Editorial: The Spotify Lie
February 14, 2014 | By: James Swan
Spotify has came under fire for the amount artists get paid when people stream music using their service.
Way back in 2010, Lady Gaga made an immense £108 for 1 million streams ; which comes to roughly £0.01 per 93 streams. Those quick to defend Spotify point out that contrary to popular belief, Lady Gaga doesn’t write her own songs; the intellectual copyright owners got far more.
At the end of last year, Thom Yorke revealed he made $0.006 per stream – and this is a man with a few song credits. Spotify’s response?
A “niche indie album” typically generates $3,300 in monthly income from Spotify, whilst a “global hit album” would earn $425,000.
A bold claim, but let’s break that down a little. Spotify payments for songwriters fluctuate according to several factors. Rather than a flat fee, you get a share of profits from Spotify based on their advertising revenue and the performance of your streams in proportion to all other streams that month.
So that “global hit album” that earned $425,000 was actually lowering the amount that other streams made.
For example, I write and then release a song on Spotify and it gets 100 streams that month, and for the sake of argument, let’s say there were only 10,000 streams that month. After the major share holders take their cut, I would be due 1% of the remaining money from ad revenue that month.
Next month, I have a surge in popularity and get 2000 streams; but Rihanna releases a new hit record and the total streams for that month are 1,000,000. Now I only get 0.02% of the remaining ad money, despite my music being streamed 20 times more. This is one of the only situations where another artists success, from a completely different genre, seriously impacts the money I make.
iTunes may not be perfect, but I get a flat fee for the number of sales I get. If I’m twice as popular one month, I’ll get twice the money, regardless of all the hit albums released at the same time. Most of all, my only real competition is artists making similar music. If I make Eskimo Rap Metal, then Biffy Clyro’s latest album isn’t exactly eating into my sales. But on Spotify, I’m up against everyone else on there.
Even if I maintain the same proportion of Spotify streams one month to the next, their ad revenue changes month to month, so I won’t even get the same pennies.
To highlight the problem, here’s an admittedly pathetic sales report from one month;
There you see the bottom line when it comes to sales versus streams. Why would the record labels put up with this? If they can lose their artist’s stream-money due to a rival’s success, then why are the engaging in this game? What’s in it for them? Well, remember those major shareholders that get the lions share of ad revenue?