solution just a tad more complicated than 'simple' to accomplish that design, creation, and acceptance?

Another thing to note (although it represents a pretty useless edge case) is that given a user who spends $10 a month on Premium if they were to listen to 1400 songs in a single month (10/(.005/.7)) bands who he is the only person who listens to and he only listens to once would receive nothing, due to accounting (and the ieee) using round to even, and 0 being the closest even penny.

I realize this the amount they are paying now per song is not too far above the $0.005 amount which rounds to 0, and therefore given changes in the market could potentially drop to an amount which would round to 0 for single play also. I also get that a single penny isn't what anyone is going to be upset about. Also that few artists will have a single play. I just find the low number of plays (1400 in a month isn't really that many) required by a person for an artist to potentially not get paid interesting.

> I also forgot to account for daylight savings time in which a day can have 25 hours.

Fortunately, the 25-hour day is in November, which is only a 30-day month. So you're okay on that front.

Daylight savings is easy to fix: don't use it, just standardize on UTC. That's what essentially everyone does in, say, telecom.

In telecom there is a lot of local-time based billing.

I guess GP was talking about switches and mediation. Certainly, once you get to billing (and downstream to "data warehouses"), CDRs have local times! Although they also have a duration field, so extra or missing hours don't cause a problem, which was the original concern.

Uber and Lyft don't provide per-ride accounting for rides for this reason. I think spotify could get away with "N plays - total $X" in this case, especially since user privacy is at stake. Also the %30 cut is extremely easy to model -- a user that pays $10 with a 30% cut is like a user that pays $7 without one.

How is this any different than say a phone bill format? that shows totals such as 'minutes' $XX, 'data' $XX' and then you can optionally view the entire logs

The royalty reporting is this complex already anyway. It's really crazy.

Please provide an example. As the examples I have seen of artists showing their Spotify payments do not support this assertion.

Here is a link to one such example I have seen which has each song paid at the same amount per play. This has made the number of items on the payment record to simply be the number of different songs which were played by that artist. http://www.digitalmusicnews.com/wp-content/uploads/2015/02/B...

That is a statement sent to the artist but broadcasters report far more detail to SoundExchange and licensing agencies.

And this whole time I was precisely talking about what would need to be sent to the artist...

Guess I am just missing your point, if you had one.

Edit due to reply since its getting nested way too deep: Thanks for clarifying. I never meant to say it was a reason to switch, complexity should never be a reason not to improve. I am just trying to say it isn't what I would call a 'simple' solution as the author asserts. I am also questioning just how much individual artists would actually want to receive all that information, which I believe would become necessary for them.

Just trying to convey that complexity of the accounting for broadcasters is not a reason to stick with the current payout system. The proposal isn't much more complicated than the data we already have to report to some agencies.

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

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.

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.

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.

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.

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?

I use the (I think still considered "beta" or something) Linux desktop version and it does not know when I turn the volume down.

When commercials come on, I quickly mute the machine, and I get a nice popup with the next song title to let me know commercials are done.

It's nice because I find radio commercials particularly obnoxious--far more than television--and spotify will sometimes play them back to back.

Speaking of which: their radio algorithm must be broken. I can select an entire genre--say classical music--and start getting repeats within a couple of hours.

They just don't have much music. I tried spotify as a youtube substitute a few months back (at a friends house). Turns out they don't have a single song I searched for (all available on youtube, well known genre classics).

It really depends, probably on the labels concerned. My own short, happy, musical career is documented in full - that is, eight tracks on obscuro progressive house labels from 2008-2011. Nobody will ever want to listen to them, except me.

(I never saw a cent, but since they're all diplomatically categorised as '< 1000 streams', that would add up to one laughable payday: and besides, I never saw a cent from the labels either.)

I know a lot of older house/trance etc tracks, including genre classics, are stuck in licensing hell after the labels folded, and I would expect that to be the more true the further back in musical history you go.

If I get back into things, I'll probably just give the MP3s away. There's no money in music, and I earn a living elsewise.

I don't have this problem in the genres I listen to--they have only not had a couple of songs from pretty obscure groups.

Even when I create a station by artist, say The Avett Brothers (considered folk music, I believe), I end up getting repeats quickly--even among the non-Avett artists playing on the station.

My own personal folk playlist (on spotify) has more variety than their own station.

I'm convinced it's an algorithm issue in my case. In yours, possibly lack of choices.

