A Former Spotify Exec Explains Why Artists Get Paid So Little on Streaming | Hacker News Reader

A Former Spotify Exec Explains Why Artists Get Paid So Little on Streaming

digitalmusicnews.com

16 pointsworkah0lic9 comments

"Spotify pays [rights holders] between $0.003 - $0.005 per stream[1]" - let's take $0.004.

Assuming an album costs $10 to the customer, with approximately a 5% sales tax[2] and 25% margin[3], and there are 10 tracks per album, the nominal comparative cost per track is somewhere around $1-0.75/track.

That means that the 'break even' point between Spotify and buying an album is around 200-250 listens.

I think this is a bit on the high side, but bear in mind that this doesn't take into consideration that a) those 200-250 listens may be spread across multiple owners of a CD (if it's sold as second-hand), b) Spotify encourages people to listen to music that they otherwise would not have bought, c) Spotify monetises otherwise 'free' listens, whether it be radio, LimeWire, etc.

Spherical cows in a vacuum, etc., but on balance I think that 200-250 listens to a track is not a bad break even point.

[1]: https://dittomusic.com/en/blog/how-much-does-spotify-pay-per...

[2]: https://worldpopulationreview.com/state-rankings/sales-tax-b...

[3]: https://howtostartanllc.com/business-ideas/record-store

He says spotify give 75% of the revenue back but it goes to labels and labels choose to only pay artists 10-15%. That’s incredibly self-serving and disingenuous and I think factually untrue in the case of small artists in particular.

Firstly Spotify have huge market power which they could easily use to benefit artists if they cared about it. They could bake in to their deals with labels a minimum cut for artists and labels would have no option but to pay this. They don’t do this even though there would be basically no downside to them which suggests they don’t care about it.

Secondly in the cases I know about directly (which are small artists on independent labels often that they own themselves) the amount spotify pays per stream is derisory. They own the label so are getting 100% of the cut from spotify, but the actual amount is just tiny. Spotify could easily rebalance the scale such that small artists are supported. Again this wouldn’t hurt them but they don’t do it.

The real reason that artists get paid so little is that sharks like spotify (and the labels too) feel they can get away with it, which largely and very sadly appears to be true.

What use is market power when the big three have lawsuit power? Spotify operates on their mercy. The only reason they haven't destroyed it is that they own a sizable chunk of it. And let's be clear, Ek is fine with this arrangement.

Spotify could (and should) "rebalance the scales" with per-user licensing, rather than per-play licensing. That would reward the music that's actually keeping users subscribed, rather than makers of replaceable background music that plays 12/6 in some hair salon.

But last time there was a push for that, the (big three) labels stopped it. Now, the labels claim to be open to it but Spotify is resisting it - I think it may be the labels yanking the chain still.

Yea presently a new technology benefits consumers because essentially it makes something previously more expensive now cheaper, but just like Netflix once the contracts all expire the artists and labels will say, we want more money — so suddenly Spotify premium will cost more money and the spotify non premium will have even more ads.

Does it benefit customers though?

At $13/mo, Spotify Premium costs $156/yr.

On the other hand, the cost of a CD album is $10-$15 new. Used, borrowed it’s even cheaper. So for that amount you can buy 10-15 albums new. Which will be with you forever. And you can now get digital singles for $0.25-$2.

Discovery is still possible or even better through good old fashioned radio or internet radio, which is what both Spotify and Apple are recreating through curated playlists and literally radio for Apple.

And if you want to listen to an individual song, ad supported free options are available across the internet, which labels and artists are thrilled to provide you since it gives you an incentive to buy the album/song and/or pay for a live performance ticket.

I’ve been budgeting about $100/yr for the last few years, and by leveraging sales, etc. my collection means I struggle to spend even $30-$40/yr now, which means that I have $60-$70 which i use to support a variety of smaller artists whose music I may catch live and buy the albums they burned on their PCs for $10.

Obviously this isn’t ideal for all. Those who love to listen to all the newest music all the time would be better off with the streaming services, but I suspect a surprisingly large percentage of people may be better off just buying their music if they have the patience to build their library over a few years, or the money to put down a large upfront investment.

Your analysis is missing the time/effort cost of sourcing, ripping and syncing CDs to a device. It’s a pain (I do it!) compared to just launching Spotify.

I wrote the comment assuming buying CDs because that’s how I like to do it (I like having a physical device) and because that also gives you the used option which is often cheaper (although my 10-15 calculations are based entirely on new albums).

But if your needs are entirely digital, buying an online album is even easier than finding it on Spotify, and finding that it’s often not available (because the particular artist hasn’t licensed with Spotify) and/or if it’s even slightly not mainstream, Spotify will bury it under the mainstream options it would like to push.

I like the accessibility - I won't have any my collection available on a vacation at the click of a button on a whim.

I like the recommendations - I discovered a lot of new interesting music thanks to Spotify algs in the past 6 months. It's a value add for me. I don't have time to follow releases or to just look up random bands.

However, he doesn't address the disparity BETWEEN LABELS on Spotify. Some labels have much sweeter deals, and that's considering aggregators already, I mean at the raw-play-count level, some get a bigger portion than others.

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