Posted in music on December 4, 2013

Spotify

You may have heard by now that there's a ton of artists bashing Spotify, like Beck, Thom Yorke, David Byrne, and more. Spotify might not be able to answer every problem these artists have, but on the often brought up topic of how they're paid, Spotify just shed some light on how that works. They just uploaded a long post titled Spotify Explained, which they go into detail about the service. Here's how the royalties work:

1. Spotify Monthly Revenue

The total revenue Spotify makes in a given month from advertising and subscriptions as explained above. This varies from country to country depending on a range of factors including how many users we have in that country, how many of them are premium subscribers and how much advertising we sell in that country.

2. Artist's Spotify streams divided by total Spotify streams

This calculates an artist's popularity on the service, their "market share." Dividing an artist's streams by the total streams on Spotify determines the percentage of our total pay-outs that should be paid for that artist's rights.

3. Royalties paid to master and publishing owners

Spotify negotiates our royalty economics with labels and publishers in each territory where we operate. Our current payment agreements lead us to distribute (~)approximately 70% of our gross revenues to master recording and publishing rights (both mechanical reproduction and performance) holders. The precise division between these types of rights holders varies by territory in accordance with local laws and negotiated agreements. In the United States, for example, statutes dictate that publishers receive ~21% the amount that master recording owners receive.

4. Artist's royalty rate

Once Spotify has paid a rights owner the total royalties due for their accumulated streams, that label or publisher pays each artist according to that artist's contractual royalty rates. This will likely also take into account other factors including recoupment status, which is one reason that different artists in different deals might ultimately receive different royalties from their respective labels and publishers.

Independent artists can retain up to 100% of their royalty payouts from Spotify by using one of our aggregator partners such as Tunecore (a small fee may apply).

5. Artist Pay Out

The end royalty paid out to the artist after the rights holder royalty split and any other deductions have been applied.

Got it? Head over to Spotify Explained to read the rest of it.

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Tags: Spotify

Comments (17)

Spotify explains how royalties are paid to artists

TL;DR - they aren't.

Posted by Anonymous | December 4, 2013 10:49 AM

It's laughable income no matter how they slice it. Streaming as a whole is unsustainable and while it may be good for music fans there's no way it can support what it costs to make an album (even on a modest budget).

Posted by Anonymous | December 4, 2013 10:53 AM

It's funny how the only musicians whining about Spotify are the ones who are already incredibly wealthy.

Here's an idea - make music because you enjoy it, not because you think you can make a career out of it. Those days are long over. If you're good enough, it just might work out for you.

Posted by Anonymous | December 4, 2013 10:59 AM

my most recent album is on Spotify. last time i checked, my album had gotten over 11,000 streams and Spotify had paid me $42 in royalties. while i agree that that's a pathetically small amount of money, i wouldn't consider my band popular in the slightest. given that fact, it actually makes me happy to know there are so many random people checking my music out from all over the place. and i assume that a huge percentage of those people probably stumbled upon my album randomly through Spotify. also, while a small handful might have bought the album otherwise, i don't necessarily feel like i'm losing out on big money by having my music streaming on there. if even 50 people that have heard my band through Spotify would come out to see us on tour or buy a shirt or something, i consider it well worth it. the royalty rate sucks, but i'd be an idiot if i said i was in it for the money. i'm just grateful that what i'm doing is reaching people and places that it wouldn't otherwise. i think that's pretty cool. i might feel differently if my band was popular, but since we're not, i'll take new listeners wherever i can get them.

Posted by Anonymous | December 4, 2013 11:07 AM

^ Billy Joel.

Posted by Anonymous | December 4, 2013 11:09 AM

^ Nah, it's Win Butler

Posted by Anonymous | December 4, 2013 11:34 AM

Buying the album on Wax is the only way to support. Plus it sounds better, looks better, and in some cases smells better.

Posted by Anonymous | December 4, 2013 11:48 AM

If Beck, Thom Yorke and David Byrne hate it, then I love it!

Posted by Anonymous | December 4, 2013 12:49 PM

If music streaming is unsustainable than what is? People are actually paying for music that they would have pirated.

Posted by Anonymous | December 4, 2013 12:52 PM

12:52, musicians are choosing between receiving nothing (w/piracy) and almost nothing (w/spotify). Obviously, something is always better than nothing, but the current spotify rates aren't enough. If piracy wasn't an issue, and the only choice consumers had was between paying for music (physical or digital) or a spotify subscription, spotify would have to pay musicians more.Piracy is not a sustainable model, and neither is spotify at the current rates.

Posted by Anonymous | December 4, 2013 1:18 PM

Piracy is over if streaming can become sustainable. Why spend the time to download something, expose your ipad/tablet/computer/whatever to the malware on all of the "free" sites, waste space on it, and then just ultimately just listen to it a few times.
It far easier to stream something via spotify how few or how many times you like. And not have to store it.

Posted by Anonymous | December 4, 2013 1:50 PM

Thom Yorke should use his spotify royalties to buy a guitar, and then actually play it on a record.

Posted by Anonymous | December 4, 2013 4:32 PM

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Posted by wealthypeople21 | December 4, 2013 9:11 PM

Spotify is fucking bullshit and for lazy music "fans" with shit taste.

Posted by Anonymous | December 4, 2013 9:14 PM

"shit taste"? You fucking idiot, Spotify has about 95% of the music that's out there.

Posted by Anonymous | December 5, 2013 12:07 AM

so 11:55, can it be said that Spotify is the new Reichsmusikkammer? because we need one now more than ever.

Posted by Sonderkommando | December 5, 2013 12:24 AM

Spotify to Host a Vacant Brand at Abrasion

Posted by ate slap | December 5, 2013 1:29 AM

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