The Spotify Artists Blog

$2 Billion and Counting

Taylor Swift is absolutely right: music is art, art has real value, and artists deserve to be paid for it. We started Spotify because we love music and piracy was killing it. So all the talk swirling around lately about how Spotify is making money on the backs of artists upsets me big time. Our whole reason for existence is to help fans find music and help artists connect with fans through a platform that protects them from piracy and pays them for their amazing work. Quincy Jones posted on Facebook that “Spotify is not the enemy; piracy is the enemy”. You know why? Two numbers: Zero and Two Billion. Piracy doesn’t pay artists a penny – nothing, zilch, zero. Spotify has paid more than two billion dollars to labels, publishers and collecting societies for distribution to songwriters and recording artists. A billion dollars from the time we started Spotify in 2008 to last year and another billion dollars since then. And that’s two billion dollars’ worth of listening that would have happened with zero or little compensation to artists and songwriters through piracy or practically equivalent services if there was no Spotify – we’re working day and night to recover money for artists and the music business that piracy was stealing away.

 

When I hear stories about artists and songwriters who say they’ve seen little or no money from streaming and are naturally angry and frustrated, I’m really frustrated too. The music industry is changing – and we’re proud of our part in that change – but lots of problems that have plagued the industry since its inception continue to exist. As I said, we’ve already paid more than $2 billion in royalties to the music industry and if that money is not flowing to the creative community in a timely and transparent way, that’s a big problem. We will do anything we can to work with the industry to increase transparency, improve speed of payments, and give artists the opportunity to promote themselves and connect with fans – that’s our responsibility as a leader in this industry; and it’s the right thing to do.

 

We’re trying to build a new music economy that works for artists in a way the music industry never has before. And it is working – Spotify is the single biggest driver of growth in the music industry, the number one source of increasing revenue, and the first or second biggest source of overall music revenue in many places. Those are facts.  But there are at least three big misconceptions out there about how we work, how much we pay, and what we mean for the future of music and the artists who create it. Let’s take a look at them.

 

Myth number one: free music for fans means artists don’t get paid.

On Spotify, nothing could be further from the truth. Not all free music is created equal – on Spotify, free music is supported by ads, and we pay for every play. Until we launched Spotify, there were two economic models for streaming services: all free or all paid, never together, and both models had a fatal flaw. The paid-only services never took off (despite spending hundreds of millions of dollars on marketing), because users were being asked to pay for something that they were already getting for free on piracy sites. The free services, which scaled massively, paid next to nothing back to artists and labels, and were often just a step away from piracy, implemented without regard to licensing, and they offered no path to convert all their free users into paying customers. Paid provided monetization without scale, free reached scale without monetization, and neither produced anywhere near enough money to replace the ongoing decline in music industry revenue.

 

We had a different idea. We believed that a blended option – or ‘freemium’ model – would build scale and monetization together, ultimately creating a new music economy that gives fans access to the music they love and pays artists fairly for their amazing work. Why link free and paid? Because the hardest thing about selling a music subscription is that most of our competition comes from the tons of free music available just about everywhere. Today, people listen to music in a wide variety of ways, but by far the three most popular ways are radio, YouTube, and piracy – all free. Here’s the overwhelming, undeniable, inescapable bottom line: the vast majority of music listening is unpaid. If we want to drive people to pay for music, we have to compete with free to get their attention in the first place.

 

So our theory was simple – offer a terrific free tier, supported by advertising, as a starting point to attract fans and get them in the door. And unlike other free music options – from piracy to YouTube to SoundCloud – we pay artists and rights holders every time a song is played on our free service.  But it’s not as flexible or uninterrupted as Premium. If you’ve ever used Spotify’s free service on mobile, you know what I mean – just like radio, you can pick the kind of music you want to hear but can’t control the specific song that’s being played, or what gets played next, and you have to listen to ads. We believed that as fans invested in Spotify with time, listening to their favorite music, discovering new music and sharing it with their friends, they would eventually want the full freedom offered by our premium tier, and they’d be willing to pay for it.

 

We were right. Our free service drives our paid service. Today we have more than 50 million active users of whom 12.5 million are subscribers each paying $120 per year. That’s three times more than the average paying music consumer spent in the past. What’s more, the majority of these paying users are under the age of 27, fans who grew up with piracy and never expected to pay for music.  But here’s the key fact: more than 80% of our subscribers started as free users. If you take away only one thing, it should be this: No free, no paid, no two billion dollars.

 

Myth number two: Spotify pays, but it pays so little per play nobody could ever earn a living from it.

First of all, let’s be clear about what a single stream – or listen – is: it’s one person playing one song one time. So people throw around a lot of stream counts that seem big and then tell you they’re associated with payouts that sound small. But let’s look at what those counts really represent. If a song has been listened to 500 thousand times on Spotify, that’s the same as it having been played one time on a U.S. radio station with a moderate sized audience of 500 thousand people. Which would pay the recording artist precisely … nothing at all. But the equivalent of that one play and its 500 thousand listens on Spotify would pay out between three and four thousand dollars. The Spotify equivalent of ten plays on that radio station – once a day for a week and a half – would be worth thirty to forty thousand dollars.

 

Now, let’s look at a hit single, say Hozier’s ‘Take Me To Church’. In the months since that song was released, it’s been listened to enough times to generate hundreds of thousands of dollars for his label and publisher. At our current size, payouts for a top artist like Taylor Swift (before she pulled her catalog) are on track to exceed $6 million a year, and that’s only growing – we expect that number to double again in a year. Any way you cut it, one thing is clear – we’re paying an enormous amount of money to labels and publishers for distribution to artists and songwriters, and significantly more than any other streaming service.

 

Myth number three: Spotify hurts sales, both download and physical.

This is classic correlation without causation – people see that downloads are down and streaming is up, so they assume the latter is causing the former. Except the whole correlation falls apart when you realize a simple fact: downloads are dropping just as quickly in markets where Spotify doesn’t exist. Canada is a great example, because it has a mature music market very similar to the US. Spotify launched in Canada a few weeks ago. In the first half of 2014, downloads declined just as dramatically in Canada – without Spotify – as they did everywhere else. If Spotify is cannibalising downloads, who’s cannibalising Canada?

 

By the same token, we’ve got a great list of artists who promoted their new releases on Spotify and had terrific sales and lots of streaming too – like Ed Sheeran, Ariana Grande, Lana Del Rey and alt-J. Artists from Daft Punk to Calvin Harris to Eminem had number ones and were on Spotify at the same time too.

 

Which brings us back to Taylor Swift. She sold more than 1.2 million copies of 1989 in the US in its first week, and that’s awesome. We hope she sells a lot more because she’s an exceptional artist producing great music. But she’s the only artist who has sold more than a million copies in an album’s first week since 2002. In the old days, multiple artists sold multiple millions every year. That just doesn’t happen any more; people’s listening habits have changed – and they’re not going to change back. You can’t look at Spotify in isolation – even though Taylor can pull her music off Spotify (where we license and pay for every song we’ve ever played), her songs are all over services and sites like YouTube and Soundcloud, where people can listen all they want for free. To say nothing of the fans who will just turn back to pirate services like Grooveshark. And sure enough, if you looked at the top spot on The Pirate Bay last week, there was 1989

 

Here’s the thing I really want artists to understand: Our interests are totally aligned with yours. Even if you don’t believe that’s our goal, look at our business. Our whole business is to maximize the value of your music. We don’t use music to drive sales of hardware or software. We use music to get people to pay for music, and we pay nearly 70% of all our revenue back to you. The more we grow, the more we’ll pay you. We’re going to be transparent about it all the way through. And we have a big team of your fellow artists here because if you think we haven’t done well enough, we want to know, and we want to do better. None of that is ever going to change.