Good luck for them to detect that my external speakers are unplugged or that my external audio interface analog volume knob is turned all the way to 0.

Luckily they don't auto-unmute if you press play. So I just quickly hit mute then play. Their annoying behavior only costs a single keystroke.

or just plug in (cheap) headphones, now spotify thinks you're listening, the music is actually playing and you can physically see why when you try to play something else it doesn't work. Everyone wins!

I don't use Spotify so I was unaware of that - really interesting (and clever/dastardly).

Spotify premium eliminates all ads, both visual and audio.

Vulfpeck is also the hottest funk band that currently rocks this planet. But as it seems, I should rather purchase their albums from Bandcamp than streaming them via Spotify.

Listened on youtube, bought on Bandcamp. You're right, they are good.

Thanks for the suggestion.

Vulfpeck is also also the band behind four really terrific EPs in as many years, and you should absolutely give them a listen[1], although ideally not on Spotify.

[1] http://vulf.bandcamp.com/

Artsits used to put together similar listening schemes on MP3.com. The money was much better back then, from what I remember.

In an alternate universe, Sleepify and Spotify are Browserify plug-ins.

Spotify commented at the time, comparing Vulfpeck to John Cage. Made me giggle. Vulfpeck is great, I saw them live in NYC a few years ago

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

> 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.

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.

Spotify has me and all I know spending 9x12=108 per year on just music. If anyone expected any of us to ever spend more than this, they are very wrong. Even if we go back to the golden days of CD sales, I doubt the average consumer spent more than this, but I might be terribly wrong. I'm sure I wouldn't.

Agreed, I finally admitted last year that I was tired of maintaining my own MP3 library and that $9/mo was a fair enough price to listen to whomever I want.

But ya, that sure seems like that should be fair enough and profitable enough for the artists I listen to, so if Spotify isn't doing a good job of making sure that is the case then I hope someone else arrives on the scene who does. After all, switching costs are now incredibly low for us as consumers and that is where I want my money going.

> Agreed, I finally admitted last year that I was tired of maintaining my own MP3 library.

If a subscription service could get me out of that chore, I'd do it in a heartbeat. But the music I listen to is crazy all over the place, and if the service doesn't have even one of the songs I want, then it's worthless. Even if I can upload mp3s, now I'm back to maintaining an mp3 library. If I switch services, I have to either pull out my mp3s or hold on to them, and if I'm holding on to them, why not hold on to all of them.

I'm hitting this point right now. After years of maintaining an mp3 collection I jumped ship to Spotify to try it out and loved it. It was great that I no longer had to spend any time to get access to the music I loved. Also community playlists were awesome (Especially the Top X Hit playlists that were updated monthly). Spotify even supported Last.FM, I was in heaven... Until Spotify didn't have that 1 song, or that 1 cd, or that 1 artist. That coupled with CONSTANTLY turning explicit music on my playlists to the "clean"/"radio edit" versions pissed me off to no end (I know why this is happening and I find it completely unacceptable).

For the last few months I've been using SoundCloud (Still paying for Spotify for every now and then or when a friend requests a song) for mashups (which are nowhere to be found on Spotify) but the SoundCloud iPhone is shit. It looks nice but whenever iOS knocks it out of memory it forgets where you were were and takes you back to the home screen (Which for long mashups sucks a lot). Furthermore it seems WAY more finicky with network connections than Spotify was. I have to turn off Wifi when I get in my car (from home -> work and from work -> home) because if I don't then SC will try to load over Wifi and I drive out of range almost immediately. Then I have to kill the app and re-launch (and re-navigate to where I was) before it will use my LTE connection. Also the mobile app doesn't scrobble to last.fm (neither does the website but I have chrome extentions for that).

I decided, literally a couple hours ago, that I was sick of this and decided to go back to maintaining my own music collection. I've got to do some research on how best to do this (Subsonic or similar on my home server and an iPhone/OS X that let's me stream+cache and scrobble to last.fm) but I believe it will all pay off in the end. I've found that all of these services (Netflix/Hulu/Spotify/Rdio/etc) are great for getting started but that all comes at a cost and it WILL bite you in the ass one day.

I've got some plans. Right now I've got all my music on Google Play, having moved it from iTunes last year, which was painful, but not too bad. I eventually want to write some Ruby software that will hold all the metadata in a sqlite database replicated to Dropbox. That way I know what the tracks are. I'll seed the DB, hopefully by hooking into a Google Play API that hopefully exists.

