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Spotify To Pay Musicians $1 Per Play

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In an exclusive interview with Spotify Founder and CEO, Daniel Ek, Digital Music News has learned that Spotify will soon be completely changing their per-play streaming rates. As of April 1st, all future plays on Spotify will earn musicians $1 per stream.

You heard right.

Here is the bulk of our conversation:

DMN: So you have a big announcement to make Dan? Can I call you Dan?

Ek: Daniel is good.

DMN: So, what’s the big announcement Danny?

Ek: I wanted to reveal this to Digital Music News first because you have been so supportive of our service since the beginning.

DMN: Our pleasure.

Ek: We are so excited to announce that we are completely removing the confusion from the current payment structure and are going to pay all musicians $1 per stream. Or about three quarters of a euro.

DMN: Hold up. I thought I heard you say one dollar per stream? As opposed to the half a penny they get now?

Ek: Well, Spotify is currently paying out about six tenths to eighty-four hundredths of a cent right now. So a bit more than half a penny, but you are correct. It will be about 138 times more than we currently pay out.

DMN: How can you afford to do this? Won’t this bankrupt Spotify?

Ek: Well, to be honest, we’ve been experimenting with payment structures since the beginning and really haven’t turned a profit with our current system, but we have been taking a lot of flack from musicians and bloggers. We’ve always paid out 70% of all the money.

We just got $700 million in new funding and we thought that we would use that to support the artists that make our service possible. With the positive buzz that will inevitably come from this major announcement, we predict 250 million active users and 60 million subs by the end of this year.

DMN: When you say paying musicians a dollar per stream, you really mean rights holders? Like major labels?

Ek: Well, actually, the only ones who will not benefit from the new pay structure will be the major labels and their distribution affiliates. The contracts we have with the major labels won’t conclude until September of 2016.

DMN: Why so far out?

Ek: They actually chose that date when we first drew up the contracts.

DMN: Can you reveal those deals?

Ek: We haven’t been able to share any details for a very long time because of the NDAs we signed, but those NDAs concluded this past week. Yes, the labels own some equity in Spotify.

DMN: Can you reveal how much?

Ek: (laughs) I’ve been dodging this question for years because of the NDAs, but now, I guess I can. Every deal is slightly different, but the majors collectively own about 22% of our net earnings.

DMN: Net earnings?

Ek: Well, they haven’t seen any revenue other than what their songs have earned because we haven’t been profitable yet. They’ve been earning their standard streaming revenue.

DMN: So what will their new rates be?

Ek: Their rates will stay the same until September of 2016.

DMN: So what you’re saying is, independent labels and self-distributed musicians will earn $1 per stream, but the major labels will continue to earn only about a half a penny per stream?

Ek: Correct.

DMN: I imagine they’re not ok with this.

Ek: Well, the majors kind of strong-armed us into unfavorable deals in the beginning. But we had to agree to them to get their catalogs. I knew Spotify had no future without the major labels’ catalogs.

“I’d been hearing that the majors weren’t passing along most of the money we paid them to their artists. And I got fed up. I figured, if we’re not going to be profitable in the near future, why not take the new seven hundred mil we got in our latest round of funding and give it back to the musicians who make our service possible. The majors asked for revenue sharing, and they got it. But if we aren’t profitable, then they won’t be either.” – Daniel Ek, Spotify CEO

DMN: Can’t they pull their artists’ catalogs from Spotify?

Ek: Actually no. In the contract it states that once they send a song to Spotify, they agree to keep it up for a minimum of 3 years.

DMN: What about new music?

Ek: We’re hoping that musicians will be our bullhorns and convince their fans that, yes, we do care about musicians and this is the most profitable service out there.

DMN: But couldn’t musicians just sit at home and put their songs on repeat for hours on end and make a living that way?

Ek: I suppose, but I don’t have a problem with that. If a musician takes the time to create music and upload it to Spotify, then why shouldn’t they earn some money from it?

DMN: Isn’t that kind of gaming the system?