 

We’re getting fans to pay for music again. We’re connecting artists to fans they would never have otherwise found, and we’re paying them for every single listen. We’re not just streaming, we’re mainstreaming now, and that’s good for music makers and music lovers around the world.

 

- Daniel Ek

 

Follow @SpotifyArtists on Twitter for regular updates on best practice, product updates, financial information, charts and other useful information for artists and their teams!

  • Zack Clark

    Great article! Bold and comical to mention Taylor Swift. This article was a tactical move; well done.

  • http://ofallies.com Nick Tyldsley

    The issue, is that it’s not relative. Smaller bands are suffering, as it’s hard enough to generate money but Spotify just makes it worse. Myth 2 & 3 are simply not myths. It’s deluded and ignorant to think so. Spotify hurts bands/artists trying to break through, however we’re basically fools if we don’t sign up as less people would listen to our music.

    Spotify works awesomely well for “Ed Sheeran, Ariana Grande, Lana Del Rey and alt-J. Artists from Daft Punk to Calvin Harris to Eminem”, but for us it simply acts as a deterrent for our fans to purchase our music outright.

    I actually think Spotify is awesome, but please take into account it’s unfair to pay the bands with a small amount of plays exactly the same as the huge bands. It needs to be relative in order to stop independent and break through artists from failing at the first hurdle as they can’t afford to survive.

    I’d be more than willing to pay a few extra quid a month if I knew this was going to happen.

    • Ryan

      The littler bands are suffering because of Spotify? Then they should take it to the next level and not be so little…. but seriously, what is preventing the smaller bands from landing a couple bigger gigs, and standing outside trying to push their CD’s down an audiences throat afterwords? If the music is appealing, they will buy it. Things will spread via word of mouth eventually with hard work… and they will continue to grow a fan base. If it isn’t, their “little band” will stay little and most likely never amount to anything. Find your niche like miss swift did, and milk it. My problem with Swift is that she is running this silly campaign when she made 55 million last year, and has a net worth of 220 million.

      • Julio

        You’re discounting that while they are working hard, using word-of-mouth, hustling for shows, growing their fan base, they run out of fuel (money) because their fans are loving their music on Spotify, which is inadvertently starving the band.

        • Eve

          Small bands would have to do all of that anyway, and they’d be making even less money if Spotify wasn’t around to do their thing. Here, let me put it like this:

          My brother and his friends had a band – it went through a lot of iterations, but eventually they settled on genre and how they worked. They were good, and I don’t say that just because I know them – more often than not, I enjoyed listening to them more than most other bands. They worked hard, spread knowledge of themselves using word of mouth, MySpace, Facebook, running around trying to get fans, participating in every musical competition or whatever around. They did gigs at every opportunity. They did not make money. The expenses of buying instruments, driving around, trying to print out CDs and merchandise ran them into the red. Their entire audience by the end of it was barely any more than a hundred or so, most of which was family, friends, or friends of family

          Any amount of exposure, any amount of extra money, anything at all would make a difference for small bands. We’re talking about changing an indie band from having a hundred people to three hundred people paying attention to them. Then three hundred to five. Then to a thousand. What Spotify offers may not be so much money that’s valuable, but potential exposure. There’s never a guarantee, but when music is a risky business to begin with I’d certainly take the chance. Besides, what to small bands have to lose? The only thing that could come from being with Spotify is… more potential money than they had before and, if people are listening, then more exposure than they had before. That seems like a win-win situation to me.

        • alex

          yeah i would so pay $10 for a few songs that i will have on repeat for a few days before getting sick of it.
          No really, if spotify didn’t exist i would only be listening to music on youtube or just pay a visit to sites that can get it cheaper.
          Also, spotify helps those artists by connecting them to thousands of users. If spotify didn’t exist then no one would know about that “band” that you think is so awesome. Seriously Swift is a greedy bitch and i will no longer support her crap. It seems as if she’s losing creativity and all of her songs sound the same, full and boring at this point.

        • Tristan White

          Wow. Since when has music downloads been the sole source of income for a good artist? If you can’t get people to pay for concert tickets, merchandise, or anything else you may want to re-evaluate your band or take a marketing class.

        • Jimmy

          Sell vinyl at shows, can’t download that. Hang out after shows and sign it. I’ll buy one

        • Elvick

          The assumption that Spotify is removing purchases is hilarious. If people weren’t using Spotify that doesn’t mean they would be buying music. Please, do provide evidence of this. That every Spotify user who didn’t use Spotify was buying all their music prior. Or that if this wasn’t in existence, that they wouldn’t find another site like it (legal or not), or just pirate.

      • http://ofallies.com Nick Tyldsley

        I totally agree! I’m saying that Spotify devalues the price of music.

        • vatreehugger

          No, volume devalues the price of music. Market saturation. If consumers only had access to more expensive albums, they would need to be more discriminating with their budgets and a lot of the small artists growing a fan base on Spotify would fall into obscurity and find themselves begging for those internet streaming scraps they once scoffed at and criticized so much.

    • Mark Rushton

      Nick Tyldsley, when have “smaller bands” ever had it good?

      Was it when they signed contracts decades ago where a record company kept the master rights and a manager stole the publishing?

      Was it when they signed contracts with a record company where they were forever recouping advances or got suckered into accepting a lower royalty rate for the “new” compact disc?

      Was it when they agreed to spend a ton of dough on a video that MTV never played?

      Was it when they discovered the record company took the lion’s share of the digital royalties that iTunes and Amazon paid out from purchases?

      Was it when “smaller” bands were persuaded into spending money greasing US terrestrial radio stations for promotional purposes with no guarantee of success and no compensation for spins other than for the songwriter?

      Exactly how much more should “smaller” bands be paid than “huge” bands? How does that even occur?

      Exactly how much more should subscribers pay every month? Please, get out your calculator and figure it out for the rest of us. I’m sure Spotify has never done any market research. (sarcasm)

      What you don’t understand is that we are at the beginning of a revolution for recording artists! Getting paid for every listen is a huge leap forward! Having regular accounting that is trustworthy is relatively new thing! Why don’t you understand this? You’re probably not a recording artist like me – just a fan. I would hope that you would educate yourself on the past, corrupt history of “compensation” for recording artists, and figure out that what Spotify, Pandora, and other digital subscription providers are doing is a good thing and is the future!

      • logician

        Comparing two things (small artist treatments then vs. Now) and saying it’s “always been bad.” Is illogical support for an argument. Fallacious “either or” or “appeal to tradition” reasoning. Two “bad” things don’t prove or justify anything. There CAN be a middle ground. Use logic.

        • Walm

          Nick said Spotify makes it worse. Mark said, no it didn’t, the past was worse.
          If you are a logician then I am a plumber.

      • http://ofallies.com Nick Tyldsley

        I’m not saying they’ve ever had it good. Point out where I mentioned that?

        I’m saying that Spotify devalues the price of music. Which quite simply, it does. Can you honestly say that listening to your favourite song 100 times is worth less than 1p/$1 to the artist?

        As i said, music streaming services are awesome and definitely the way forward, but there needs to be more balance so larger and smaller artists benefit relatively.

    • http://mattaningram.com/ Mattan Ingram

      There are so many small bands (and small artists of every sort) that the supply has far exceed the demand. When that happens the amount of money you can make providing something that is over-supplied is low. There is no magic way around that.

      The internet is a wonderful thing and gives creative tools to many who didn’t have them before, but it also convinces them that they have a much greater chance of success (and ability to live off such earnings) than they actually have.

      When a small band was passed over for a record deal pre-Spotify were they being screwed? No they just weren’t considered popular or good enough to be worthwhile. Now with Spotify pretty much ANYONE can have a record made available to the public, but you can’t expect to be paid handsomely for it when you are next to hundreds of thousands of other similar artists.

