Spotify Explains Themselves

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Last month I wrote a post about why I was thinking of cancelling my Spotify subscription. I talked about a bunch of different reasons, and one of the main reasons had to do with the mysterious payout scheme.

Well, the other day, Spotify very smartly launched Spotify Artists, a site dedicated to helping clear some of the confusion and suspicion felt by artists about how they were being paid. Their decision to draw back the curtain probably had more to do with the likes of David Byrne & Thom Yorke slagging them off and very little to do with losing my subscription, but that won't stop me from pretending they were really just trying to appease me.

Now, I'm not going to go into any deep analysis of things, as the original post I wrote is still a pretty accurate account of my thoughts on how I'd prefer my monthly music allowance spent (plus I haven't actually done a deep analysis of things anyway), but I will take a moment to add a few new thoughts.

Thought #1 - There Is Not A Flat Per Stream Rate

Artists are not actually paid a per stream rate. Back in the murky waters of before a couple of days ago, that seemed to be the long held opinion of everyone, including myself. And rightly so, as artists could only look at how much money they were paid and divide it by how many times their songs were played and come to about the same fraction of a penny per play outcome that everyone else was coming up with (or at least, of those who were sharing their data). Because that was all the information anyone had to go on, a Small Amount Per Stream rate sort of became the perceived truth of how Spotify works. Well, that was kind of wrong. It actually works like this:


What struck me the most was how this formula seems a little troubling for smaller artists, especially when compared to the old (and wrong) understanding that there was a flat pay per stream rate (a rate that I think most people thought would at least get higher with the more subscribers / revenue Spotify brought in). Because it turns out that an artists payout is actually affected by how much their music is listened to in comparison to how much everyone else's music is listened to. So it's not just about getting your music in to as many earholes as you can (something that's hard enough to do, but something that you can at least kind of influence by the quality of the songs you write and the promotion you do), but you also have to factor in how much everyone else is listening to the rest of almost all of recorded music (which, of course, you have no control over). And in a world where Justin Bieber has almost 50 million Twitter followers and a novelty song like ‘What The Fox Say’ has almost 270 million Youtube views… that doesn't bode very well for the small artist.

It was more comforting thinking that everybody got paid the same low amount per stream, because if you happened to get lucky (pun intended) and get a bunch of plays, you too could earn some more serious coin. I mean, it makes perfect business sense that Spotify works this way, as a flat per stream rate wouldn't scale, but it is still more than a little bit discouraging if you are the type that finds the music that always dominates the Top 40 charts to be more than a little bit discouraging.

One used to be able to think that all those millions of little Belieber's just had questionable taste in music and that was that. Nothing to worry about; we've all been young and liked soulless music. And besides, if tweens weren't your target audience, it's not like you were losing out on any would be sales. You'd sell music to your small base of fans and the Biebs would sell music to his way bigger base. End of story.

But with this Spotify formula, millions of Beliebers —and Little Monsters and Fox Sayers(?) and Etceteras— are actually lowering your Spotify payouts. Which is a shame, as streaming is a baby that would never have been born without the internet, and the internet was supposed to help level the playing field for those who did not have the clout of a major record label behind them. But if Spotify's payout scheme is actually a pie being divvied up, I think a majority of artists (especially the artists that you'll find me talking about on this blog) are going to be forever receiving crumbs.

Thought #2 - What's A Niche Indie Album?

The other chart that really caught my eye was found in the Specific Payment Figures section of this new Spotify Artists site. I guess what really drew my attention was the monthly figure for a “Niche Indie Album”, because earning $3,300 in one month seems more like a “Rock Star Album” when compared to the money A Singer Of Songs album makes in a month on Spotify.


So I guess this second thought isn't really a thought, but more a question: who made $3,300 on Spofity in the month of July 2013?

I'm just really curious as to what is considered “niche indie” in the world of Spotify.

It would have also been nice if Spotify had created a bar on their chart for those artists that make under $50 a month. I get that for the sake of promoting their product, they didn't want to draw attention to this large underclass that exists, but it would have been a bit more accurate of a chart if the low point wasn't artists making $3,300 a month (because that is definitely not the low end of the spectrum). Also, I would have liked to see the name that they would have labeled that category (what's a word for exponentially smaller than niche?).

Anyways, those are all my new Spotify thoughts. It's nice to see that they're not ignoring a lot of the artist gripes that have recently been brought up (again and again), even if it doesn't change the outcome I already came to in regards to cancelling my account. In fact, I am now officially an ‘ad-supported’ Spotify listener. Although, I wish I would have remembered that December and January were the 2 months of the year that I actually listen to the most Spotify, as it's the time of the year that I play catch up with all the music on year end lists that I never got around to listening to, but so far I haven't hit my 10 hour listening limit (but I probably will).

Oh well, hindsight is 20/20. Plus, I've already spent that monthly £5 over here (and this new information has only reinforced my doubts about whether my £5, combined with my low monthly listening usage, was making it to any of the artists I listen to in any significant amount).