iTunes Chart-Toppers (a/o February 21st):
Spotify continues to come under fire for its compensation levels to both artists and indie labels, though the company is now defending itself. The debate intensified last week, when band Uniform Motion opened their books and revealed Spotify per- 
album payouts that were just a tiny fraction of downloads, CDs, and especially vinyl (that comparison and debate is here).
But those comparisons are entirely unfair, according to Spotify, which has now offered this statement to Digital Music News on the matter:
___________
Spotify does not sell streams, but access to music.
Users pay for this access either via a subscription fee or with their ear time
via the ad-supported service [just like commercial radio] - they do not pay per
stream. In other words, Spotify is not a unit based business and it does not
make sense to look at revenues from Spotify from a per stream or other music
unit-based point of view. Instead, one must look at the overall revenues that
Spotify is generating, and how these revenues grow over time.
Spotify is generating serious revenues for rights holders,
labels, publishers and the artists that they represent. We have paid over $100m to rights holders
since our launch, and the overwhelming majority of our label partners are
thrilled with the revenues we're returning to them. Spotify is now the second
single largest source of digital music revenue for labels in
It is also important to note that Spotify was created as a
better, more convenient alternative to piracy. Estimates suggest that around
95% of all music downloads are illegal. Spotify is now monetising an audience
the large majority of whom were downloading illegally (and therefore not making
a penny for the industry) before Spotify was available.
___________
Comments Closed
Bryan Monday, September 19, 2011
This statement does not change the fact that thier payout to artists is terrible.
Cliff Baldwin Monday, September 19, 2011
translation: "We are trying to figure out how to make money for ourselves dammit! We have taken all this VC investment and have the heavies at the major labels as investors too -- they want to see a return on their investments. Hell, they only got into the game to see if we could hit it big, it has nothing to do with musicians or artists. Don't worry, the mega artists with millions of spins will get paid. Everyone else needs to just be patient, the paradigm shift could take five to ten years. At that point, we may cut a few checks with numbers to the left of the decimal point instead of only to the right of the decimal point. Hang in their artists. And be sure to put out a tip jar at your gigs, that always helps when engineering-driven tech scam companies are exploiting your music and raping you in the process.
brononymous Monday, September 19, 2011
ding ding ding ding
Visitor Name Monday, September 19, 2011
I am Visitor Name. And I agree with you. In the end what counts is how much the artist gets paid, say, after 10x streaming of a full album. If Uniform Motion gets 0.29EUR for 10x streaming of a full album, then Spotify must be condemned for this poor return. EUR2.94 for 100x listening to the full album? That's ridiculous, Spotify! (Me personally, i dont support Spotify. I dont use their free or paid service. There are much better FREE alternatives, you name them.)
Dave Monday, September 19, 2011
Empty statment from Spotify.
The overwhelming majority of independent artists never see a penny from them, yet they're building a business off the music.
Incredibly weak arguments from top to bottom.
@BenjiKRogers Monday, September 19, 2011
Benji Rogers
weak response indeed!
@Andy_Doe Monday, September 19, 2011
Andy Doe
...and the rebuttal, in the name of balance. it's ok, I suppose.
@pkmonaghan Monday, September 19, 2011
Patrick Monaghan
Spotify has a payout structure?
@naoumusic Monday, September 19, 2011
Andrew Naoum
Apple's model ruined the industry favoring big labels. Access and distribution are key . I share via Spotify every day!
@producestories Monday, September 19, 2011
anna b
Huh. I wonder how individual artists feel about not looking at revenues "from a per-unit point of view"?
Versus Monday, September 19, 2011
Of course artists get paid by labels. It's a business relationship. The artist generates income for the labels, and the labels pay in the form of advances, licensing, payments for works for hire, remixes, etc etc.
That's how I have always been paid.
- Versus
Adam Monday, September 19, 2011
Are we really having this conversation again? Since when is an artist getting paid by the label anyway? Artists shouldn't depend on payments from the label for physical, digital, or streaming.
If an artist is complaining about not getting paid by Spotify then their priorties are all wrong. Complain about the costs of touring, or the costs or merchandise - something that actually affects the artists' bottom line.
-a
Visitor Monday, September 19, 2011
Are we really having this conversation again? Since when is an artist getting paid by the label anyway?
Historically, the initial label advance was the artist's biggest source of money. But if the labels receive no money from recordings, there will be no advance for future artists. So yes, artists and labels have every right to still be having this discussion.
Vail, CO Monday, September 19, 2011
Gee I wonder what Limewire's 'compensation structure' was? Spotify's better than $0.
earbits Tuesday, September 20, 2011
The question is, are they getting enough from the people who used to file share to make up for the purchasers of music who now pay fractions of a cent to never have to buy any albums again. They are a deterrent to both piracy AND purchasing.
alden Monday, September 19, 2011
I'm Glad Spotify responded but in reality everyone has a reason to be so upset. Spotify doled out tens of millions to UMG, WMG, EMI, and Sony to get their songs leaving nothing for the rest. Add ownership shares and other nonsense and this is not a good deal for most artists and indie labels who are getting scraps.
yt75 Monday, September 19, 2011
I hate the concept of subscription to a catalog anyway, it is asphixiating and does not really promote true novelty, what is needed is the ability to buid ones own bookshelf or music album shelf from any vendors, and have a third party maintain these shelves, with several of them, with full privacy as part of the contract.