      • http://ofallies.com Nick Tyldsley

        I absolutely agree and hope Spotify and other services continue, as it’s an awesome way of spreading the word. However I’m saying that their payment to artists should be be proportional.

        Can you honestly say that listening to your favourite song 100 times is worth less than 1p/$1 to the artist?

    • ysubgirl

      I disagree . When I find artists and albums I really like, (and Spotify allows me to listen to new artists without losing $$ on things I end up not liking), I will make a point to purchase the album via Itunes,if available. That way I can have the music wherever I go, sometimes streaming isn’t available, and also support the artist more than I would be able to listening via Spotify alone. I don’t know if your argument really holds true. I was once a musician in a band, and I think the main issue is, it’s just damned hard for musicians to make money and break through. Most musicians, even extremely talented ones never make it big, and never make money from it. It’s a rough gig, so I sympathize, but that’s always been the case and isn’t Spotify’s fault. Additionally, this is the way the music industry is going, pretty soon everything will be streaming, not just music. Better to find new ways to generate money then to not get paid at all. I say get on board or get left behind. The Record Labels are proof of that, they have lost millions because of refusing to change their old business models.

      • http://ofallies.com Nick Tyldsley

        I agree, it’s a brilliant way of finding new music. But unfortunately it devalues the price of an album. Many people won’t go and buy the album on iTunes as well…

    • BryanMiguel

      I discovered Hozier in 2012 because of Spotify. Since then I’ve shared with all my friends his music. And I bought tickets to see him when he went on tour. So I’m really glad of his recent success.

      But Spotify and all these other streaming sites are still only avenues of income. Treat your art as less of a product and more of a service. Shows and merchandise will be larger sources of income. So it’s important to think Spotify and streaming and selling CDs as less of your product, but more as marketing tools to have people come see you at your show.

    • Austin

      I feel as though if a little band is concerned with just money, they aren’t a band I would want to support. There are a few local bands that have not only worked in the band, but a 9-to-5 as well. They aren’t terribly concerned about the money and just want to play the music for someone. That’s the art. That’s the band I will pay to see live. That’s the band that I will support. Not some guys pissing and moaning about how they can’t (yet) make a living off of music. Really put in 110% of effort and make the ends meet by doing all that is possible (lime a real job on the side) then I will listen.

      Until tnen, do it for the love of the art. Not to make money.

    • Aerovistae

      So you’re saying unproven newcomers to a field should get higher pay than established, proven professionals, just to make things fair? LMAO. “New university graduates should get paid more than those with 25 years industry experience– otherwise how can we compete for CEO positions???”

    • Tristan White

      You need to focus on using your music as a marketing tool and your band as the product. You say it’s foolish to not use Spotify because no one would listen to your music. How do you not count the value you are getting in marketing into your equation? Plain and simple your songs are not worth the same as “Ed Sheeran, Ariana Grande, Lana Del Rey and alt-J. Artists from Daft Punk to Calvin Harris to Eminem.” I know who those people are. I know what I am getting when I play their music. Your music is a gamble. It may be good, it may not be. 90% of businesses fail in the first 3 years. Not every musician with a dream is able to produce, market, and play songs well enough to pass the first few hurdles. You need the whole package and Spotify makes the marketing part a whole heck of a lot easier.

    • MultiVac

      This is the equivalent of “everyone gets a trophy.” Everyone cannot win. Just because you put music on Spotify does not entitle you to make as much as a “winning” artist. There is a business side to all of this. Taylor Swift started out where everyone starts out, she’s just an exceptional songwriter. She wins.

      I hate this culture of entitlement. Work hard. Figure it out.

    • Elvick

      The industry is never going to pay a small band the same as a big one. If it weren’t Spotify, they’d more than likely be finding your music to listen to elsewhere. Rather than buying it. Some ‘fans’ aren’t very good ones. You may not want to see that as an actual artist, but as a huge fan of music I see these type of people all the time.

      If I love an artist, I will buy their music. I’ve bought so much music this year, I will need to buy a new shelf for it all and I still need to get more, but between all I buy I have to leave some things for later. And I’ve bought singles and music videos on iTunes just to support them in excess prior to album release. And, sometimes I’ll buy the album digitally too. In addition I can now use Spotify (didn’t know it was in Canada until just now). Even started to buy music on Google for cheap, triple dipping. All these things are additional ways for me to support an artist that I love.

      If your fans don’t care enough about you or your music to buy it… then they probably wouldn’t if Spotify wasn’t around either. I doubt they are the type of fans that would go see you live either.

      I have a friend who ‘loves’ some bands and he doesn’t buy any music. And he doesn’t use legal services either. It annoys me as a lover of music. But that’s what he does. Some people aren’t going to buy music, even if they ‘love it’. Their love is just of listening to it, not of the people who created it.

  • alex forselius

    You’re right Daniel! Spotify is the best thing that happened to the music industry since music were invented. Spotify is so far the best tool for artists to promote themselves – and get paid for it at the same time. Make a song that is successfull and spread iself – and you will get money for the promotion instead of having to pay for it. When artists says they cannot longer live on music, they have to realize – you cannot make a track and earn a living by sitting back. You must do the hard work – promote yourself, touring and do all that ‘shit’ work as an musician in order to make a living. I never expect royalty can make a living, that is something you must realize.

    • Carlos

      Obviously the payout depends on the size / community of spotify but right at the moment it’s so small that nobody apart from EMI/Universal etc.and their artists can take it serious. You realize that not every band/producer is the next beatles or david guetta, lots of people work hard over years but what comes in over streaming is way too little compared to what comes via digital download or physical products. It’s a misconception of music listeners that bands and artists should “play gigs to earn money” because in reality neither everyone can get gigs and neither does every music listener go to a gig. Your misconception is that you look at music as royalty while creating music is a job as every other. It takes days/weeks/months of work to create music and it should be payed and not be “given away” for almost nothing.
      And btw. “Make a song that is successfull” music is an artform and not a basis to generate money. I tell you what most musicians do not try to “make a living” or are aware that it takes alot to make a living. All they really want is a fair share and currently it is not, no matter how you twist it.

  • Rogier

    Interesting piece. One question I have always wondered about as a spotify user. Why is it not easy to donate (via the same linked creditcard) additional money directly (and fully) to the artist. I don’t see how that would detract from Spotify’s business model, yet it would give appreciative fans an easy way to support artists in a hassle free way… (and great PR for spotify to boot) win-win!

    • Ulrich Ellison

      Great idea, Rogier.

      • Christopher Miller

        But lets make it clear that it is the artists that are getting the contribution. A donate button on the Artist page of an independent would be fantastic and a great way fans to connect with their favorite small music makers. Hell, open it up to something like Kickstarter for music, bands can set up gig goals and if enough people pitch in from a certain area, BOOM, that artist/band can ship out to the local coffee shop and play their even on coffee shop gig pay. BUT, and this is the biggest but. DO NOT allow labels and publishers to pull this shit on Spotify. They’re undeniably one of your biggest problems in this whole scheme. For Spotify to truly work correctly the labels need to be out of the picture entirely. T-Swift would be much happier with that 6m a year she pulled in if it all actually went to her… So until you convince real rising stars to use your service untethered by the chains of big labels you will always have the problem of the real artists not making enough off your service. Convincing things like donation buttons and concert crowd-funding. PS. I expect my royalty check for this great idea in the mail by the end of the year, hopefully I get a better cut than Taylor.

        • Bon

          Truth!!!

        • Paul

          1) Isn’t this the general idea of https://bandcamp.com/ ?

          2) Artist like T-Swift would never get as popular as they are without the support and promotion of the major labels and their promotion. Most independent Labels are much fairer in the share that they pay musicians, but do not provide the same promotional support.

