I’m an Indie Label Owner. Why Am I Getting $0.0013 Per Spotify Stream?

Any ideas?  In our in-box this morning…

“Hi DMN,

 

I’m a big fan of your blog. I run the label Wealth & Taste and front the band Japan Soul.

 

I’m always checking my very low CD Baby distributions statements. While I hardly make anything off of music I do earn pennies every day. I looked at a recent Spotify streaming statement and was a little confused. I thought that streaming was pretty much consistently .005-.007 cents a stream. I’m getting .0013 on this latest statement.

 

I’m the record label/artist so it’s not like it’s being skimmed by a big record label.  This isn’t news in and of itself but I was wondering if you might consider illuminating what a stream is worth and why it can dip so low?  I always guessed there was some Spotify logic that maybe said a stream gets less valuable every time one individual streams the track (no proof or anything to back that up).  Or maybe non-paying Spotify listeners streams are worth considerably less than paying subscribers?

 

Anyway, I figured if anyone would know you would. I’m attaching the statement.

 

Jason Paul
Wealth & Taste, Japan Soul”

 

spotifyroyalty

41 Responses

    • Anonymous

      Are we sure these aren’t coming from the Spotify Radio product? Might need a slightly larger sample size than… two streams.

      Reply
      • Paul Resnikoff
        Paul Resnikoff

        Could be the explanation (though it does say ‘stream’)

        This year, Pandora’s statutory rate (the government-set rate) per song stream is $0.00130.

        Reply
      • Anonymous

        Exactly,

        Also, with 2 streams in any given accounting period, I think there are bigger problems here to worry about….

        Reply
        • Jeff Robinson

          We’ve got product out through 3 different distributors. It appears to us that CD Baby may be most guilty of under-reporting streams. Compared to what the other distributors show, CD Baby always comes in way lower and rounds to the nearest 100 spins.

          No clue how that accounting works.

          But at least these artists have made back their $35 pyramid-scheme sign-up fee from them. Wasn’t there an article that stated 85% of most artists don’t? I think Moses Avalon did that research…

          Reply
          • David

            What distributors are you running through that don’t appear to be under-reporting streams?

  1. Locke

    Spotify already stated that Free Users Plays will not payout the same as subscribed users

    Reply
  2. zoe

    Here’s a larger sample for you – one artist’s Spotify payments for all of 2014.

    2014:
    http://bit.ly/1DqWzDl

    Average is $00.00431 per steam (after CDBaby’s 9% cut). Average in 2013 was $.00431 per stream. I’m guessing those low ones are ad-supported streams.

    Glad I haven’t had to rely on streaming, or touring, this year.

    Reply
    • Paul Resnikoff
      Paul Resnikoff

      Thanks Zöe. I’ve asked Jason for more stats, but just not sure if he will want to reveal more details. It’s hard to come out with two lines much less 200. You’re one of the few artists that has the, well, balls to do that.

      Reply
    • David

      Kudos to Zoe Keating, as usual, for sharing this. On a quick look at the data, what strikes me first is the massive difference in payout rates for different ‘lines’, ranging from over a cent per stream to barely a hundredth of a cent. (I may have missed some of the more extreme outliers.) A factor-of-ten difference seems fairly common. Some of these differences may have plausible explanations, e.g. payout rates in the UK or US are higher than in Latvia or Spain. But others are on the face of it just inexplicable. For example I noticed several cases where streams on the same day in the same territory had a factor-of-ten difference! Is this the ‘smoking gun’ to show that Spotify’s public explanation of ‘How Spotify Artists Get Paid on Spotify’ is a crock?

      Reply
      • GGG

        I’ve always assumed it depends on who/how it’s streamed. You’ve got free desktop users, premium desktop, free mobile, paid mobile, “paid” bundled, etc and all of those in numerous areas.

        Reply
        • David

          I agree that’s probably the explanation, but it is NOT what Spotify have publicly said in explaining to artists how the payments are calculated! Any two streams of the same track, in the same territory, on the same day, should get the same payout rate. Yet it is clear from Zoe’s spreadsheet that that is not happening. Apart from the question of Spotify’s (dis)honesty, there are practical implications for artists’ and labels’ marketing strategies.