Ek: Well, the music that gets played more will earn more.

DMN: Except if it’s from a major label?

Ek: Yes.

Well there you have it. Danny boy is sticking it to the majors. And giving back to the musicians. Will we see a mass exodus from the major labels? Probably. Why would artists who currently make little to nothing from their labels want to stick around when they could earn way more on their own?

The song of the year, “Happy” by Pharrell Williams, has over 94 million plays on Spotify. That means, with this new pay structure, he could have earned $94 million had he released it independently.

**Update: Upon hearing this news, Thom Yorke has issued takedown notices to iTunes and has sent all of his music to Spotify.

Image by Fortune Live Media from Flickr used with the Creative Commons License

 

Ari Herstand is a Los Angeles based singer/songwriter and the creator of Ari’s Take. Listen to his new album on Spotify. Follow him on Twitter: @aristake

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Comments (41)
  1. Mike C.

    haha….i don’t think so, ari…nice try tho… “Daniel is fine” was the giveaway..


    Reply
  2. April Fools!!!

    Hahaha…
    You almost got me!


    Reply
  3. Hoodgrown

    LMAO. I totally forgot today was April Fool’s day


    Reply
  4. Tyler D

    Yeah, now you’re just playing with people emotions man. LOL


    Reply
  5. David

    I thought you were only allowed one April Fools joke? DMN now has at least two, though it is often difficult to tell.


    Reply
  6. Anonymous

    You guys could have at least made these semi-realistic. Still would’ve been covered under parody.


    Reply
  7. LC

    I am all types of confused. I read today google is buying spotify and now they are going to pay $1 per play. Hard to believe either since today Aprils Fools day. I would hope that a business wouldn’t do a prank like this because it isn’t funny at all. Their current pay structure is horrible.


    Reply
  8. sdfs

    sdf


    Reply
  9. Anonymous

    Fair compensation for working musicians has now become April fool’s joke.
    Its turning into a civil rights issue.


    Reply
  10. Walt Kruhoeffer

    Wishful thinking haha.


    Reply
  11. Shane NRG

    Very funny…


    Reply
  12. Patricia

    April’s Fool!!!!


    Reply
  13. Jason Didner

    Saw the headline. Knew the date. Applied advice from “The Platinum Rainbow” – If it sounds too good to be true, it probably is. Nice!


    Reply
  14. Anonymous

    Come on this is too obvious. Should be Spotify plans to pay 1 cent per play, still April Fools material.


    Reply
    1. Anonymous

      Spotify payments to rightsholders in some territories are actually over a penny already. Not that you’d know that from media coverage…


      Reply
  15. gp

    this is fucked up! you guys are serious assholes for posting a fake article about something as important as musicians payroll. musicians that are viewed as successful rock stars by some, actually in some cases get paid the same as your minimum wage drive thru workers. or less. it’s super infuriating to have wasted my time reading this only to see people laughing about it. to refer to yourself as a musician, “ari”, is the real joke.


    Reply
    1. Vlar49

      wow haha… calm down. Nobody died.


      Reply
      1. Holly Hilburger

        hope he does die. Dumb FUCK! After all they forgot to say April Fools. It should be like Simon Says. He didn’t say t so it should be rendered a fact


        Reply
    2. Holly Hilburger

      agreed. I wish them true suffering in life for this stupid prank. I hope Spotify steps up or goes under for this. Their fault or not. And to the faulty, Fuck off and DIE!


      Reply
  16. Paleface

    I notice from the author’s biog that he doesn’t rely on creating original recorded music to earn his living. Maybe if he did, he’d realise that only a complete twat would think this was somehow funny. Prick.


    Reply
    1. M

      I’m a professional musician and I got a laugh out of it.


      Reply
      1. Holly Hilburger

        you must be a professional yuppie musician, which means your music can suck and probably does. It would be funny if I had something against musicians but I spend too much and work way too hard for the music scene here


        Reply
        1. Stereo G

          Holly — I would recommend an anti-depressant, perhaps? Life’s way too short to be this down-and-out and pissy.