        • Muhammad Bilal Islam

          I agree completely, the labels are the real problem here

        • Pithra

          The problem is that the labels own the artists with the crazy contracts they get them to sign

    • Augie
    • SanRamon

      A friend and I have been talking for the last month about a way to make this work. It would be such an excellent idea. You could very easily encourage tips, or merch buying, or whatever. Huge for getting money directly to artists.

    • chris carpenter

      Because publishing companies don’t want money going straight to the artists.

      • Dylan

        I think it goes a step beyond this. I’m pretty sure the artist sells the rights of the song to the publishing company, making it no longer their property so they couldn’t even legally ask for donations for the songs, as technically it is no longer the artists property. Could be wrong, hope I am.

    • http://ofallies.com Nick Tyldsley

      Great idea.

    • Lance King

      Just so everyone is clear on the process, there are a few actually that play out not just one way here. For Indie artists, they normally get their digital distribution from a company, the company will take a small chunk of what ever comes in digitally, that would be say 10-15% normally, the artist would receive the remainder directly. If a band is signed or licensed to a record label, that entity would set up the digital distribution, and they would pay the artist generally 50% of the net they receive (which would be after the company took their 10-15% that does the distribution). If an artist has a publisher, and has licensed the song to a publisher (still owning rights to the song) Then generally they will receive an advance for a group of songs they licensed which will be recouped, much like a label deal, and the publisher will attempt to sell the songs to either other artists for use, or collect artist performance royalties from airplay and use of songs in various places like streaming and radio play and also in commercials on television or in movies. A publisher will receive generally 50% of whatever gross they collect and the artist will receive the balance. So there is no real way to know how much of your donation would get to the artists without knowing any or all deals they have going on. Be better to have a direct link in some capacity to donate directly to the artists, but that would mean a TON more logistical work for Spotify. And undoubtedly they would need to take a cut for administrational fees. Better solution is to look up your fav artists on Facebook and ask for a paypal email you can send them money to!

  • john

    Second to last paragraph: “more we grow” should be “The more we grow”.

  • Rebecca

    I love Spotify.

  • Louie L

    I don’t like Spotify.

    • Mark Mosley

      Strong,thoughtful, foward thinking here. I like it. Keep it up.

  • E. Versteegt

    Interesting article. BUT, I can somewhat imagine how Taylor Swift feels.

    Spotify used to be a pioneering company, one of the first to introduce flat fee and unlimited listening to music against costs that most of us can (and want to) afford.

    Unfortunately, also toward it’s paying customers, is not that young and pioneering company any more. The best (or worst) example for this it the fact that they, despite more than 6000 kudo’s on their forum and actual customers leaving, blatantly refuse to implement Chromecast support :( .

    For sure, you can cast the entire screen of most tablets or cast a tab in the Chrome browser, but that gives terrible audio quality and relies on your (portable) device staying awake all the time.

    The only reason for not implementing chromecast most can think of, is that Spotify is becoming increasingly greedy and is being paid largely by manufacturers that sell equipment with Spotify built in.

    Too bad, but competition is already emerging with similar (or even better) offers. Examples are Deezer, Google Play Music, etc. and all have native Chromecast support .

  • Kdforf

    It doesn’t really matter what song is being played. Spotify offers a really good experience when listening to music and the loyalty of the users lies with the experience that Spotify offers not what music is being played. That being said the music itself plays some role but it is not as important as the experience that Spotify offers.

    Spotify/Rdio/Itunes Radio and etc. are the future and opposing this awesome services is like trying to swim against the stream. Some may succeed but not everyone can do that. That being said, the success that they have achieved swimming against the stream is temporarily.

  • Andrew

    Thank you, Daniel.

  • gary

    “Why You and Taylor Swift Are Not Getting Paid The Money You Earned From The Streams Of Your Songs”

    http://www.americansongwriter.com/2014/11/songwriter-u-guest-blog-audiams-jeff-price/

  • Jon Riffioso Hockley

    Myth number one: free music for fans means artists don’t get paid:

    Free music for fans means artist don’t want to get paid they want to raise their profile.

    Myth number two: Spotify pays, but it pays so little per play nobody could ever earn a living from it. It’s true. Spotify can’t compare it self to radio because it’s on demand thus the royalties should be much higher. Why compare yourself to radio: artists get paid wether you like their song or not. On spotify every song you choose you want to hear so you owe the artist a lot more.

    Myth number three: Spotify hurts sales, both download and physical. It’s true and has been proven.

    Piracy = Kidnap

    Spotify = Slavery

    Sales = Employment

    • Billy Joe

      Think about this: Some people love music, but do not want to pay for it. So what will this person that wants music that doesn’t want to pay for it do? They will simply go to a torrentting and get it for free, without the artist getting a dime. However, with Spotify, you don’t pay a penny. Nothing. You get to listen to music for free, and you don’t have to go through the downloading/risk that a torrentting site would involve, and the artist gets paid a little.

      Personally, I only pay for albums I know I will listen to a lot and I really want to support the artist. Otherwise, I’m just going to look it up on Spotify. It is not on Spotify? Okay, I guess I’m heading to the Pirate Bay!

    • Mark Mosley

      I’m intrigued by this. I would love to see some numbers to support your claims? I am not sure anyone is saying you can survive as an artist off Spotify alone but I am intrigued to hear some of the numbers.

    • aardvarked

      “Spotify hurts sales, both download and physical. It’s true and has been proven.”

      Feel free to go ahead and share the proof.

  • Neil Barry

    Great post Daniel. I love Spotify and agree with many of your points. The industry is screaming for a new playbook and I think you are heading in the right direction. One important correction. You say that 500,000 plays on Spotify equals one spin a moderate sized radio station. I think you are confusing weekly cume (total weekly listeners) with AQH (average quarter hour) listening. A radio station that has 500,000 weekly listeners probably only has an average of ten or fifteen thousand people listening at any given time. There are very few music stations, (if any!) in the country that are big enough to draw 500,000 listeners in at the same time. Keep up the great work and thanks again for a great post.

  • Syberen van Munster

    The lack of payment for radio play is a specifically American issue though. In lots of other countries artists would be properly compensated for getting played for 500,000 people. Also radio doesn’t play songs on demand of every individual listener.

  • Ejede

    I enjoyed read. I’m a huge fan of Spotify, and I would like to work on the collaborative filtering side of a music service provider in the future because I’m a data analyst by trade. In addition, I used to pirate music, and I now have paid memberships on both Spotify and Pandora because I like paying for music, and I feel the price points are affordable to users who are accustomed to piracy for previous lack of funds to purchase music in the past. In addition, I’m a musician, so I completely grasp the value of art and the Taylor Swift perspective.

    However, I would like to make one point in contrast with the article. It’s not entirely accurate to analogize Spotify with traditional radio in regards to 500+k plays being equivalent to one play on standard radio. That’s a logical perspective from Spotify, but an artist will naturally view Spotify as the equivalent of selling an album for reasons I won’t go in. I feel Spotify falls between those two categories and how to accurately define this is the core disconnect between streaming services and artists.

    Fans want to pay an amount that we feel is affordable. Spotify is a business that obviously needs to make money to survive. Artists/Labels want to be paid what they’ve been conditioned to believe is the value of music. I would venture to guess that if Spotify was a non-profit organization that paid 100% of its revenue to artists/labels, artists/labels would still feel under compensated. At the end of the day, the music industry is constantly changing, and one of these three groups will have to take a loss. This article does a very good job of explaining why artists/labels are benefitting from Spotify because the alternative would be no compensation in many cases. Taylor Swift’s actions are the current equivalent of Metallica circa Napster era. From one perspective, that was a success for piracy. From another, legal action is what caused the momentum for a mine and millions of others willingness to pay $10/month.

    Things keep changing, and like any industry, there will be no end game until the product dies. Except music will never die.