Then I want to grab all the files and put them on S3 or something and store the links in the db. Then it's a front-end problem, I'll need a command line interface and then one day I'll make a GUI. I could also find tracks that exist only, say, on YouTube, and store links to those too.

Then I'll be able to use it as a music player and store no music on my local machine.

Then the biggest pain in the ass becomes syncing to my portable devices, which is the only reason I haven't done this yet. I would hate to have to maintain two libraries at the same time. So I have to think my way through that. Though I'm sure I could write a syncer that would work much better than Google Play's, I haven't bothered to sit down to do it yet.

It sounds like you're working really hard to reinvent what Subsonic already achieves. It lets you build your own streaming service, and has apps (with caching) on all mobile platforms.

Doesn't bother me. I reinvent a lot of things. Doing it myself lets me fine-tune the interface and hook it into other projects.

Also, I've learned that reinvention often takes less time than learning someone else's service. If the API is really clean and useful, maybe it's worthwhile, but in most cases, it's not. If only because the vast majority of the time, I'm expected to use what's effectively a beta. I can write beta software too!

For this service specifically, just because I can self-host won't make it any easier to move off of it. Moving from iTunes to Google Play was pretty easy once I grabbed a library off of RubyGems to hook into iTunes. I'd have a coding task to do to move off this too. My own software can have everything I need, so I won't ever need to move off, just write translation layers. It's more work up front, but buys me a lot of flexibility down the road.

> That coupled with CONSTANTLY turning explicit music on my playlists to the "clean"/"radio edit" versions pissed me off to no end (I know why this is happening and I find it completely unacceptable).

Why is this happening? Bugs the hell out of me too

Ok, I've posted in the forums a few times on this and the reason seems to be that music gets licensed and unlicensed all the time on Spotify but they try to hide that from the user (as they should). However in a number of cases when an explicit song that gets unlicenced (even if it is almost immediately re-licensed) then it will fallback to the clean licenced version because Spotify always wants to default to non-explicit songs (In fact for a while, and maybe still, they didn't allow explicit songs on the mobile app, the only way to hear them was to add them to a playlist on desktop first, there was no way to search for or find them). I'm fine with this IF AND ONLY IF when the explicit version is re-added that my song (or rather my "pointer" to the song) gets "upgraded".

Ideally there would be an "explicit-only" checkbox like there is "hide explicit" one that would always show the explicit instead of the clean version.

Edit: My Spotify forum post for reference https://community.spotify.com/t5/Help-Desktop-Linux-Mac-and/... I can't seem to find my orignal post... Maybe I'm mis-remembering and I just read it on the forums...

There's a support article here:


They claim that the behavior matches your desired behavior of having a "pointer" that re-updates if availability changes and the explicit version is made available again

Now I just use Youtube (via Streamus, a Chrome extension that plays from Youtube) and SoundCloud. Not having that 1 song really does ruin Spotify or any similar kind of service for me.

Yeah I used this extention https://chrome.google.com/webstore/detail/media-keys-by-sway... (Media Keys by Sway) for a while but it plus the SC tab was chewing up memory. Now I'm using Vox (OS X client) that works with SC (and my media keys). I do plan on offlining the SC playlists I like and just playing the files directly eventually.

:D That's what I like to hear! (Developer of Streamus here... thanks for using it!!)

There's a third issue: Playback on spotify sounds horrible, even with high quality playback turned on it. It cannot come close in quality and richness to a VBR mp3. Anytime I really want to feel the music, I have to fire up forbar2000

What I suspect happens is that most Spotify consumers are undiscerning and use it as either a radio substitute or for playing whatever their friends are listening to (which is going to be "Top 40" almost by definition). So like everything else it's profitable for the big acts and not for anyone else.

The average consumer only spends $48 on recorded music per year.[0] At $100+ per year, services like Spotify are much more expensive for all but the most prolific music collector.


But only one quarter of the users is a subscriber:


Suppose that the average price for subscribers is $7.50 (since students get discounts and they are probably a large chunk of subscribers).

That's (12 * 7.50) / 4 = $22.50

Suddenly that $48 starts to look pretty good.

Yeah, but you probably shouldn't assume that Spotify is the only money they spend. Just because someone has a Spotify subscription (and thus has demonstrated a willingness to spend money on music), they might buy at least the odd track and/or also subscribe to other streaming in some form on other services, e.g. as part of Amazon Prime. And OTOH, unpaid Spotify subscribers will in some cases be unpaid precisely because they get their music from other sources (streaming, paid, "free").

