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Spotify Premium Royalties Are 10 Times Greater Than Free, Ad-Supported Royalties…

spotifyonetenth

at least.  The only problem is, of course, that most people are listening for free, and Spotify doesn’t let artists choose who has access.

And here’s the proof: the following is a translated Spotify royalty statement from Anssi Kela, one of the most successful artists in Finland.  The first part goes through top-level, per-play royalties from Spotify for the track ‘Levoton Tyttö’, before splitting the different payouts between Premium, Unlimited, and free-access, ad-supported accounts (you can find Kela’s full blog post, in Finnish, here).

Part I: Top-Level

MARCH 2013

  • Streams: 186, 317
  • Royalty: $620
  • Average per-stream payout: $0.0033

APRIL 2013

  • Streams: 415, 353
  • Royalty: $1,188
  • Average per-stream payout: $0.0029

MAY 2013

  • Streams: 300,524
  • Royalty: $836.07
  • Average per-stream payout: $0.0028

JUNE 2013

  • Streams: 156,119
  • Royalty: $515.59
  • Average per-stream payout: $0.0033

TOTAL

  • Streams: 1,058,313
  • Royalty: $3,159.96
  • Average per-stream payout: $0.003

Part II: Premium & Unlimited vs. Free

“Let’s take another look at April, the biggest month in the statement.  This time, I’ll note the type of account the user was using while listening.”

APRIL 2013

Spotify Free:

  • Streams: 220,571
  • Royalty: $108.40
  • Average per-stream payout: $0.00049

Spotify Premium and Unlimited:

  • Streams: 194,782
  • $1,079.87
  • Average per-stream payout: $0.0055

(Difference: 11.2 times greater)

 

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Comments (43)
  1. GGG

    They really need to start marketing themselves (at this point I’m not sure if they have a marketing department) and limiting free listening. Do like 40 hours or whatever they did elsewhere. Regardless of what you think of the company, the service is user friendly enough and good enough to draw people in after the trial.


    Reply
    1. TuneHunter

      100million of super premium Spoofs will make only 10B in business (veer few are super premium – most are 4.99 deals) if all other streamers and advertiser deliver additional 20 billion – iTunes and Amazon will be gone and we will be half way to 1999 (today, in current dollars 56 billion).

      All inclusive streaming is a major retardant of music industry and nothing will change that.

      If your view is more optimistic your mind might be in the state of illusion –
      humankind was in the state of similar illusion for over 1600 years when they seen the Earth as a pancake with sun cruising around.
      There is no hope for preachers of free, ad or sub supported income. Time to sale music – internet is made for it.


      Reply
      1. GGG

        Yes, me promoting streaming is exactly like when people thought the earth was flat. You’re a fucking tool.


        Reply
        1. TuneHunter

          Dot on!
          You have to be a religious fanatic to not see this case of unti-monetization, so for you Earth is flat – be careful you might walk off the cliff.


          Reply
          1. Haris

            Sorry to burst you bubble and bring you hurtling back into flat earth, but the concept of digital music being exclusive to paid users revolves around the ability to prevent people from telling each other interesting things.
            Since people in music industry share the same opinion with yours, we end up with lots and lots of pirates.
            Google is your friend to see the facts: countries with Spotify have a huge drop in pirated albums.
            Spotify needs to work on their model with royalties, but it’s the first time that a web service make a huge impact on piracy. Your perception of “hey now there is the internet, let’s sell music” belongs to the middle ages and you may as well start the witch hunt.
            You may stop your internal dialog , you’re wrong!


            Reply
  2. TuneHunter

    Both are pathetic!
    7 cents per stream with stream # 6 finishing rent to own process.
    If you got chills rip at instant discount for just 39 cents. Lets do it!


    Reply
  3. Yves Villeneuve

    I’ll pass.


    Reply
  4. Zach

    They need to acquire / licenses better ad technology. Raising their CPM / CPC rates incrementally over time would provide artists substantially more revenue. They have access to a trove of Facebook user data, but are not making great use of it (obviously).

    One of the core issues in the Spotify ecosystem is their development support / API usage. There hasn’t been any third-party ‘big’ mash-up successes that traditionally help the whole ship move forward. The API is clunky and redundant.


    Reply
  5. David

    That’s interesting. Of course, I don’t read Finnish, and I wouldn’t trust Google Translate for something like this, but the figures seem to tally.

    Unfortunately they conflict with those given in this Finnish (but English-language) article (as mentioned at the Trichordist blog): http://yle.fi/uutiset/finnish_pop_musician_earns_mere_pennies_on_spotify/6921281

    This suggests a pay-per-stream of 0.2 euro-cents on free streams, and 0.4 euro-cents on premium streams: a ratio of 1:2, not 1:10. I don’t know the reason for the discrepancy. Possibly the Finnish article misunderstood his figures. It is easy to get muddled over decimal places. Kela himself seems to be a bit muddled (if he is correctly quoted), because he seems to think his overall royalty is less than a tenth of a cent, when on his own figures it is clearly at least a fifth of a cent. And if there were really such a huge difference between the payout on free and premium streams we would surely have heard about it before now?