  • http://www.fosterhagey.com Foster Hagey

    “So our theory was simple – offer a terrific free tier, supported by advertising, as a starting point to attract fans and get them in the door. … just like radio, you can pick the kind of music you want to hear but can’t control the specific song that’s being played, or what gets played next, and you have to listen to ads. We believed that as fans invested in Spotify with time, listening to their favorite music, discovering new music and sharing it with their friends, they would eventually want the full freedom offered by our premium tier, and they’d be willing to pay for it.”

    I’m a bit confused about what you say here versus what it says in the Spotify Explained: Royalties in Detail section.

    http://www.spotifyartists.com/spotify-explained/#royalties-in-detail

    As you explain it here, Spotify seems more like three services with three different rates than just one service with one rate as explained in Spotify Explained: Royalties in Detail section.

    1) Free Mobile Internet-Connected Radio
    Minimal selection or choice, few or no skips, Lots of Ads audio ads in your stream, no offline access
    (just like Pandora and iHeartRadio custom stations)

    2) Free Desktop Fully Interactive Streaming
    Play what you want when you want, scan to anywhere in a song, make playlists, less audio ads, but plenty of banners and popups, no offline access

    3) Premium Mobile
    Play what you want when you want, scan to anywhere in a song, make playlists, make playlists available offline for desktop and mobile, no ads, user pays

    So when you do the calculation from the Spotify Explained: Royalties in Detail, do you do it for each tier separately and then mix the results into an effective rate much like taxes or do you mix advertising and user payment revenue together and then do the calculation?

  • Dev

    That’s some straight-up strawman bullshit.

    “And that’s two billion dollars’ worth of listening that would have happened with zero or little compensation to artists and songwriters through piracy or practically equivalent services if there was no Spotify”

    There is no evidence that every person who listened to those songs on Spotify would have ever pirated. If you are making assumptions then you might as well assume they would have bought the songs instead. So it’s money lost by the artist. Stop painting yourself as some altruistic humanitarian out to save music.

    You’re in the business of making money.

    • TonnieP

      “There is no evidence that every person who listened to those songs on Spotify would have ever pirated”
      Well, i am from the ‘napster generation’, i spent about 40/50 euro’s a year maximum on itunes or cd’s, the rest was pirated, since day one spotify launched in my country i had an premium subscription, so i guess there is a lot of truth in the statement

      • Ruli Gomez

        Exactly the same case here. I never, ever bought an album. The ones I’ve got were given as gifts. Since Spotify was made available in my country, I’ve always paid for a premium subscription.

    • TJ Hammerle

      It’s always about money, everyone knows this. The game is changing…people don’t feel guilty about torrenting music anymore and more people will do it unless a convenient and cheap alternative is provided. Piracy HAS declined with the availability of streaming services, so either all of those people had a change in heart and decided to start buying music again, or they turned to services like spotify. He’s just pointing out to the artists that pulling their music from streaming services is likely to drive many listeners back into piracy where the artist will get nothing.

    • MultiVac

      Every business is in the business of making money….that’s why it’s a business.

      Brilliant.

    • Elvick

      There is also no evidence that every person who listens to these songs on Spotify would buy music if Spotify didn’t exist. Yet people are hating on Spotify over it, like they’re removing tons of music buyers from the pool of consumers.

      And I think Spotify’s argument is closer to reality than the reverse. Just look at album sales (pre-Spotify). They fell dramatically without the help of streaming services. It’s not because people stopped enjoying music.

  • http://www.manishboyz.com Pharaoh ManishBoyz

    If Spotify stays around 40+ years and people still listen to some of the same songs an artist produced in the past, he has the potential to receive a “salary” over a longer period of time, as opposed to a one-time sale. It is up to the artist to create content that has a longer shelf-life in order to fully take advantage of Spotify’s business model. As more consumers switch from other non-monetized platforms to Spotify there is potential to make serious money (half-million to a billion streams annually on Spotify vs. YouTube).

    -Pharaoh T.

    ManishBoyz Publishing, Inc.

    [www.manishboyz.com/music]

  • Julio

    How many of you would spend money and effort making a product, then let someone copy it over and over while paying you according to some calculation that only they know? C’mon, Spotify. Make the royalty calculations transparent.

  • Dustin Woodrow

    I’m just surprised that 12.5 million people are paying $120 a year for a music service. That’s $1.5 billion a year and a lot of music lovers with disposable income.

  • Joel White

    Even if one accepts without skepticism the assumption that piracy has really been so thwarted by spotify alone, not to mention the “2 billion dollar” claim, the amount being paid to artist compared to the amounts being paid by customers and advertisers is embarrassing and exploitative. Your painting spotify as some heroic platform saving us artists from piracy is my hardy-har-har moment of day…we don’t give a shit about what pirates steal, we want our due from you! To be fair, what you owe us with respect to the billions more you make off our music. Stop acting like we’re getting a fair shake. Please. We’re not that stupid

  • Joel White

    Even if one accepts without skepticism the assumption that piracy has really been so thwarted by spotify alone, not to mention the “2 billion dollar” claim, the amount being paid to artist compared to the amounts being paid by customers and advertisers is embarrassing and exploitative. Your painting spotify as some heroic platform saving us artists from piracy is my hardy-har-har moment of day…we don’t give a shit about what pirates steal, we want our due from you! To be fair, what you owe us with respect to the billions more you’re making from the use of our creation. Stop acting like we’re getting a fair shake. Please. You sound ridiculous. We’re not that stupid.

    • Vojta Polak

      Your music, or any other goods in general, is only worth as much as someone is willing to pay for it, not how much you think it is. Spotify is offering you a certain amount (based on the number of plays), but if you think you can get more somewhere else you are free to do it.

  • Lyle David Pierce, III

    Mr. Daniel Ek, I would never authorize either you, or your organization to use my creations, and I am going to explain why – again.

    “Myth number three: Spotify hurts sales, both download and physical. This is classic correlation without causation – people see that downloads are down and streaming is up, so they assume the latter is causing the former.”

    RESPONSE: In the article posted below
    [see attached link], you can find the following quotations which strongly suggest that Spotify not only hurts both download and physical sales, but also “the artist’s” ability to generate future streaming revenue.

    “Downloads: Rdio Unlimited (their premium service) and Spotify Premium users can DOWNLOAD MUSIC to their mobile device and listen offline, while Songza relies on streaming.” [Emphasis supplied.]

    “Accessibility: All three have mobile apps for listening on the go as well as a web browser-based player. (Spotify ENCOURAGES users to download its standalone desktop program.)” [Emphasis supplied.]

    These quotations clearly state that “Spotify users can DOWNLOAD MUSIC to their mobile device”, as well as their home computers by way of Spotify’s “standalone desktop program” – in fact, Spotify “encourages” this activity. [Emphasis supplied.]

    Spotify offers “[o]ver 20 million” licensed tracks globally at a cost of $9.99 a month for the ad-free experience which permits Premium users to legally download digital copies to both their mobile device, as well as their home computer.

    Thus, it appears that for the cost of one digital album offered through Google Play or iTunes, a Spotify Premium user can access and legally download over 20,000,000 licensed tracks on Spotify and, theoretically, let the account expire at the end of the month – if I were a pirate and had legal access to 20,000,000 licensed songs for only one easy payment of $9.99, I would give up piracy too.

    A number of questions arise in view of the foregoing Mr. Ek.

    (1) When a Spotify Premium user downloads, let’s say, 100,000 licensed tracks to both their mobile device and computer for $9.99, does advertisement still play when those tracks are played offline?

    (2) When a Spotify Premium user plays those 100,000 downloaded licensed tracks, are those plays counted as streams so that “the artist” and “other rights holders” can thereby receive royalty payments?

    (3) If a Spotify Premium user has downloaded 100,000 licensed tracks from “the artist,” how many digital downloads would they reasonably be expected to purchase thereafter from digital download services such as Google Play or iTunes?