Of course, music revenue has declined overall in any case.

Thanks for that link. I always assumed that the music subscription services charged more than what the average consumer pays for music in a year.

It appears that the artists aren't getting paid enough because there are not enough subscribers. And there are not enough subscribers because the price is too high for the average music consumer. So lowering the price $5/month might actually drastically increase the artist pay.

Same. I went from spending $0 on recorded music to $15 a month (Spotify family plan so my gf and I can use it simultaneously).

In my experience, while Spotify pays little outright, it is one of the few services that genuinely provides exposure in a beneficial way, one that may actually correlate to iTunes sales. That mentioned, Spotify deserves credit for paying anything, rather than sitting around and saying that exposure itself is a tangible payment form (e.g. McDonalds & SXSW). As Spotify expands, I can genuinely see new nations discovering my music, and that's quite interesting and appreciated.

I think it's important to remember that I'm speaking as an "unsigned" and independent artist. My income is not noteworthy from digital sales, and frankly does not even recoup the amount that I spend on distribution. However, unlike the majority of "signed" artists, I have extensive rights management avenues, very little overhead, and if I ever do make a lot of money through digital channels, it will not subsidize a system that I utterly dislike on practical and ethical grounds (ex: no health insurance for signed artists). YMMV.

This. I signed up for spotify for the convinience and it is far too expensive, but it did help me actually find artists that I cared to hear.

However they also have some pretty giant omissions and even for the top tier track they are very hostile to their users, which means I am looking for something better.

> That mentioned, Spotify deserves credit for paying anything, rather than sitting around and saying that exposure itself is a tangible payment form (e.g. McDonalds & SXSW).

Or the pro-piracy crowd...

> That said, has there EVER been a business model in the US that was profitable for artists?

As far as I know, the various music purchasing services (as opposed to radio or rental services) directly pay the artists a fraction of each purchase of their music.

And if you're sufficiently popular, you can also sell directly to decrease the overhead.

In a completely different direction, there's also Patreon and other patronage-model sites.

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.

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:


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.

> 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?

That is my understanding as well; in particular, a lot of popular mythologies about artists "recouping" and being stiffed on royalties seem to be just that: mythological.

Here's a good post:


Actually, it's not a myth; see the above link to what Steve Albini wrote if you'd like to get more educated and enhance your understanding of a very calculating and explotative business model.

Serious question: how much do you actually know about Steve Albini? Are you a Big Black fan? Are you at all acquainted with the Chicago punk scene he's from? Have you read anything else he's written, for instance about any band not from that scene? Or, for that matter, any of the story of his business relationship with the labels? And you know how he makes his money, right? (hint: not by touring Shellac).

(I am an unabashed and somewhat obsessive Albini fan).

I think at this point you can safely assume that anyone writing an opinion about the music industry has read that old Albini zine post.

If you'd read Lowery's post, I think you'd see that he in several ways rebuts it.

I've followed him enough, can't stand his music because it sounds like noisy, barely competent shit to me and I know he makes his money just like Timbaland makes his money - getting paid on the back-end for production work. I can safely assume that most everybody has NOT read that article based on the ridiculous notion that somehow the music industry has changed its principles and methods since my family got started in the business in the late 1960s.

Why would I take seriously a person who says "Sound recordings are not cheap to make" and goes on to state "Artists still have to pay for that highly skilled labor" when frankly neither of these are true? Maybe it is for musicians who live in a 1960-1995 dynamic, but I have more computing and music making power and ability in my home studio than I know what to do with. Recording studios are dying by the dozens. For all the talk of disruption, that's one legacy industry that is taking it on the chin. Lowery is part of the problem, not the solution. Plus he tosses out anecdotes like "For a very long period of time record labels provided a decent living to thousands of lucky artists" and cites...nothing...

So the most ground breaking conclusion he has is Free+Streaming+Digital Sales? WOW. It's my business model for the past 10 years! Boy did I learn something from this guy! Oh, wait, no I didn't. That link is one of the most rambling and thinly veiled self-serving "discussions" of music in the new digital environment. I'll eventually study it more, simply to use it as cannon fodder for rebuttals. Thanks for sharing, I can always use more proof I know what I'm doing is right.

I can't tell whether you're talking about Albini or Lowery here.

