A Former Spotify Exec Explains Why Artists Get Paid So Little on Streaming(digitalmusicnews.com) |
A Former Spotify Exec Explains Why Artists Get Paid So Little on Streaming(digitalmusicnews.com) |
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
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.
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.
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.
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.
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.