    (4) If a Spotify Premium user shares those 100,000 downloaded tracks with a friend, does Spotify still pay royalties to “the artist” and “other rights holders” for those tracks?

    (5) After answering those questions, ask yourself this question: Who is cannibalising the music industry Mr. Ek?

    I had intended on responding to each and every statement made in the attached article, but as I was writing it became clear that it was not necessary to do so as I believe that what has already been written sufficiently dispels the Spotify myth – I shudder to think about how many tracks have been downloaded thus far, and how many more tracks are being downloaded at that at this very moment – $2 billion and counting?

    • http://SpotifyArtists.com/ Mark Williamson

      1) You can’t take tracks offline on the free service, you have to be connected to the internet. So, yes, ads still play and generate royalties on the free service. There are no ads on Premium.

      2) Yes. The application simply reports the offline tracks that you streamed the next time you connect to the internet. If you do not connect within 30 days then the app disables music playing (so you can’t be offline forever). i.e. Offline streams count as streams and are royalty bearing.

      3) Behaviour is different for every user. Some will buy downloads, some vinyl, some will only stream, some will go to shows. Even if they do none of those things a Spotify user is worth more to the industry than the average non-Spotify user (http://www.spotifyartists.com/spotify-explained/#spotifys-progress-so-far)

      4) A user cannot share a song file. They are encrypted and inaccessible to the user. When they share a song with a friend they are simply sharing a link. If their friend plays the song, it plays on their own devices and generates a royalty.

      5) Dan has already answered this one.

      Finally, on Spotify you do not “download” tracks. If you take them offline you are simply “caching” that track to your phone. You do not own it, you can only keep it if you stay paying $120 a year and you cannot move those files.

  • Joel White

    One last comment for perspective and to turn your logic against you: imagine I say “hey spotify, how about I pay you only 2.99 a month for premium service, it’s either that or I go back to grooveshark..?” Basically, that’s what you’re saying to artists: accept the miserable percentage we pay cuz it’s better than the nothing you’d get from thieves. Your entire main argument is a total wash. Try again. Thanks for being a legal platform and all but sorry if we don’t see it as exceptional, much less cause for celebration

  • Raquel

    “But she’s the only artist who has sold more than a million copies in an album’s first week since 2002″

    Huh? Lady Gaga’s Born This Way sold 1.1 million in its first week in 2011.

  • Austin

    Boom. *Drops Mike and walks out*

  • Burningguitar

    Yeah, thanks so much for aligning your interests with mine. As an indie artist, I am so blessed by your generosity as you pay 0.01 dollars per play for my songs. It has revolutionized my income! At least a radio station guarantees an audience. On Spotify, we do all the work a and get paid peanuts for it. You can tout your major label payments all you want, but those are completely based on their clout and negotiating power. Us regular people get jack squat.

    • Vojta Polak

      So you are basically complaining about getting 0.01 dollars more per song play than without Spotify?

  • AdifferentDude

    Sweet! So you got into music to make money huh? I love bands that get into it for the money and not because hey love the craft!

    • Garrett Cox

      If you want to be a musician full time, you need to be earning enough to live on the income.

    • Sceamer

      Exactly. Are they expecting to become rich by just being musicians?
      Come on guys, I’m a game developer and I don’t make millions.
      Be realistic

  • Lexi

    I think Spotify is one of the best things to happen to music in a while. I am able to listen to the songs I love and discover new artists. Spotify creates a one of a kind experience for music lovers which allows them to easily find and explore new music without having to spend an arm and a leg by buying countless albums. I am able to enjoy such an experience and still am contributing to artists (at a pay rate I can afford). What artists and bands who choose to opt out of streaming sites such as Spotify are missing is the possibility for millions of music lovers to find and experience their music.

    I believe that the most important thing about music is that (while it can be just plain fun) it is also a way of expression and I would hope that artists would want their thoughts and experiences to reach as many people as possible. I also believe that Spotify allows for a much larger portion of people to be able to experience the greatness that is music while still making a contribution to artists.

  • Rusty Longwood

    $.006/stream is for paid subscriber listens. $.001/stream would be from free members.

    • http://innervates.com RJ Gazarek

      this is great, because in one single comment line – you’ve managed to completely undermine the CEO’s entire letter. So he’s up there, writing about .006/stream – he’s talking strictly about the top end, listening, by paid subscribers… So he says 500,000 listeners is the same as one play on the radio? Sorry, no it’s not, one play on the radio is to a bunch of FREE listeners. So let’s do the real math. 500,000 times .001/stream (let’s compare apples to apples Mr. CEO)…. That’s $500… yeah… I can see why artists would be pissed off…

      • Hangry Kale

        It’s a business, douche. If it isn’t profitable guess what, it doesn’t exist. He is totally right because I pay for their services and if not for spotify I would positively be pirating music for free. Damn right they pay the big artists more than the small ones. No one wants to listen to indie garbage 24/7. And getting paid something is better than nothing right? Go sit on a gluten free wiener and get over yourself. Heaven forbid someone have an idea and capitalize on it.

  • Ryan Brooks

    As a music lover and Spotify addict, I will say that I would never -ever- pay for an album. Unless you’re releasing an album that’s going to be played by me hundreds of times, I will never buy your album. Unless your music is on Spotify, chances are you will never make money on my listens. Either the radio is making it or it’s being streamed. If it’s not being streamed? Well time to move to another artist that I can stream. It’s pretty standard of most people I know just relying on streaming for music, why even turn on radio anymore?

    Now what Spotify needs to do is spend some money on their track selection intelligence. I feel like when I play a station, the selections it makes based on the song or artist I pick are fairly bland, and it goes back into my own selections alot. Most times I feel like it’s unnecessarily pushing Creed at me. Fix track selection. Then start blending smaller bands and band plays into radio plays based on what they already like. And you should know what they like, you know what they listen to and how many times they listen to it :) That’s all. Thanks for being awesome Spotify.

  • Kirby

    “played one time on a U.S. radio station with a moderate sized audience of 500 thousand people. Which would pay the recording artist precisely … nothing at all.”

    I don’t think this is correct. Would ASCAP or BMI not collect royalty for the airing of this song?

    I’m Canadian and I know SOCAN (ASCAP/BMI Equivalent here) collects for radio royalty. I understand your comments about “exposure” but I’m sure there would be revenue for the artist if a station played their song. Its the reason ASCAP/BMI/SOCAN exist.

    Or is it different in the US?

  • Wayne Norris

    Spotify is simple…..good model if you actually make good music people will want to continue listening to. Bad model if your music is awful…one stream and done. An established artist who puts out a crap albulm should avoid Spotify….better get that $10 upfront!!

  • Jake At State Farm

    I’m going to assume you don’t headline at major music festivals, or have your songs broadcast across national radio, and your concert tickets probably cost a lot less than today’s top artists… I’m also going to go out on a limb and say people probably don’t join Spotify so they can have on-demand access to all of your music. If you’re good enough, one day you’ll probably get paid the same as leading artists, but you see where I’m going with this?

  • freaksavior

    If they really are, then would you prove it by uploading a pdf of your payout? Obviously black out the personal data

    • Academic

      “YOU MADE A COMMENT ON THE INTERNET; PROVIDE DOCUMENTATION IN TRIPLICATE AS PROOF”

      I bet you’re fun at parties.

  • itschrome

    All I can say is I agree with Daniel here. I haven’t bought or paid for music since probably 2003(ish) I just pirated everything. that being said I now pay for my spotify service! I just love having all that music right there on my phone when I want it. Or in my house on my stereo. Generally the sound quality is pretty good and they have everything I want! I don’t mind paying for music in this format at all. and now the music industry is making money where I use to just steal it all. win, win if you ask me. Swift is just an attention whore…

  • GrimyDude

    would rates be the same for everyone? id assume artists with a much larger viewership and larger fanbase (more possible ad views) would get better rates then lesser known artists. Spotify would have more to gain, and would obviously give them more of an incentive to partner with them.