Nice Loren Feldman video on this catalog & streaming concept below (link at the end) :
http://iiscn.wordpress.com/2011/06/28/la-vod-un-concept-denfant-de-la-tele-a-oublier/
HansH Monday, September 19, 2011
A nice response polished up by marketeers. This is the same story you always get when asking for information on their pay outs. "Spotify is not a unit based business" Nice, but why do they pay out per stream then?
It's ok for Spotify to look at the big picture. Indie artists don't have this view.
steveh Monday, September 19, 2011
Well done HansH! I am in complete agreement with your comment!
@WFMU Monday, September 19, 2011
WFMU
Spotify defends its paltry payouts to artists, saying essentially, it's better than nothing!
@henrydonahue Monday, September 19, 2011
Henry Donahue
Sadly they have a point.
@rdmarvel Monday, September 19, 2011
Roger
Not even. Statement references labels, not artists.
@chronosome Monday, September 19, 2011
R...A...M
Anyone surprised?
@ted_gordon Monday, September 19, 2011
ted_gordon
nice: spotify passing the buck (literally) to "rights holders" and labels, still leaving actual artists in the lurch.
MDTI Monday, September 19, 2011
One of my track has 30 plays on Deezer
revenue:
0.13€
which should amount to something around 0.13/30 =0.004333 per play.
which results in something like
"to make 1300 euros a month from your music you must aim at 300.000 plays a month...."
:-)
PS: I do not have a precise breakdown from deezer, just some number on the site i use to distribute the tracks...
From itune-europe, I get 0.82 per sales, but I am not sure it takes the distributors fees in consideration (that 9%).
If they do, then ity is "just" 21 cents more than i planned.
If they don't, then it 0.82-9% = 0.754... which is around 13 cents more than i planned.
Beware Lady Gaga, Guetta, Lil"Wayne, UMG and SONY here i come !!!!
Fortunately, the contract that I signed provides payment of the artist/music producer (me) from the 1st cent.... (the investment from the project purchaser was around 30.000 euros, and 20.000 euros that he could have used otherwise, but those guys didn't listen to me).
The better "income" is probably the other projects I've been involved thanks to that first one, and it is commissioned music so it is more of a "take the money and go", which is fine too.
The only problem is promotion, and especially the video clip, but fortunately I work with friends so it's about 50% of the price a major would pay.
Next project will include direct sales of high quality formats, without intermediary....
Oh, I love making music, fortunately ;-)
I hope the info helps someone :-)
MDTI Monday, September 19, 2011
PS: if you want to know, in my "business plan" I planned for
A- sale at consumer: 0.99
B- VAT one sale: 20% (the number a finance guy would use)
C - Commission by selling plateform (10% ?)
D - Commission by distributor (9% of A-B-C)
E - result: 0.61 cents for the right holders.
I noticed that Itunes sale at 1.29, and some specialized website sell the same product at really abusive prices (1.59 to 1.79 per track!!!! they think they sell CDs or what??).
So on itune, from 1.29 to 0.828 approx = 47 cents all tax and fees per mp3 sale.
50.000 euros investment (I prefer 30K, because 20K where just spoiled) = a bit less than 61.000 mp3 sales to break even on 50K, and 36.000 "only" if they did use the money wisely and kept 20 for the next single.
I hope it helps :-)
MDTI Monday, September 19, 2011
oh, and if you want to help me (at getting better and more precise numbers)
check on deezer: http://www.deezer.com/fr/music/martinsanchez/higher-navigator-960753
or why not here so i can study youtube revenues http://www.youtube.com/watch?v=XE6Uuea-DMw
This is light and informative advert isn't it Paul ? :-)
MDTI Monday, September 19, 2011
Takeaway: Deezer offer 0.001 eurocent more than spotify... ;-)
paul Monday, September 19, 2011
Ha, it's all good. I'd just note - sometimes this gets overlooked - "300.000" in 'Euro-speak' means "300,000" in Americano.
/paul
MDTI Monday, September 19, 2011
yes, 300.000 in eurospeaks is USD 300,000 (I should adopt the universal K: 300K€ :-)
Visitor Name Monday, September 19, 2011
@MDTI
You are getting paid by Spotify and Deezer? Just tell us in clear words if you are happy with Spotify as "business partner" or not. If i were Uniform Motion i would say bye-bye to Spotify. Have you guys noted?.. There are still independent labels which eschew all(!) streaming websites but publish their albums with iTunes (and or amazonMP3) only. If anyone wants audio (in form of published bits and bytes) from those labels, he/she must pay for the tracks, track by track from iTunes, amazonMP3, or from the label's website. You cant find any streams.
Indies should steer clear of streaming websites!! That's the best protection against ..etc..
