I mean, a more fair way would be to split each subscriber's bill by the artists _they_ listened to. That would favor small / local artists more.
- 2 users, A and B, each pay $10/month
- User A listens to 20 Taylor Swift songs
- User B listens to 5 Radiohead songs
- Spotify gets a 30% cut
Currently:
- Spotify gets $6
- Taylor Swift gets $11.20
- Radiohead gets $2.80
If each subscriber's bill was split separately:
- Spotify gets $6
- Taylor Swift gets $7
- Radiohead gets $7
So this change would benefit artists that less active Spotify users listen to.
Right now the less active users are paying to support the listening of the most active users.
Personally this would make me feel like my money is more directly supporting the artists I care about.
This is where you're wrong..
2. It’s a simplified example for explanatory purposes
There's a reason Spotify is ending their service in Uruguay, and it's not because they're enough.
Right now someone who only streams a few songs gets a very small “vote” (assuming pay is per stream). That would make it so that everyone had the same “voting” power. But I doubt there’s much correlation between people who use Spotify less and small artists. In fact that’s probably a negative correlation if anything, and this could end up hurting local artists.
But what I usually see is lots of movies made for teens who are binge watching Netflix even though they are paying the same. Netflix has some public presentations on their algorithm and from the presentations it looks like they are optimizing for watches without weighting by subscription revenue per watch.
Fwiw, the actual Spotify math is a bit more complicated than just splitting by streams - I.e., https://www.theverge.com/2023/11/21/23971616/spotify-royalti...
Now if my 7$ are distributed to all artists I've listened to this artist will now receive 7$. If my 7$ is thrown in a global pool and split by global stream counts this artist gets almost nothing.
Of course this is a extreme example but it should illustrate why this can matter.
Not by definition. If you generate more streams this month than the average user, your streams are a larger fraction of the stream counts than your 7$ is of the revenue pool, and this artist will get paid more than if he only got your 7$.
Splitting the revenue per-user instead of per-stream can certainly make a huge difference, but switching to per-user instead of per-stream benefits artists with listeners that generate a below-average amount of streams per month, regardless of their absolute stream numbers.
Essentially A's money is going towards Y, even though she never listed to Y.
(I'm not expressing an opinion on which of these I prefer)
Instead, your listening is not weighted in any special way so it goes into the global pot of money and hours listened and gets diluted by the people listening more.
Currently Madonna will get 1000/1100 of artist's share => 10/11 x 70% x 20 = 12,73$ While Queen will get 100/1100 => 1/11 x 70% x 20 = 1.27$
With a per subscriber split => Queen and Madonna will get 7$
Right now there is an incentive for artists to create shorter songs so they get more stream = more revenue
And there's the fact that the payment per stream is low on Spotify compared to Qobuz or Tidal.
Is there any reason to believe big artist listeners on average stream more songs per month?
In other words: A small artist can _bring_ users to the platform, fair enough, but the platform that gives access to other artists and enables that needs to take the bigger share.
Spotify however wants to maximize its cut and so has incentives to shift money from less popular artists if it can entice major labels to its platform. This has absolutely nothing to do with what’s fair, it’s simply about profit maximization and reducing the risks of competing platforms.
Well I do not have the numbers here, but I would argue that this is definitely not the case in reality.
> Spotify however wants to maximize its cut and so has incentives to shift money from less popular artists if it can entice major labels to its platform
It’s the other way around, because the platform has competing interests: Spotify wants to have the labels to sell an “optionality” to the users (I.e. get the money from subs) but in terms of reproduction/execution Spotify wants to reproduce the maximum of podcasts and/or long tail artists because in those 2 cases Spotify does not spend a single penny.
The labels has a very high bargaining power over Spotify due to its catalog, so as expected this is the biggest expenditure.
That’s one of the reasons why Spotify is desperately pushing podcasts like crazy.
Agreed.
Major labels have leverage which they use to get a larger slice of that 70% than they would otherwise make in a ‘fair’ split.
No, they all are. I wouldn't be a subscriber and I doubt many others would be if they only had the "top" artists that "are responsible for funding the entire platform".
Go through your playlist for a minute and find how many artists aren't "the big ones" and ask yourself if you'd use the platform if the small artists weren't included. The whole point of spotify is ALL music, so ALL music is important, surely?
What sustain the economics on the Spotify is its catalog that is a composition of the labels catalog + long tail artists and their podcasts also.
When users goes to the Spotify, they are paying not to support their favourite artist but to be able to access the platform, that occasionally will have their long tail artists.
> The whole point of spotify is ALL music, so ALL music is important, surely?
Not necessarily. Catalog + Network effects + Marketplace is important.
What you’re describing in your argument is that “since you’re in the platform due to the artist, it’s fair that this artist receives the 70% of your money”. The flaw here is that this artist is benefiting of a marketplace and all its infrastructure and distribution without paying and the whole point of the platform is to give access to its catalog.
Think on the Spotify price as some kind of “optionality fee”.
It sounds better if they artist got your entire monthly payment (after payment processors and Spotify’s fee), but probably a nightmare for accountants.
The Uruguay parliament should regulate the contracts between their local artists and the labels. Some of them will ban Uruguay artists but some of them, maybe local ones, will intercept the money no matter what.
Or Spotify makes deals with individual artists, but there is a long and thin tail of them.
They won't. They will have contracts with distributors: https://artists.spotify.com/providers