          Reply
  17. Tay Hoyle

    ha…
    In reality…if spotify had the balls to take care of the musicians this could work…

    The business plan of milking the cow dry doesn’t work… and that is why the
    majors fell in the first place… Spotify’s business practice can not sustain it’s self forever.
    At some point something has to give…


    Reply
  18. lroose

    Some DMN readers need to calm the heck down.

    Yeesh.


    Reply
  19. Scotty Olson, Jibe Records Seattle

    Definitely Sharing…Best April Fools I’ve sen yet :)


    Reply
    1. Holly Hilburger

      except the STUPID idiot forgot to say April fools. Therefore it is NOT funny and should be held responsible for


      Reply
      1. Akshay

        Amen, Holly.


        Reply
  20. gene

    NOT FUNNY……………they can afford to make fun of how they are ripping off musicians….I guess it’s ok if a doctor tells a patient he has cancer….then says….”gotcha….April Fools”……yeh….we are the fools indeed for putting up with this shit


    Reply
    1. Anonymous

      Why is it Spotify’s fault that this site posted a fake article?


      Reply
      1. Holly Hilburger

        because there has been nothing said by them that this is in fact a April fools joke. That is F*cked up! and they should step up


        Reply
  21. AB

    This is a horrible joke about a very real and pressing issue for us songwriters and musicians. How low and insulting.


    Reply
  22. Juraj Blažević

    DMN: So you have a big announcement to make Dan? Can I call you Dan?

    Ek: Daniel is good.

    DMN: So, what’s the big announcement Danny?

    lmao


    Reply
  23. chris

    Dont we wish we had atleast 10 cents… lol but a $1 whoo we can dream on…


    Reply
  24. Holly Hilburger

    If this is a hoax I and most people I know that use spotify will uninstall it and never use it again. It is not funny and they should go under for an act so FU*KED UP!!!


    Reply
  25. Mark

    Yeah i just contacted spotify to verify its not until i scrolled down to day that i seen this is fake and almost paid for music distribution


    Reply
  26. Anonymous

    this is really only funny if the right people there get to read it obviously! ;-)


    Reply
  27. Whores!

    “We just got $700 million in new funding and we thought that we would use that to support the artists that make our service possible.”
    PAY THE ARTIST! THAT’S IT! THEY PAY YOUR WORK!


    Reply
  28. Maria-Theresia Frohlich

    The information was provided by an anonymous independent label with a catalogue of roughly 1,500 songs, and is based on flat royalties before distribution fees and the like are deducted. The streams occurred between Jan 2012 and February 1, 2014.

    Nokia lead the pack, paying an average of $0.07411 per stream, following by Google Play, which pays $0.04573. MySpace Music and Amazon Cloud have the lowest rates, with each stream only netting artists $0.00094 and $0.00012 respectively. The figures are below, in dollar amounts.
    Nokia: 0.07411
    Google Play: 0.04573
    Xbox Music: 0.03212
    simfy: 0.01626
    Napster: 0.01578
    MediaNet: 0.01140
    Rhapsody: 0.01122
    Muve Music: 0.00875
    Deezer: 0.00745
    Rdio: 0.00692
    Spotify: 0.00521
    MySpace Music: 0.00094
    Amazon Cloud: 0.00012


    Reply
  29. Andrew

    I thought it was good. Had me hooked, but the Dan-Daniel-Danny sealed the deal… the rest was lots of fun to read, Ari.


    Reply
  30. Akshay

    Fun is good but I SERIOUSLY HATE posts like these.
    Even if it was meant to be an April Fool’s joke there should be a CLEAR identifier in RED (at least after Apr 1st is passed).

    While researching, I don’t mean to land here via Google only to read and believe BOGUS text and “missing” the date on this article, Apr 1st.

    WASTE of time and ultimately hurts your website’s credibility.

    You’re welcome.


    Reply

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