          Reply
          • GGG

            Oh, I don’t think I’ve seen where they said it’s all supposed to be the same. I’ve only ever said them state the average, which is higher than indies get because you get hundreds of millions of streams at the higher major label rate against hundreds of thousands of indie streams at a lower rate. So the math will just work out to raise the average because there’s more streams getting the higher rate.

          • Anonymous

            Not to mention the Majors have a large equity share of Spotify where indies at best have 1% with Merlin or whatever it is…

            I wonder if Spotify is aware they are supporting music from artists, producers and labels that was created and inspired using unreleased, unfinished, unpublished stolen property protected by Copyright?… Would this make them as culpable in the matter?

            They are essentially profiting, getting market traction, investment and large salaries and bonuses off a lot of illegal content…

            – Justin Mayer

          • David

            Spotify do not *say*, in so many words, that the rate per stream would be the same, but it is a simple inference from their explanation of how royalties are determined. See here http://www.spotifyartists.com/spotify-explained/ and in particular the section headed ‘Royalties in Detail’. Note especially the statement that ‘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’. It is implied in the paragraph following this that there could be some variation between different territories, but there is no suggestion that there would be any variation arising from a different ‘mix’ of streaming modes for an artist or a track within a territory. Any such variation would be inconsistent with the general formula for calculation. It is obvious, for example, that if an artist is popular with a young demographic using mainly the free option, such variation would give that artist less than his/her share of ‘total streams’ than an artist who appealed mainly to premium users. If in fact there is such a variation, the most charitable view would be that Spotify’s explanation is grossly incomplete, if not deliberately dishonest.

            Probably a more serious issue is the alleged variation in payment rates to different record labels and/or publishers. Any such variation would again be logically inconsistent with the statement that ‘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’. The paragraph headed ‘Royalties paid to master and publishing owners’ does leave a little wiggle-room for slight variations (the ‘precise division’), but any large variation, say, between major labels and independents would be contrary to the general thrust of the statement. This is such a central issue that if there is such a large variation, the failure to mention it can only be deliberately dishonest.

    • Cord

      If this were any other business industry red flags would be going up everywhere.

      Reply
        • Anonymous

          Interesting…

          Majors have more muscle as they lift more weight therefore it would make logical sense their streams overall would work out to more. They also have the ability to market their artists, legitimate or not, in front of all paid subscribers thus providing the evidence to justify a higher rate for them.

          Of course they are in a pretty precarious position with the illegality of some of their business decisions and actions and ultimately them and their employees and contractors are profiting and benefiting off the theft of unreleased unfinished unpublished property, a significantly more serious and heinous crime then those of which they complain and fight.

          Them doing as such does not set a good example and with their high profile employees being such public role models, leading the youth, it’s a little concerning.

          If our leaders and those at the top, our supposed industries top gunners, are acting in such a criminal way, what sort of message is that sending to the rest of us as well as the World?

          How can anyone even consider listening to their pleas for tightened legislation and increased enforcement, something obviously many independents certainly need????

          At the bare minimum i currently have 3 super high profile top of the charts artists, their producers teams and labels, on the hook for serious copyright infringement easily reaching into the multi-millions of dollars, and that’s just the tip of the iceberg.

          If these sorts of things are going to continue to happen i fear where our societies and world in general is headed and it’s overall a possible final nail in the coffin for this industry ever regaining its footing, certainly privately, possibly publicly, and ultimately leaving all of them little choice but to further position themselves as serious offending criminals and in bed more and more with extremely suspicious and terrorist like investors and sponsors.

          – Justin Mayer

          Reply
          • Curious

            Hi Justin,

            Please could you elaborate/provide a source for the following:

            “and ultimately leaving all of them little choice but to further position themselves as serious offending criminals and in bed more and more with extremely suspicious and terrorist like investors and sponsors.”

            Just interested in reading more on it- thanks!

    • JTVDigital

      Checked a mix of 2013 and 2014 Spotify streams, average unit stream is 0.00464 USD before distributor’s cut (10% in our case)

      Reply
    • SpotiDJ

      Rates differ per country and tier. The average is still about $.005
      These $0.0013 streams are Adfunded streams.

      BTW A statement showing just 2 streams is not worth publishing.

      Reply
  3. Adam

    Any idea what country the stream was in (a lot of aggregators offer this).

    If someone in say Philippines streamed it it’s likely a lot lower rate then the UK.