  • Justin Farquhar

    Yeah, that makes perfect sense. An artist like Taylor Swift has the leverage to negotiate a better deal than an indie musician.

  • Omar Ruiz

    Taylor Swift is just an idiot without any business sense. I’ll take the business advice of a entrepreneur whose net worth is $400m over the artist worth half that amount.

  • Murph09

    Who cares.. This industry is responsible for getting what the consumer wants at any given time. Spotify is doing that right now. If places that sell physical copies or downloads don’t like that then they need to change their business model. If Taylor doesn’t like it then she can pull out of Spotify and make it that much harder for her fans to hear her. Though she is on the radio like 23 hours a day..

  • Anonymousnightreader

    If Taylor swift is reading this whole article, then she must feel poopie :P spotify is that middle child

  • Ryan

    Good article and an interesting read. I’m siding with Spotify on this one.

  • vatreehugger

    If you expect to “make a living” from streaming a recording, just stop playing music and get a new job. Someone more talented will fill your shoes in a heartbeat. You’re not needed.

    This is just the new generation’s imaginary “good ol’ days”…..romanticizing a past that never really existed. Small artists complaining about services like Spotify “not paying them enough” have no idea how unfathomably miniscule, how borderline non-existent their fan bases would be, and how little money they would be making if not for cheap and yes often even free distribution on the internet. They will never know how good they have it now and how quickly they would go broke and need to give up on their dreams if they were trying to make a living playing music in the “good ol’” pre-Napster days.

    Consumer budgets can only support so many musicians. The only reason there are as many of you out there now vilifying Spotify and its ilk is because it costs less for people to listen to you. Raise costs, forcing consumers to be more selective with their music budgets, and 90% of you will find yourselves knocking on Spotify’s door begging for those pay-per-stream scraps.

  • teamretard

    I see and how much money would you be receiving if your music wasn’t on spotify?

    • http://ofallies.com Nick Tyldsley

      Why buy an album if it’s on spotify for £5.99 a month?

  • jhodder

    Plus, Spotify is INCREDIBLE for small artists’ popularity. I can’t tell you how many tiny bands I’ve found over Spotify that I couldn’t possibly have found otherwise. If I like them, I’ll download their music.

  • Not that popular

    That’s because you’re not a major artist like Taylor Swift. Quite frankly, people are less interested in listening to you than they are others.

  • Danny

    Seriously, as a user of spotify I love it. I have sound cloud and barely use you tube. It seems like to me if you have a job and can pay for the premium spotify you love it. If you only have the free spotify I bet you have tried the premium trial and wish you had the premium all the time. Now for you people that think swift was right about pulling her album from spotify, that’s great. Don’t play her on there then. If she doesn’t think that she gets enough dough from them then spotify should pull all her music from there for the next year. I’m willing to bet that before the next year is over, her label and her publisher will have her music back on spotify.

  • albin Xxxxxxxx

    I think that the downside of spotify is the client. On my smartphone or pc vlc or other media player uses radically less proccessing power, wich makes the service useless. My problem is not paying for myself, but when i see where the money ends up i start too look towards youtube instead, wich provides legal music for free.

  • Veendo Veendo

    It seems like a much more fair system than back in the days when a few powerful companies/people decided what the public got to hear…AND also made determinations about royalties. It was far from fair in decades past….There was just a lot more money to go around (recorded music sales have declined severely = far fewer dollars in the pot). Now there is an actual spin count…every play is accounted for…and paid for; less money to go around. Plus, as a Spotify user, I can make all the decisions about what I want to hear. Spotify is the best.

    I’m one of the millions of paid subscribers – I consider Spotify a good value.

    • Carlos

      You really think this changed? First thing when I login is Coldplay ad. After every 5th or 10th play I get another ad for another EMI/Universal based artists. Come on…

      Of course as a customer it’s a great value, I’ve not seen anyone ever complaining about that – it’s the other side, the creators that are not getting valued.

  • tony g

    So weak and dishonest:

    “ If a song has been listened to 500 thousand times on
    Spotify, that’s the same as it having been played one time on a U.S. radio
    station with a moderate sized audience of 500 thousand people. Which would pay
    the recording artist precisely … nothing at all. But the equivalent of that one
    play and its 500 thousand listens on Spotify would pay out between three and
    four thousand dollars.”

    Please. Spotify replaces people actually ever buying the CD.
    A radio play comes on randomly and makes you want to buy the album.

  • Bon

    It was nice of him not to mention that if Taylor Swift wants more money she should own her own catalog instead of the record labels owning everything she does. If she did… she would be getting those royalties from all the listeners streaming her music. Poor Taylor… seems like she needs a Swift kick in the ass when it comes to business.

  • Carlos

    It’s not that, it was never that. It’s the simple fact that you make much more money per person on a digital plattform or physical product – what does it help if you have a 100 times more people if you get a 1000 times less per stream vs per download.
    And stop with the “gigs” or “shows”. Not every music creator has the chance to get “gigs” or play “shows”. Your degrading music for “shows” that’s the problem.

    • aardvarked

      This is nonsense. There is a clear and very obvious difference between streaming a song and paying to download it, do you believe small artists would be earning hundreds of thousands if Spotify and other music streaming services didn’t exist?

  • Vincent

    So Daniel when is Rammstein available on spotty? I’ve been waiting for it since 2009!!!

  • http://SpotifyArtists.com/ Mark Williamson

    Hey, check out the section of our site below which explains some of the variables that can affect the “per stream”. Also be aware that the rate publishing here is an average and that it includes publishing payments.

    http://www.spotifyartists.com/spotify-explained/#wait-i-thought-spotify-paid-a-per-stream-rate

  • http://SpotifyArtists.com/ Mark Williamson

    The average adult American spends only $25 on music PER YEAR. In the UK only 1 in 3 adults spends more than $0 on music. Spotify’s Premium tier generates $120 & the average (including advertising revenue) is $41 (higher than the average US spend).

    The vast majority of people do not pay very much at all for music.

    http://www.spotifyartists.com/spotify-explained/#spotifys-progress-so-far

  • http://SpotifyArtists.com/ Mark Williamson

    The average adult American spends only $25 on music PER YEAR. In the UK only 1 in 3 adults spends more than $0 on music. Spotify’s Premium tier generates $120 & the average (including advertising revenue) is $41 (higher than the average US spend).

    The vast majority of people do not pay very much at all for music.

    http://www.spotifyartists.com/

  • http://ofallies.com Nick Tyldsley

    “The cost of creating music today is way less than it was before.” – Based on what? I know for a fact it isn’t. Good producers, studio time and music PR is expensive.

    As I’ve written above, can you honestly say that listening to your favourite song 100 times is worth less than 1p/$1 to the artist?

  • http://ofallies.com Nick Tyldsley

    Yes. You get paid for radio airplay.

    http://www.prsformusic.com/Pages/default.aspx

  • John

    Umm, not convinced tbh. Spotify capitalised on the issues with piracy when piracy was a problem. The same arguement could be made for having a Spotify for movies as was this not also an entity that had huge problems with piracy? Of course the movie industry would never let this happen. As more p2p sites are removed, the arguement for piracy becomes a smaller and smaller issue, however, the music industry is left with this service! We’ve moved from looking to prevent piracy, to make music so cheap people won’t bother?

