Let’s assume you (like me) are one of the 286 million people in the world who currently use the music streaming platform Spotify. In all likelihood, that number is actually low, as that is the data reflected in the company’s Q1 2020 report. At that time, a little under half of those, 130 million, were Spotify Premium accounts—meaning people who paid a monthly subscription fee to enjoy ad free streaming.
The point is, if you are a Spotify user, you’re in good company. About 44% of its subscribers listen on a daily basis with an average consumption of 25 hours of streamed music per month. Further, with over 50 million available songs, it remains an incredible resource for conveniently discovering and enjoying music. I mean that sincerely. Spotify, alongside its rival streaming services like Apple Music, Pandora, and Deezer, has revolutionized the way people experience music. It’s lowered the cost for consumers to hear the songs they love wherever they are, and it has created a platform for lesser known indie artists to potentially gain exposure to a massive and ever growing network of listeners for a low cost upload fee. Again, these are fantastic things. As a music lover, my monthly subscription to Spotify has become nearly indispensable.
However, I am also a professional Americana artist living in Nashville who has multiple albums in the Spotify catalog and, as a result, can personally affirm the types of horror stories that many struggling artists share in regards to Spotify’s pay structures. To put it bluntly, no matter how many times you listen my music (on any of the popular streaming services) and no matter how much I sincerely appreciate your support, very little revenue actually goes into my pocket.
In the US, the average amount paid per stream on Spotify is $0.0035—meaning an artist who amasses one million streams would earn $3500. Unfortunately, it’s not nearly that simple. Many varying factors actually determine what ends up being an artist’s payout. For one, less is made on a stream that comes from a free ad-supported Spotify account than on a Premium subscription. Further, the cost of premium subscriptions varies per country—which, in some cases, decreases the gross profit that is being split up in the first place.
For example, in Denmark a premium subscription costs the equivalent of $15.65 USD, while in India that same service only costs $1.60 USD. It’s made even more convoluted when considering the ad revenue generated in each region varies on a monthly basis. In other words, one million streams in a country like Iceland, which has the highest average per stream rate, will generally net an artist nine times the amount that would be made if those streams had come in countries like: Morocco, Tunisia, or Algeria.
Source: Spotify
What’s important to note is that Spotify’s pay structure works like a cliche, elementary school pie equation—or, in fancier terms, a “pro-rata” system (meaning “in proportion). As Quartz puts it, “The way Spotify and Apple Music pay artists is simple. They take all of the money generated from users, whether by advertisements or subscriptions, and put it in a big pot. They then divide that pot by the total share of streams each artist received. So if Apple Music gave $100 million of their revenues to artists in a month, and Drake accounted 1% of all streams that month, then Drake (and the writers of Drake’s songs) would receive $1 million… (about 70% of Spotify and Apple Music revenues go to music labels and artists).”
Therefore, let’s say hypothetically, you pay $10 per month on a premium subscription and then spend the entirety of the month only listening to my music—hey, a guy can dream—that would not mean that Spotify’s 70% revenue payout of your $10 would go in support of my music. In fact, nearly all of it would be sent to the labels representing the major artists generating the huge streaming numbers. In 2017, four top labels were responsible for 87% of Spotify’s content. It’s also worth recognizing that often the master and publishing rights are owned by labels and not their artists—thus shrinking the artist’s share even more. Furthermore, regardless of whether my monthly streams went up or down, my payout would still only come in proportion to both the overall number of streams for the month on the platform and the total amount of revenue brought in.
So now that we’ve attempted to basically outline what is generally behind the many anti-Spotify rants by artists, let’s talk a bit about what solutions have been suggested. First, I want to reiterate my earlier point: I am personally a Spotify user and a lover of the service it offers—as well as a user of Pandora and Apple Music. As an artist, my music has been listened to thousands of times around the world in countries I can only dream of getting to visit. All the while, all I had to do was pay $35 to get my album uploaded and watch in wonder from my living room in Tennessee—considering most of this year has been spent there. Whereas I have utilized streaming promotion campaigns to gain more exposure on the platforms and get play-listed, to be able to say all of that would be nearly impossible for an admittedly small fish like me without services like Spotify. It is simply the primary way people are discovering music these days, so there is little choice other than to utilize the space.
That being said, in a year where other supplemental revenue streams like live performances have disintegrated and as people have moved away from buying CDs (vinyl being sort of a wild card), my streaming income has felt especially meager. Thus, bigger artists like Guy Garvey, lead singer of the English rock band Elbow, have stepped in with a solution. “The big picture is that £10 a month for access to all music is too little… It came out in the committee the other day: everyone feels a little bit guilty for having access to all this music for f— all. It’s not sustainable and the emergency is we’re losing artists because they’re demoralised and they can’t afford to live.”
In his view, an initial solution is found in raising the amount users pay for their subscriptions. By increasing overall revenue, payouts would naturally also increase even under the current pay structure. In addition, Garvey is also pushing for equitable renumeration in which streams are split 50/50 between labels and groups, which means an equal percentage would go directly to the artists who made the recording. He called it “reliable income that’s nothing to do with the labels or to do with the streaming platform – it’s a right”.
Speaking of rights, one of the primary issues that faces artists in favor of this type of reform is the lack of US government protections when it comes to guaranteeing mechanical royalties from streams. There is legislation that guarantees a certain percentage of revenue when it applies to CDs and physical sales, but the push to modernize those copyright laws to encompass modern technologies has been slow moving. However, with the passage of the Music Modernization Act in 2018, the US Copyright Office is set to establish a nonprofit agency known as the Mechanical Licensing Collective (MLC) beginning in 2021 which will work to collect and distribute mechanical royalty payments to copyright owners as it applies to streaming revenues. This act is a massive step in the right direction for artist rights and could prove to be the backbone for new monetizations within the streaming market that better supports artists as well as preserves the valuable services that the streaming platforms offer.
Suffice it to say, it is a multifaceted issue that ultimately will require the reconciliation of its various factors. As Garvey puts it,”People don’t realise that their artists don’t get their cash and that needs fixing… I think it will be fixed and it will be the labels and the artists and a bit of government, and it will also be the streaming platforms, and it will be the consumers that fix it.”
All of this to say, this piece is not intended to discourage you from using Spotify—in fact, the opposite: use it more. All of the streaming services offer an unprecedented ability to enjoy and discover artists that could use your support. Discover them. As one of those artists, though, I would simply invite you to realize that, for many of us, being an artist in the first place is expensive, time consuming, and usually not very lucrative—meager streaming revenues being just one part of that equation. Of course, in my own opinion, neither the streaming services, nor you the listener, ought to shoulder the blame for that. Certainly, I hope that a compromise is found that allows being both an artist and a music consumer to be financially sustainable. Fortunately, as we have seen, work is being done every day to achieve that goal.
Thus, I’ll leave you with my own, more immediate, solution: keep doing what you’re doing. Keep loving and supporting music. If you find a new artist you love, blare their songs at top volume and share them with all your friends. That’s the beauty of something like Spotify. However, if you do find one of those artists, I hope that you’ll remember that they’re also trying to make a living, and I would recommend going on their website and buying a T-shirt (or ten), a CD, and/or buying a ticket to their show—when that is again applicable. If there is one, perhaps even check out their Scenes Live Session (hint, hint). We are grateful for you—even when we’re not making much off your streams. There are ways, however, that you can us in a more effective manner, and you can usually get a shirt, a sticker, or a koozie cup out of the deal—who knows, maybe it’ll be a collector’s item some day.