    Reply
  4. AnneM

    $. 0013 is the statutory rate for non-interactive Internet radio, like Pandora. Spotify usually falls under the category of interactive Internet radio, which pays about twice that amount. These are probably from the Spotify radio service.

    Reply
  5. Anon

    Whomever mentioned the statutory rate is most likely correct. Ad Funded and Subscriber plays should be higher and paid based on a share of revenues collected, unless your deal with Spotify calls for a specific per play rate (doubtful).

    Reply
  6. steveh

    I would have thought that the low per-play income here was consistent with it coming from the ad-funded free Spotify service only, not from the Premium subscription service which pays a much higher royalty rate.

    Generally, the $0.005 per stream rate often quoted is an average between free ad-funded and premium.

    Reply
  7. David

    If these are ‘radio’ plays, the figures may be legit, in the sense that they are what Pandora or any other online radio station would play.

    But if they are for on-demand streaming, whether by paid or ad-supported users, then Spotify should be asked to explain them. As I’ve pointed out before, Spotify’s own public explanation of its royalty system does not allow for royalty rates to individual artists or labels to vary according to the proportion of paid and ad-supported streams in that individual artist or label’s listeners. There can be variations according to different ‘territories’: e.g. if a track is played mainly in territories where users are mainly ‘paid’, the royalty will be higher than in territories where they are mainly ad-supported. But within each territory all artists/labels should get the same payout rate, regardless of the particular breakdown of their listeners.

    Reply
  8. Anon

    What’s interesting to me about Zoe’s statement is that there is no identification of how her music was consumed (i.e. mobile vs. non-mobile, ad funded vs. subscriber, etc.). I know with certainty that Spotify provides this information to the major labels. I wonder if Zoe’s statement has already been processed by CD Baby, effectively summarizing the data and rendering it useless in this regard.

    Reply
  9. Andy

    Been meaning to do this for a while (following Zoë’s lead) but we switched aggregators in February of this year, which makes it difficult to compile all the info. But here’s sales data for all platforms (from TuneCore) from Jan 2013 – Feb 2014. Knock yourselves out! http://bit.ly/1wzuQ1Y
    You’ll see from the data that Spotify stream rates vary from country to country and also whether or not the stream is from a premium user or an ad supported user.

    Reply
  10. GGG

    My bands’ stats still average out to .004-.005/play. They go as low as a few hundredths of a cent to as high as 1.4 cents (thanks to the exchange rate).

    The issue with the average that Spotify claims, (which I believe they said .006 correct?) is that they put major artists and indies in the same boat. Majors get a better rate, and you’ve probably got hundreds more plays of a major for every one play on an indie band. So if you’ve got some major getting 1000 streams at, say, .008, and 100 indie streams at .004, the average will favor the majors.

    Reply
  11. Anonymous

    Don’t bother wasting too much time digging into his 1 play problem.

    I wont go into details, but yes, sometimes some streams will come through at about that rate.

    Sometimes some streams will come in with a higher rate then the known average.

    With enough streams and using transparent distributors, it will even out to around the common average.

    – Justin Mayer

    Plum Minnow

    Reply
  12. Tim

    The real problem here is that your statement does not show the revenues per stream type per territory per month. You only see an aggregated result whereas Spotify pays different amounts for free, unlimited, premium and bundled services per country per month. Also, it can happen that revenues change after they have been accounted for. For example when bundled telco services were late on reporting. This explains why artists could get additional revenues for the same stream. These revenue calculations are not as secret as most of you think they are. Just ask the party that provided the statement.

    Reply
  13. Chris

    The real problem is that, regardless of the actual rate being .005 or .0013 the rate is still too low. We should all just say NO to Spotify until they pony up at least .05 per stream IMO.

    Reply
  14. Versus

    All these rates are obscenely low.
    Spotify, fix your business model.
    Raise the price of ads, raise the price of subscriptions, raise the pay-outs.

    Reply
  15. BacktoDisc

    So even with spotify indie artist still have to rely on physical album sales :/

    Reply
  16. Mike

    @Chris, while i agree the numbers are too low, .05 cents a play would simply not work. Your forgetting who the core users are, younger folks without a lot of money, therefor, they will not pay high subscription fees, and advertizing agencies will not pay a lot, to advertise to a poor user base. Demand a set price of .01 a play, (you wont get it) but accept a set price of .005

    A standard .005 a play would be a huge increase, over what these people are getting now.

    Reply

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