I think Albini is shackled to view of the industry that rejects anything that doesn't sound like The Jesus Lizard. For a good example of this: read the very long thread on the Electric Audio message board where his fans try to find a hip-hop track he'll like.

And remember that artists do not go to the press with stories of, "the label gave me a big advance and then the record was a flop."

Haha yeah that's technically true, because if that scenario actually happens that artist/band is effectively ruined, blacklisted, radioactive, whatever. Practically speaking though, are you aware of the "Sophmore Slump" concept at all? It's well known that after the first big success the record company wants MORE SUCCESS and that rarely happens. There are outliers like Adele, but far more often things go the way of Sisqo and "Return of Dragon" which famously had a $1 million video budget, banking on the success of "Thong Song." Guess what: Didn't recoup for the label.

"Didn't recoup" doesn't necessarily mean the label didn't get its money back.

More commonly it means that artist royalties - which are a small proportion of label income - don't exceed the initial advance.

Book publishing works the same way. Labels/publishers can be comfortably in profit on a project, but the system is set up to make sure that artists don't get a share of that profit.

Now - labels played all kinds of games to make sure they paid artists as little as possible, up to and including outright lies about the sales and income. (Some writers have discovered that publishers sometimes still try this.)

Even so, most traditional label deals were far more generous to artists than today's streaming deals. Labels also spent significant money on PR, publicity, and payola, which Spotify and YouTube obviously don't.

Even fairly minor bands could live comfortably for a few years from radio play and royalties from a single mid-list album. Top sellers could afford castles, private jets, and custom-built recording studios.

This was partly a feature of scarcity, when there were far fewer artists selling music to a public that was more interested in music.

But it was also a direct result of more generous accounting/royalty options, and the fact that once artists crossed a certain threshold they had enough spare capital to start developing alternative stand-alone businesses.

> because if that scenario actually happens that artist/band is effectively ruined, blacklisted, radioactive, whatever.

If this were true, no one would work in music for more than a few years. No artist makes a hit every time.

No, of course not. Bear in mind that most bands/artists had a manager, who took care of the business side and who earned a percentage of the payout from labels, concert promoters, etc., and was thus incentivized to get the best deal on their behalf.

Sure, touring and sponsorships are extraordinarily profitable for artists. Those able to attract an audience or fill venues.

The Eagles made $100 million last year; Springsteen $81 million; Bon Jovi $81 million; Calvin Harris $66 million; Toby Keith $65m; Taylor Swift $64m; Bruno Mars $60m; Pink $52m; Roger Waters $46m; ... Muse $34m, Gaga $30m, this list just keeps going.

Michael Buble made $1+ million per tour date in 2014 (making $51 million overall).

From the info I can find, there are at least 100 individual artists making over $5 million per year.

Yes, but that represents a very small minority of artists. Most lose a lot of money or break even if they're lucky. Check out this article by Pomplamoose, who are a relatively successful band.


I find this to be a good examination article regarding the now infamous Pomplamoose tour breakdown:


I think that doing only 24 tour dates as a mid-popularity group, while not exactly managing costs well, to be an obvious setup to lose money. If they want to treat it like a business, they're doing a terrible job of running a business.

No, a terrible job of running a business is what Amanda Palmer did by trying to pay musicians in beer. I'm not a Pomplamoose fan or advocate, but they capitalized better than most could hope for - you know, like The Rembrants? I think you're arguing from a highly biased outlook in that you cite 1% of artists which cater to a monied audience (teenagers dependent on parents, Baby Boomers who have achieved success to afford $50-250 tickets) specifically to discount the realistic percentage that 80% of artists who make any money doing music don't actually make a living doing it.

> while not exactly managing costs well

In what way did they not manage costs well? Even if they pick up 10% across the board, they're still not making money.

Per diem of $20. Not per meal--per day--$20 for 3 meals.

$5K for insurance--we paid that for a group with WAY less liability.

$125 per day for hotel room. Okay, that's about the only thing that might be a little high. But you aren't going to find much under $80 that isn't a dump--and you're packing 2 people per room. Even if that line item is 50% high, they're still not making money.

There is very little I would call fat on this breakdown.

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

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.

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.

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.

Do artists get payouts from free listeners as well?

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!"

>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.

Nope, this rule would do the opposite. Currently, only a very small fraction are getting any "real" money at all. This would cut out some chunk of their revenue and distribute it slightly more evenly across all the artists. This is a more "fair for everyone" approach, in the sense that socialism is more "fair for everyone".