    Reply
    1. HansH

      Touche. And it’s not just the rates. “most people are listening for free”. Not true. According to this Dutch article 80% of streams are generated by paying subscribers.


      Reply
      1. Yves Villeneuve

        Which means streaming companies are significantly overstating active free streamers.


        Reply
  6. Casey

    Is this the total royalty being paid, or the cut of the royalty Anssi Kela gets? Because both are significantly lower than the royalty estimates we have seen thrown around from time to time.


    Reply
    1. lassial

      That’s his share, the middle men have taken their share – but there is some additional royalties missing from this deal.


      Reply
  7. Jeff Robinson

    I love this industry! Get me Obamacare and food stamps now! I work in the music biz! I am a rock star!


    Reply
  8. David Taylor

    Well …
    I think that iTunes does not return back the money he owes to us.
    in any case, is not acceptable to have a song, on top-selling, (and this, iTunes itself, it shows the grid of the songs more ‘known), and then, to be paid… , 9 pounds!
    This is a fairy tale , not reality .


    Reply
  9. Joseph L.

    It is strange, because the streaming revenues she reports are inconsistent with my figures (I’m a French artist manager).

    Here is a snapshot of the streaming revenues of one of my artists over the last three months, after the distributor’s 10% cut :
    http://oi40.tinypic.com/eb1qnm.jpg

    As you can see, our per stream revenue on Spotify is exactly 4.91 euro cts (6.63 USD cents), and on Deezer it is 5.53 euro cts (7.47 USD cts). Our French distributor (www.wiseband.com) does not give us access to the premium/free users revenue split however.
    For me, the major learning was the youtube vs. other streams’ major gap : a youtube play yields us 0.24 euro cents on average (0.33 USD cts), a mind-blowing 20 times less than streaming revenues! I do not know however if this figure is significant, given the relatively low number of youtube plays over the period (86k).
    Maybe other readers share their figures with us?

    And I can add that the average income per stream does not depend on the digital distributor you choose : since the revenue per stream calculation is very obscure, you might think bigger digital distributors could have negotiated a better license from the streaming platforms, right? I am using Tunecore, Ditto Music and Wiseband, and we’re getting very similar revenue per stream from all three platforms.


    Reply
    1. David

      That is very odd. 6 or 7 US cents per stream is by far the highest payout I have seen reported.


      Reply
      1. wiiiii

        it’s off by 1 decimal point. From the link:

        474 euro for 96m655 streams = 0.0049 euro per stream or $0.0065 USD at current exchange rate


        Reply
        1. Joseph L.

          Absolutely, I’m 1 decimal point off, sorry for writing too fast without re-reading first! But the 0.49 euro cent – 0.63-0.65 USD cents – is far higher than the 0.3 reported above. So I guess Anssi Kela’s reported figures are “after cut” from his label and intermediaries.

          I only manage indie artists, we have direct contracts only with the distributors, and we still control 100% of the rights.


          Reply
          1. TuneHunter

            Anssi Kela is part of experimental music farm operated by Spotify.

            Population of Finland is just 5M. Add Norway and Sweden and you are still less than NY metro.

            It is very economical to grow mutated results in such a micro market for sole purpose of brain washing investors and content owners! Those numbers will not happen in US unless we charge $29.99

            Lets start to sale music – internet is the best place to do it!


            Reply
          2. David

            Aha, the curse of the decimal point strikes again!


            Reply
            1. Joseph L.

              Every friggin’ time. Especially when you talk about fractions of a cent (sigh)


              Reply
              1. OB1

                I trhink the play rates for Anssi Kela are publishing not recorded music.


                Reply
              2. Danwriter

                I agree. Can we please standardize the metric nomenclature? $1.00 = one dollar. $0.10 = ten cents; $0.01 = one cent; $0.001 = one-tenth of a cent, etc.


                Reply
          3. Faza (TCM)

            I’d say that both you and Kela are correct – if that’s the right word.

            Based on my experience, both numbers are along the lines of what might be expected from Spotify. However, Spotify payouts actually show a large variance, depending on where they originate and whether they’re generated by premium or free plays. I’ve seen anything from 1.5 cents (US) to 0.15 cents (with a general growth trend over the past several years). On average, they end up working out at something like half-a-cent (still US) over the past year or so.

            Now, being French, I’d suppose that the majority of your plays are in France – which results in your average revenue per play at roughly 0.49 eurocents. However, notice the quirk of Spotify’s pricing that means your French plays are worth roughly one-and-a-third as much as any plays you might get in the US (because the French subscription costs that much more – 10 euro v. 10 bucks). UK plays are worth more still, while my native Poland has got possibly the cheapest Spotify anywhere (with te top-level subscription clocking in at just over 4 euro a month).

            The point is that you can expect the average per-stream rate to vary between artists, depending on where they get the majority of their plays (and whether those are from paying punters). Moreover, the period for which we count plays does matter, because the payouts have been increasing recently (meaning that the further back you go, the lower your average will be). What is important is whether the numbers are of similar magnitude and they are in this case – hovering around 0.5 US cents.


