These are the only people that will ever be getting $$$ from Spotify:

(1) Executives / Daniel Ek

(2) Major Labels

(3) Coca-Cola

(4) Facebook

(5) Investors (see also #s 1,2)

(6) Wall Street (see also #s 1,2,3,4,5)

+1

i don't see "artists" anywhere on your list

Yeah, ya see that's kinda his point...

That's exactly right. 

the answer is simple in its process but difficult in its execution - artists and lawyers (who represent artists, the majority of whom are lazy about learning the business of music) need to negotiate better terms with publishing companies, labels and other rights organizations.  the push has to start at the creative origins - while easy to write, difficult to implement....

Paul you kind of sound like a dick here.  

This is not about diplomacy.

ACtually you have a critical question being posited here. Spotify is saying that all it needs is scale to increase payments and royalties.  So in the early stages of growth (towards the scale) are the artist royalties also growing?

It is really a Yes or No question.

dear dumb commenters, this is what a reporter sounds like when he is doing his job right. you should hear the things reporters say to your congressman!

Visitor2:  It was a valid question and Paul pursued it with the same vigor that I would expect of any journalist.  Didn't sound like a dick to me.  Sounded like a motivated, interested researcher.

arnaque?

oui

[in a candid world]

Actually, Paul, you know what?  They haven't increased at all!  

Actually I don't even know, half the time the label is going to be stiffing them anyway!  

ECM is pulling its catalogue from Spotify. Just saying.

Weird.. 2 months ago the band Uniform Motion revealed on their blog that their Spotify payouts increased 56% in 2011 compared to 2010.

http://uniformmotion.tumblr.com/post/18906123942/update-to-release-day-economics

I own a digital music store and have content on Spotify.

As a retailer you are never in a hurry to pay the content owners and as a content owner you need paying yesterday!

I think we need to wait 6 months to see what's happening with this service 

That's fine and dandy, however the basis of spotify's dynamic content value and payout structure is already based on a 90 day cycle.  

Bottom line, all things considered we should have seen some movement by now. There has been a substantial amount of growth in the paid and unpaid users, as well as ad revenue that continues to roll in, and at least one ENORMOUS corporate sponsor. 

They really have some explaining to do at this point....

"As a retailer you are never in a hurry to pay."  nice

If Spotify payout is being held up b/c of accounting and adminstration, then they should say that and release some raw data.  Saying "No Comment" is at best poor business at worst deceptive.

Unfortunately, push aside the PR, business isn't 'nice'

If any artists/labels think they are being underpaid, get a very good lawyer and hit Spotify with a suit.

My point is 'Spotify' may be legally 'holding' cash (something that is VERY common on the publishing side) This might be happening here BUT considering the 90 day fall out + add another 30 days for your aggregator, then your label could add a further 90....

....this complaining is a little premature.

There's the iceberg, and then there's the tip...

http://blog.tunecore.com/2012/03/the-additional-10-5-spotify-royalty-you-are-not-getting.html

Then Mr. Savoca should say "The administration and dibursement is holding up artist revenue and we are doing our best to see that they get their increase."  But he didn't.

and yes you don't have to be "nice" to run a business but you can try to try, you can accomplish the same results w/o being a smug a-hole

Yeah, sounds only slightly more evasive then "we've paid hundreds of millions back to rights holders". 

In the end it still doesn't address the overarching and now seemingly blatant lack of transparency, especially when it comes to how the pie gets cut and potentially how and when that pie will get bigger for the artists that power the service. 

f**k spotify, bandcamp all the way yall

+1

f**ck Apples, Oranges all the way Y'all!!

Maybe the best comment on the entire internet.  

Paul, what is your problem with Spotify?

all streaming services pay out low rates - that's the streaming model. I'm sure it has been explained to you.

So why the constant attack on Spotify over other streaming services? for eg, everyone's content is on youtube - and  for years no-one has been paid.  it has been built using unlicensed copyrighted content for many years.  

now most content suppliers have their content fingerprinted and are happily moetising - but are the rates any better than Spotify's? And what about all those millions, probably billions, of streams that occured before any deal was done? I can tell you that rate  - zero.

and if you emailed any serive to ask their rates - they wouldn't tell you. iTunes. Amazon, Rhapsody, eMusic. fuck even the local bricks and mortar indie probably wouldn't. that isn't news, it's just you being facetious and vindictive.

Find another drum to bang Paul. This gripe of yours only looks personal and has become very tiresome. it's cetainly not journalism. 

He's really asking a simple question though?  

Remember one thing: Spotify is spending millions trying to convince you that this is a greatest deal for artists. Why not just show the numbers (would be a helluva lot cheaper)

::MW

I don't think private corporations share their internal financials. Not even ASCAP and BMI have transparency on their payouts. That has more to do with laws in the United States than anything else.