(Personally I like the idea a lot, but it sucks for the artists currently making a killing on Spotify. Perhaps for big labels as well, though since they have a ton of small artists typically it might be near neutral for them)

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.

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

But if you're so talented and have such good fans, why would you need to put Spotify between you and those fans?

Such bullshit.

How on earth is it a "zero sum game" that they are paid their fair share of the cut?

> There is little difference between 99% of the artists getting peanuts, and 100% of the artists getting peanuts.

You just pulled those numbers out of your ass.

> How on earth is it a "zero sum game"

In the sense that it is a fixed income situation, where the question of how the income is divided does not make everyone richer as a group. If you change the rules for dividing the spoils, those who get more income do so because someone else is getting less. This is consistent with the definition of "zero-sum game".

> that they are paid their fair share of the cut?

There is no unique definition of "fair share" here. It is not inherently "fair" that if some subscriber paid $10 for a month, and forgot all about the service and ended up listening to only one song that month, that some artist should get $7 for that. It's not "unfair", either.

> You just pulled those numbers out of your ass.

That is true, and if you would prefer the numbers out of your ass, then you do the pulling; I'm not going there, sorry. Ass numbers for the sake of example is all we are going to get here, though.

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.

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.

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

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.

I'm almost certain free users pay out a lower rate, payout information from Zoe Keating has confirmed that there is a somewhat large disparity between rates even within the same country with no explanation attached, there's only 1 or 2 things it could be. Radio payouts are lower because it constitutes a 'radio play' and therefore gets less than a premium user playing the song on demand so there's definitely variance within the payout rates.

I think there certainly is a lower rate for radio -- I think Spotify gets Pandora-like rates for Spotify Radio, which I believe are lower than the rates they pay for their normal music streaming. I don't think there are different rates for free and paid streamers, though.

People make tools to game usage-based rewards in free to play games. They call it "idling". You could hack this by making an idling tool for spotify that would re-stream your tracks when you weren't using spotify.

couldn't you do this with a premium account as well?... assuming you can make more than $9 a month from 24/7 listening

I'm not sure, but I have a suspicion that this might open up a can of worms about artists not wanting their music to be available for free. This way, no matter whether the user is paying or not, the artist gets paid for every time his song is played. The proposed alternative, however, might create an incentive for "paid-only" music, since some distributors want guaranteed monetization.

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?

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.

> 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.

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.

Some small players might not either. It might be working in some small players' favour that less active users are subsidising active users.

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?

Rather than guess what the number of plays is, I think what's more valuable is to see what the break even point is.

Assuming 12 songs on a CD, and that each CD costs $2 to print, distribute, and account for merchant margins, that gives us effectively $0.66666 per song. At the rate of $0.00786 per play on spotify, you'd have to play each song on your physical CD 84 times (or 1018 plays across varied tracks) before it produced less revenue for the artist than a play on spotify.

I'm guestimating here, but I'd say that in general artists/record companies benefit more from CD sales based on those numbers.

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.

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.

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.

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

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)

I don't really know how you quantify "number of plays" through time and attribute a "value per spin". Take John Coltrane's "Blue Train" - $10 for that album in 1957 would have given you almost 60 years of unlimited play (if you could keep the record clean!).

To a certain degree, "Buying an album" has always been a gamble. Spotify/Amazon/etc make it easier to (a) not buy albums that suck, and (b) buy more singles instead.

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/

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.

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?

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

I had always thought it was the record labels who would essentially prevent this from happening as they're essentially getting cut. Unless I'm misunderstanding something. It would certainly be interesting to see a new streaming service with a different type of payment structure for artists.

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...

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.

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.

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.

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

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

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?

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?

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.

I can't speak for Spotify, but can for Pandora... I listen maybe 20 hours a month, and just got sick of the ads... That's all there was to it. I don't want to curate my music more than a like/dislike and it works for me.

That said, I don't like the model that's currently in use for online-only music stations... it's tough all around.

Different people value the features of premium differently, no different than the market for any other good or service.

For instance, it is probably true that to some people $5 dollars a month is nothing compared to the torture of listening to a single ad ever.

I'm a paying light listener. I coudn't stand the ads and the audio quality on the freebie, plus I need the offline music feature when I'm travelling or commuting.

For free users the money divided would be the ad money.

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.

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.

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