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Comment by Sniperfish | Hacker News Reader

I don't have much personal investment in the story, I'm a significant consumer of music but haven't user Spotify (despite being in Canada I was only vaguely aware the service isn't available here).

They've taken some flak in the past for their payments to artists and while I'm not following the discussions closely enough to suggest those criticisms are unjustified it does seem that they're not the chief culprit. 30% retained doesn't on the face of it seem unreasonably high, does anyone know how this compares to equivalent services?

Ultimately I don't think disclosure is ever a bad thing and hope maybe this is one more small step advancing the general 'royalty model' conversation.

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70% royalty share was imposed by the majors to Spotify. Just because this was the model used by physical stores and it's how the industry works. They didn't change the revenue split model.

One of the problems here is that there are many middlemen involved between the artist and Spotify. The label, the manager, the aggregator. Everyone gets his piece.

Also, there is problem regarding how much it takes for an artist to get the same from Spotify than they used to get from a song sold from a service like iTunes. Some artists claim that a song has to be listened up to 60 times in a streaming service in order to the same as a song sold in a digital music store. And here there comes the big issue. Have you ever listened 60 times to a song you buy in iTunes.

Spotify has been trying to claim that 70% is too high, and were trying to push for a reduction in royalties paid to artists via labels and lobbying congress. Trying to point out that they were not profitable, even though they're a new business and expecting profitability in this area so early isn't realistic by most measures.

But paying 70% of revenue for inputs isn't that big of a deal, especially for a business that can scale without having to make significant long-term capital investments.

Here's the problem: 70% of what? Revenue? What if the revenue is lousy?

Also, indie musicians have lousy royalty terms compared to the major labels that have partnered up with Spotify.

There's also the problem that services like this and Pandora are apparently unsustainable.

It's really part of a long pattern starting with Napster. Start a kick-ass service that gives music away for "free", ignoring pesky problems such as illegality or unsustainable royalty costs. Get the consumers excited about it by lying to them, and lose money for a while as you grow. Then pit the users against the musicians by having everyone complain to Congress about the royalty rates and try to convince the musicians that they shouldn't expect to make money if they aren't off sleeping on Motel 6 floors and making $12/night trying to sell t-shirts in dive bars. (Oops, did some bitterness sneak in there?)

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