The previous commenter makes a good point. There is a lot of anti-Spotify stuff in Digital Music News, yet never much critical analysis of Google/YouTube's lack of payment to artists with their streaming music through videos (which is ironic considering that YouTube is very likely the most-used service for streaming music on the Internet).

The future of music does not involve ownership of a physical artifact. We all know that. We all want artists to be compensated fairly. So why single out Spotify for problems that are really the fault of the poorly written DMCA.

Spotify is not the problem. The current state of US Copyright law is the problem. Don't get it twisted. 

Artists should just assume that their being treated fairly with no evidence of how a company acutally operates or compensates them for use of their creations? Sounds like an old model wet dream...

To me, this is like being a commission based salesman where your cut is never actually known, constantly changing, but never actually substantiated. Would you want to work for that company? 

I understand that the majority of people complaining don't understand the basic principles of rights ownership, how Spotify works in general and how these two systems are coalescing here. However it's in Spotify's best interest to keep people in the dark (both on the consumer side as well as the artist side). 

The consumer feels like they're getting the world for (almost) free when it comes to access to content and delivery. Even the former pirate feels as if he's doing the world a favor with a paid or even unpaid user acct. They really don't want to hear that the artist they love isn't actually seeing any real revenue, they'll generally turn a blind eye or even go as far as blaming the artist themselves for signing a "bogus" deal. 

The artist is told to hop on board and that this (streaming) is the future, which I also believe is true, however at the moment we're not seeing some basic transparency that can lead artists to not only embrace, but champion the format change. 

Give everyone the basic, honest knowledge of how things work, and show it works fairly and you'll see more positive results from both artists and the consumer. Add a remarkable product and you'll see remarkable results, ask Louis CK. 

I believe the "future of music" that you love to throw around will revolve around many different mediums, "owned" physical/tangible artifacts as well as "owned" and licensed virtual items and services. As long as there are artists trying to compensate themselves while services like spotify fail to do so, there will always be sale of artifact. 

You do seem fairly versed on the subject though so maybe explain to me how you would change US copyright law to help artists be compensated fairly? 

"The future of music does not involve ownership of a physical artifact..."

Says who? I think you're in for a rude awakening...

mouahaha...

There are so many ways to just say no...

I didn't get that part. Thanks for the link this time, though.

When someone won't answer your question you know they are hiding something and that's waht happened here

How about we ask for a percentage breakdown as to where all the money goes, there's nothing confidential about that.

betcha they won't answer that one either though

Spotiy = no money for artists or labels, simple as that

BAM

Suits and ther GREED.  Nuff Sed!

We love Spotify.  But as an indie label, this kind of evasion and arrogance makes us want to turn on them. Hard.

So.... the leaked report. Are we saying it was made up, or falsified somehow, and then leaked? What for?

Spotify press contact Jim Butcher has responded with this statement.  I asked as a follow-up - how much are payments increasing? - and still waiting for a response.

/paul

________________________

So, repeat the "leaked" report with no additional data, not even a percent range of increase in payout. Just trust us, everything is great and getting better every day.

These are't the droids you're looking for...

You can see the payout rate per stream in the accounting details given by your distributor. What's the fuss about?

Paul,

I think you need to reexamine your premise which seems to be 'Spotify doesn't pay artist royalties.'  Makes for a good attention-grabber, but it's oversimplied and innacurate.

Spotify, like Rhapsody and any other interactive streaming service needs to license masters and compositions according to a) a negotiated rate (masters) and b) statutory rates (compositions).

In order for your reporting to be more in depth and accurate, perhaps you should try and put together a study on how record labels, both major and indie, pay royalties to their artists.  After all, they are the ones responsible for paying artists in this equation.

Secondly, you might attempt to look at the composition side and ask some questions: who set the statutory rates and by what mechanism?  Is there a way to explain the rates to a lay person?  How do songwriters and publishers fit into this ecosystem?  Since some artists are also songwriters, they stand (theoretically) to earn on the composition side.  What do publishers think of interactive streaming royalties? 

Last but not least, in 2012 there are several strata on both the composition and master side, ranging from Major Label/Major Pub/Artist down to self-controlled artist/master owner/songwriter.  Why don't you take a moment to examine the complexity?  Surely if you do you'll be less tempted to frame the debate as: How much does Spotify pay artists?  It's a bit like asking UPS how much they pay me for the goods I sell on eBay.

This is the most idiotic and ill-informed blog i have ever seen on digital music. You say you are a digital music "expert"???

