Spotify – Meet the New Boss
You may have heard recently that Spotify CEO Daniel Ek defending the rates Spotify pays artists per stream. Currently they pay $0.0033 which is about a third of a penny per stream. Apple Music pays about double that at .00735 per stream. He suggested that artists should be releasing music more than every 3 or 4 years. And intimated that it’s artists’ fault that they can’t sustain a living off of these small royalties. The artist need to work harder is his plan. Hmmmm.
Well, in case you haven’t heard, this massively pissed off a lot of artists. They are saying he/they iare keeping most of these royalties and screwing over artists left and right. If you got a million streams the rights holder gets about $3300 in royalties. If a label owns your masters they will be probably be taking a big chunk of that. Not to mention if you’re splitting it up between a band of 4 or 5 people.
So let’s take a look at this from a different perspective. First of all, no one is forcing artists to use Spotify. Personally, I look at it as promotion. No more, no less. This is the same way records, cd’s, etc. have been for a long time, i.e. not big artist moneymakers. At least if you are releasing through a label. I see these streams as a way to pull people into the universe of your band.
The real money doesn’t come from there anyway. The real money is in the merch and the gig income. If you have a million streams and you haven’t cleaned up on mech sales you are dong something way wrong. Same thing with touring. If you failed to pull in some good paying gigs after getting a million streams, someone in your organization is not taking advantage of the gift you have been given.
By the same token, if you have a million streams on Spotify you are most certainly blowing up up on other platforms like Apply Music, Youtube, etc. . More $. And you should be selling cd’s as well to the diehards who MUST have physical product. And you would be reasonable to expect placements in tv shows, movies, and possibly commercials. Ka-ching.
Where do your royalties come from? Spotify makes it’s money from its premium subscribers, just the same as Apple Music. Spotify even claims to still be losing money and not turning a profit. They claim they’ve lost about 2.5 billion since they started a decade ago. Does that sound fishy to you? It does to me.
To put things in perspective, an mp3 that cost .99 pays you once. I believe the royalty you would get on that is about 50 cents. So a listener would have to listen 150 times to that song before you made the same amount on a stream. The interesting part though is that they can be listening to it twenty years from now and you will still be getting streaming royalties from it and the royalty rate will have probably gone up by that point. If they listen to it 1000 times you get payed over 6 times more than the mp3.
Just to be clear, I’m not defending or making a case for streaming royalty rates. On the surface it looks bad. Spotify royalties are one of those things that provokes a knee jerk reaction from a lot of people so I wanted to play devil’s advocate and show the other side to all this.
What streaming services can give you as an artist is access to a lot of fans. Same as radio. At the end of the day I look at both of those mediums as advertising. And let me be the first to tell you, advertising works.
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