    There are lots of things I disagree with in this article. For instance, the comparisons of 500,000 listen on Spotify being similar to 1 play on a medium sized radio station? For one, a radio station decides on the playlist, meaning in the majority of cases, the listener doesn’t have the song on tap. Secondly, radio is a promotional platform to encourage sales, if you’re listening to the song in Spotify, there is no additional purchasing incentive. Additionally, to arrive at 500,000 listens on Spotify, the promotional efforts and existing portfolio of work required to arrive at this level takes a lot more effort on a daily basis than finding a medium sized radio station to put out your music (from experience). In short though, by paying less than 1p to listen to a track, subconsciously, you have already devalued a product that is worthy of the prices found in stores such as itunes, amazon play etc, that consequently is having a knock on effect in many other aspects of the industry. Let’s be honest, when was the last time in the present era of music, we heard a classic. Music has almost become a throw away concept, with a short window of interest due to this pricing strategy alone.

    Honestly, Spotify should take a lot of responsibility for this change. Yeah the 2 Billion figure sounds impressive when put in that context, but currently Spotify solves an outdated problem, which now through its overbearing popularity sets a cap on pricing and ensures that independent musicians struggle tremendously to earn money through the work they perform. If you looked at your average plays per song data and divided that by the current digital price of the track on other platforms, you would surely agree that you should be charging more money per play (and that more of that money should be fed back to the artist). Under this pricing strategy, Spotify would still hold it’s place in the timeline of music purchasing but not dominate it entirely and restrict actual digital sales/progression of the music industry.

  • Jessica Penrose Indie Andromed

    how do i get my music on spotify? this is something i can support, something i don’t give lightly as an artist.

  • SeanJ

    I just have one question, related to transparency. I see in a comment that paid streams are 0.006 and free streams are 0.001. My question is, are all streams (paid vs. free excepted) treated equally? In my mind the ideal model would be sharing the revenue according to streams, so popular frequently played tracks get more. Whereas there’s the worry in my mind that there might be “I’m a big artist/label, I can negotiate for a bigger slice of the pie.” going on. Which to my mind is harmful to music in general. Same goes for ‘exclusives’. I really don’t see consumers signing up for every service just so that can get access to all music. An exclusive might sway them to a particular service, but thereby exclude them from anything only available on alternates. Once again, harmful to music in general and only really of benefit to the “big players”, not consumers or artists.

  • dope

    But why can’t I use Spotify outside the US? :( I assume it would be the same because I would still get ads.

  • Yves

    So as of 2013, Spotify is making 1.5 billion per year with premium subscriptions only (12.5 m subscriptions at 120$ / year) and distributes 1 billion. So, does the 500 million go to the functioning costs? I hope that the company will be more transparent, but for now at least, you can guess where the money is going :)

  • Blejs

    See it like this tho, will someone buy your songs if not heared you before? Spotify might make the people get curious and google you up. Then perhaps see your gig, buy music. IF good enough.

  • mammut

    It’s not the pirates who are the problem, it’s the labels, RIAA and others. The artists won’t shut up about how streaming is hurting them when in fact their contracts just plain suck. You can see this everywhere, not just music. Why the hell does an ebook cost the same as a printed book? There are no printing, material, cover and close to none distribution costs. You could distribute an ebook to every single person on the planet for $1000. The typesetting is a question of another say $1000. Why the hell then does the book cost the same as a hardcover, moreover when you’re getting the DRM, blocked text-to-speech capabilities and similar goodies along with it?

    Piracy has allowed me to find music I would never know about otherwise in the pre-youtube and streaming in general era. I was a student and I couldn’t afford to buy LPs and CDs, so I pirated stuff and instead saved up for concerts as there I at least had the feeling that the money went to the artist in a large part – of course that was naive, they probably don’t make that much on concerts as well. Anyway, when I got around to make some money, I bought a lot of stuff I liked. Even if I didn’t like an album, I supported any one of my favourite artists whenever they put out a song they distributed directly through their website unencumbered by a label. Nowadays, I am still eager to get the money to them and I find Spotify and similar companies to be just the tools for the job, but the artists simply need to ditch their labels, tell RIAA to fuck off and start selling directly. Judging by the news around RIAA and their equivalents in other countries in the last 10 years, it’s the only solution. At least for artists that weren’t fabricated by their labels and actually can do something interesting. Of course, Taylor Swift would be out of luck in that regard and should stick to her label.

  • aardvarked

    Why should it?

  • Pål

    Wait… So PRS, Tono or what it’s called in the US doesn’t pay for radio play? My guess is Taylor Swift has earned millions on radio play. Everone else in the world with licensed music do, so why not Taylor?

  • That guy

    Because that would bankrupt them faster than you can blink.

    Also, why do you expect them to pay you enough to get by? Starting artists have through time made their money on local concerts, if you are as good as you think, people will show up…

  • That guy

    Most artists have a regular job and do their music because they love it; you are expecting to get rich quick – those days are gone and won’t come back. Also, remember for every artist who made it big, millions didn’t.

  • Figuresmadeintopeople

    The point being that you can use both. You don’t need to exclusively use Spotify. Using Spotify won’t reduce your Itunes sales. Being available to as many people as possible is a good thing.

  • Karl Hungus

    Freemium. The ium is Latin for “not really”

  • Academic

    …You get that adults don’t talk to each other like this, right?

    • Anon

      Did you expect anything else from “Tits McFuck?” C’mon.

    • Shan

      What do you expect from “tits mcfuck”?

    • fuck mctits

      His name is tits mcfuck…

    • ahem

      oh yeah go ahead, argue with the guy named “tits mcfuck”

  • Garrett Cox

    Because they don’t need to, its just a simple demand graph. they really want big artist, so they will pay more money to make sure they stay. there is no incentive to give you a raise.

  • eh

    There’s a bit of entitlement here which I think it the issue. That small newcomer band may be great and put out wonderful music, but they aren’t just *owed* more money because just because they’ve created new music or because they’re smaller.

  • ET

    I love Spotify, i became a premium member the day it was launched here. Why? because its easy, lets me listen to band i like, and discover new ones without really having to search for it. So what did i do before Spotify? I mostly listen to radio online, or youtube. I think i have bought about 30 albums in my life (30 years old), and sometimes pirated stuff, but not on a big scale cuz i was lazy enough to not want to wast time searching for songs who’s names i didn’t know in the first place. So I agree with the post that bands should be happy to get some revenue, because sure as hell i never bothered to pay for anything before. With Spotify i’m paying for convenience and with out it I would certainly be using Grooveshark because that too is convenient. Maybe all artist wont become millionaires, but at least someone is listening to your music.

  • Vojta Polak

    Or you just go to Piratebay and download it. With Spotify the artist gets at least something, otherwise she would get nothing at all.

  • Vojta Polak

    Why should be artists penalized for success?

  • j

    Can you possibly imagine saying that to a person in real life? Don’t be an idiot, just because someone says something wrong doesn’t mean they’re a waste of space and life.

  • http://www.paulogy.com Paulogy

    This is all well and good, but there are certainly people who no longer purchase albums (or purchase far fewer) because they use Spotify for their music. Is the artist getting a similar cut through Spotify that they would through retail? Through digital? If not, that may be the key contention.

  • Dustin Woodrow

    That’s a great way to think about it. I have a box of records and CDs that I’ve converted to digital files, but this would be a good option to have access to old and new music too.

  • adam

    You know you can download albums to your phone through spotify so you no longer have to stream it right?

  • Zack Clark

    Yeah, I know.

  • Carlos

    thanks for sharing!

  • Kristin Maher

    Question, why don’t you pay for music? My husband is a musician. It’s how he makes his living. He is on tour a majority of the year, and when not touring he is writing or recording. It’s a hard life and requires a lot of sacrifice. Why would you not pay the $10 for an album and help the artist to continue to create? I think that is the major issue here. Would you eat at a restaurant and then just walk out without paying? Why are you entitled to music/books/movies for free, but are willing to pay for say coffee or food? At least the music/book/movies you get to keep and reuse. Once you finish your drink or food its gone.

  • Nathan Walker

    I’m not seeing the typo.

  • Sophia

    Yes

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