1. digital music services don't pay artists - they pay labels and distributors - labels and distributors pay artists. so if you are digging for dirt on artist payouts talk to Universal, or Warner or Sony and ask them what they pay artists for streaming. it takes 30 seconds and a calculator to work out what spotify or rdio or mog or rhapsody would pay for each $9.99 customer. 

2. what business reveals their commercial in confidence terms with suppliers to a journalist??? try asking i-tunes or emusic or rdio or mog or rhapsody what they pay to each label and see how far you get.

Having trawled this site at a friend's suggestion, your vendetta against Spotify comes off as pathetic, sulky and petulant. What a waste of space and time.  

If you've been following this site for a while, you'd understand that paul actually is a avid user, and proponent of streaming and most newer distribution and delivery technologies.  The topics he brings up are talking points because they effect the entire music ecosystem. 

There are independently, directly distributed artists that haven't seen any movement in their revenue, these are people who understand full well how Spotify, publishing and these systems function. 

The issues he's brought up regarding spotify are legitimate, relevant and well researched. From the artist's standpoint (not the label's) the issue will always be about transparency and how these new services could potentially either replace, or cannabalize their other revenue streams. 

The question paul has posited here reflects those concerns, and it's one that absolutely appropos of the current climate within artists and their views of the service. 

It's actually a simple question. They promise as the service scales, the profits for rights holders and artists will increase. Now they're dodging what scaling actually is. 

Evasive?

1. What is an "Independently, directly Distributed artist???" , who are they, and how can they prove their payouts haven't increased since as the service grows? I'm skeptical that this person even exists. You cant turn up off the street and get your music on Spotify. You need to use a label or distributor.

The revenue chain is :

Spotify licenses the right to make the music available from that label/distributor.

Spotify pays that label/distributor.

The label/distributor collects revenues, takes their cut and passes the money on to you.

Simple math would surely tell you that if a service has 1,000 subscribers then grows to 100,000 subscribers, you have to be paid more - tho only way that doesnt happen is if no one listens to your music. 

2. "How can a piece be legitimate, relevant and well researched if the journalist doesnt understand the most basic premise, ie that SPOTIFY DOES NOT PAY THE ARTIST -  IT PAYS THE LABEL OR DISTRIBUTOR????

3. I think the real issues with artist payments relate to the basis on which they are paid by their labels.

There has elsewhere been (far more informed and intelligent than in the moronic witch hunt on this site) very interesting debate on whether labels are paying artists based on old-word physical percentages, or on licensing splits (which were paid eg for use of masters in films/advertising, which are generally much higher, around 50% of revenue as opposed to the 12-18% artists received of wholesale price of physical formats). That difference dramatically changes the amount artists get paid.

I dont quite know why the journalist on this site has such a hard-on for Spotify - other than an ulterior motive of some sort. 

it is certainly not credible journalism.

1+2

The "directly distributed" is referring to artists/band who use services like Tunecore or another brand facsimile that does not take a cut of their revenue, rather they pay a flat fee upfront.

These artists don't answer to labels or distributors in the traditional way  so their payout should be increasing. The way Spotify determines value of a "spin" is not at all comparable to how Itunes derives their cut from a sale, it is based on overall revenue of the company over a 90 cycle and is therefore dynamic.  It's value per spin has been shown to vary from market to market, artist to artist (mostly due to different NDA'd deals with different labels, and different internal sub strata of the service). 

If the rights owner also owns 100% of the publishing rights they should be seeing an increase on both the masters and pub side due to the fact that Spotify pays out 2 royalties per spin. 

REGARDLESS of if NO ONE listens to your music, your statement from your aggregator should be showing that the per spin amount is going up if they're seeing the growth they claim to be seeing. 

3.

The "real" issue has always been artists getting or not getting paid, label or no label. The core of this industry is the artist and the fan/consumer who supports them. 

The issues brought up here are meant to increase transparency between the new middle men who are delivering the goods, and promising to revolutionize an already crippled system. 

Seriously, how does this work?  Does Spotify pay the label or the artist?  Or both?  If they pay the label and the label passes it on to the artist, does the artist get to know how much the label was paid by Spotify? Could it be the label is getting paid more month over month, but it's not getting to the artist? 

I've been reading up on Spotify's artist pay shenanigans. Not looking great...

Would love some newer info if anyone has it. 

ALSO this is just about the weakest defense Spotify could offer. REALLY? Posing as the heal-all to 'illegal sharing'

Universal+EMI, such big predator.

There seems to be a lot of confusion here between payment-per-stream and aggregate payment. The Evolver article claimed that aggregate payments were increasing, while the Hypebot article claimed that payment-per-stream was not. No contradiction there.

Spotify have claimed that both aggregate payments and payment-per-stream are increasing as the number of users rises, which is plausible, but there doesn't seem to be any actual figure for the increase in payment-per-stream, and it may be very small.