            Reply
  10. hippydog

    So why is there different levels of payout depending on the user?
    why should the artists have to take a hit because spotify has a horrible advertising department…

    and
    when I say horrible, i mean I just looked at it, and I now know why Spotify isnt making enough money from advertising..
    Because they SUCK AT IT..
    Minimum buy in at $10000. (which means unlike facebook and google ads, they are missing out on all the small business or ones who just want to test it out).. Advertising isnt easily traceable (little real time interaction so they have the same problems of justifying their reach the as radio), etc etc
    I wont say their ad rates are ‘out to lunch’ but so many other services I think give better ‘value’ and have better user traceability. (knowing how the user found you)

    basically they are not setup correctly to sell ads, which I personally think hurts them.. (VERY FEW SERVICES CAN SURVIVE FROM JUST PAID SUBSCRIPTIONS)..

    They should have merged with turntable.fm
    which would have given them an interactive user base, which in turn would have given their ‘ad spots’ more value..

    again..
    its just my opinion, but if an entertainment provider can’t at least break even from selling ads, they will not survive..
    The “Freemium” of the web is too ingrained now.. You want people to pay, you better be 10 times better then anything free


    Reply
  11. HansH

    Let me give you something to chew on. The April Spotify rates in Euros per tier for a few countries

    Sweden
    ad funded 0.000977
    unlimited 0.003465
    mobile 0.006273
    telia 0.005763
    premium 0.010828

    UK
    ad funded 0.001246
    unlimited 0.003489
    mobile 0.006975
    premium 0.008962

    US
    ad funded 0.000874
    unlimited 0.003168
    mobile 0.005259
    premium 0.009113

    Netherlands
    ad funded 0.000923
    unlimited 0.002944
    mobile 0.006735
    premium 0.006508
    KPN Mobile 0.010096
    KPN 0.010540


    Reply
    1. OB1

      Backs up my point on the rates quoted being publishing


      Reply
    2. Paul Resnikoff

      Source?

      (ie, is this all payouts, a sample that is representative, one label, or just one artist?)


      Reply
      1. HansH

        The data comes from both my own label and the British label ClubAC30 that was kind enough to let me analyse their statements. We both use Zimbalam/Believe Digital for digital distribution.


        Reply
      2. HansH

        Paul, also interesting is the fact that both with my label as ClubAC30 free streams are just 20% of all streams. So no need to be afraid that most users are streaming for free. That’s not the case, at least not with these two labels. I will publish more data soon.


        Reply
        1. Casey

          Out of curiosity, do you know if that percentage varies by region? I would think regions where there is a 10 hour monthly limit on free accounts would have a lower percentage of songs streamed on free accounts than say the US, where everyone can stream all they want currently.


          Reply
          1. HansH

            It indeed varies per country. Some examples from the ClubAC30 data. US: 20% free streams, UK 16%, Sweden 4%, Netherlands 11%


            Reply
    3. Casey

      If that is accurate, then the ad funded on-demand rate for the US is lower than Pandora’s free service. I have a hard time believing that.


      Reply
      1. HansH

        It’s accurate, trust me.


        Reply
        1. Casey

          I didn’t see it was in euros. That makes a big difference.


          Reply
    4. TuneHunter

      Hans, there is nothing to chew on. Nice sets of numbers with no value.
      I am assuming you are one of the streaming “successes” and this is the source of your excitement.
      Let me know when you will be on Sussie Orman’s show so we can see your numbers!

      If you look at the big picture there is no hope. Allowing for all inclusive streaming with all discovery tools as part of the deal will only dwarf the potential of the industry.
      With streaming rates avg. at $6, half a billion subs will bring just $35B – at that point there will be no sales and ads will bring at the best additional $10B – expect $45B industry in 2025.

      TERRIBLE OUTCOME – 1999 equals TODAY $56B in inflation adjusted dollars.

      If you are not in middle ages you are blinded by science. (S. Parker, D. Ek and Francis Keeling science)
      There is $100B of music around us – please don’t continue to kill the business.


      Reply
  12. R.P.

    Question: what happens if one person streams the song over and over 24/7 on a computer or device, does Spotify pay out on this per stream or per user?


    Reply
    1. TuneHunter

      Good subject for scientific experiment. 3 minute tune would get 480 plays per day = $2.4 a day based on avg. half a penny from Swedish numbers above. Set up 100 computers and you will be $240 a day.
      Adjusting for cost of computers and internet access you will beat local waitress – until they catch it.

      Those two lines are vivid proof of no hope for streaming.
      24 hours of playing freshly discovered cream of cream delivers $2.4 Total communism!

      We can earn same with just 6 tunes at $39 purchased from the Radio by person in transit from NY to DC.


      Reply
  13. question

    i use spotify sometimes and if i want to listen to the same song over and over i zip it back to the start of the track just before it ends. I can do this endless times and never get served an ad. What’s the situation there? Is any revenue being generated or is it counting as one play?


    Reply
    1. TuneHunter

      I am amazed and overwhelmed by Spotify’s greatness.

      We must bow and praise the King!

      .. and let’s respect YouTube – the Queen of free

      Welcome to modern days of the tithe.


      Reply

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