MDTI Monday, September 19, 2011
Hello Visitor Name,
I also didn't see any financial interest in being on any streaming plateform. But there are several elements to consider:
- Your online distribution service may make it compulsory to be on streaming plateform x or y (by default, there is way to discuss, but the basics packs often include one or more streaming plateforms).
- The promotion agency did really insist for us to be on deezer (i think the CEO know each other.. so they seem to try to nurture each other business).
- The above project was a "first test" and what needed is to get some exposure before going any further. A streaming plateform may be interesting for exposure , for example to post links to deezer instead of soundcloud. It may be intersting for some audience.
- Last year at new years eve, I was inspain with friends, and the music was 100% from spotify... so with an add or two every x song... but it showed me that those plateforms are the only/favorite mean of listening music and make it listen to friends. Young people working in spain and not making loads of money, so they save on media by going to streaming.
So far, I don't see any "dillution" of mp3 sales into streaming. But we are not at all a big project and only a couple of month old... one project is not enough to judge. People who really like will probably buy a media rather than having to access it on streaming.
It "can be " intersting not because those website are good for promotion, on the contrary, they suck: it is "if people who are on such streaming plateforms want to listen my music, then I am ok to be there".
Because generally, small project like ours is lost in the limbos of billions of mp3 of famous celebrities, and there is no chance that someone actually does a "search and find". You go listen to what you already know generally (99% of the users.. the other 1% is probably the ones who follow Digital music news ;-)
if you want to make money, you will need people to know about you, so they can either buy a better sounding format, or come to see you live in venues and clubs in the future...
It is more about that than any financial consideration. But only the future will tell if it is useful for small bands.
MDTI Monday, September 19, 2011
PS: i ididn't get paid: i only see the "analysis of revenues" provided by Zimbalam, the plateform i use to distribute the tracks.
If money there is, I will probably give it away to the producer of the video clip... and will forget about my 20% share (which i don't care if it is not a 3 digit number....for the moment :-)
MDTI Monday, September 19, 2011
PS2: I don't use deezer or spotify personnally. I find them cumbersome, croweded with the same Top 10 as any other chart site, the sound quality is to puke.....
I don't deal with them directly, the distribution service provider does it for me.
So there is not interest in being there except to make your music avalaible to the members of those site. nothing more, nothing less.... in my humble opinion.
Visitor Name Tuesday, September 20, 2011
@MDTI
Thanks for your answer. It helps everyone who is reading the discussion to understand what the real situation is for affected groups of people (=artists, indies). Yes, I agree, only future can tell if your decision to be exposed on Spotify was right or rather wrong. But let's set our believes. And I am telling you: I believe that streaming subscription services ruin your business, and indies who are on amazonMP3 and on iTunes but not on streaming sites think the same way. Paul has posted many statistical data and graphs that CD sales are in the decline. The main reason for this is digital piracy and the global availability (torrents, blogs, rapidshare, incl. lossless ape/flac rips) of audio in downloadable format.. and as the declining CD sales prove: the majority of consumers is happy enough with those digital bits and bytes from the inter. And streaming subscription sites imho contribute to the development that the consumer gets satisfied more easily and faster to check out a new album. Personally, when i pay a monthly subscription fee and can listen to all the new (and old) albums of an artist, it's too difficult to appreciate the recording work. Most of the times i think 'baah, good that i was able to listen thru the album 4 times. it's nice. but i know it now and have listened to it already 4 times, so why buy now, these days? i am (=my curiosity is) already satisfied and while the album is nice i better keep my $-bucks in my pockets as long as possible until i stumble on something worth buying because i cant get it from elsewhere, e.g. buying a new pair of Puma shoes from ebay or saving money for a new smartphone.' and after 1 2 weeks i would have forgotten about the album. I am a CD collector and i am telling you: in 2011 my CD purchases included exclusively albums which were not available as subscription streams. Every CD collector has a different attitude towards buying CDs. Mine is: My urge and curiosity isnt satisfied until i "have" the album (in any kind of format, incl. crappy 128k streams saved to disk with legal recording software) or have listened to it. Once i have, my desire to buy the album vanishes and after a few days/weeks i would have forgotten about my interest in "acquiring" it. I will only consider buying a physical CD if this is the only way to get to listen to this particular album. If a CD is available as streaming music album, chances are very low or zero that i would ever think of buying it in physical format. Bad attitude, i admit. But it's reality that there are thousands of listeners with the same bad attitude.. and such a attitude has grown with time by the global availability of "internet audio bits and bytes". Music subscription services spoon feed the subscribers. They are satisfied (like after a meal). Music subscription services ruin the business of indies or smaller CD companies. My belief.
MDTI Tuesday, September 20, 2011
I think you are not wrong :-)
Thanks for the point of view.
@drpants Monday, September 19, 2011
Dr. Pants
Oh ok. That makes it so much better.
steveh Monday, September 19, 2011
"Spotify is not a unit based business and it does not make sense to look at revenues from Spotify from a per stream or other music unit-based point of view."
If you are an artist in the fortunate position of having your own label, distribution and fanbase then the per stream payout of Spotify DOES matter.
This is your income in the digital music economy. This is how you pay the bills. How can it be otherwise?
The per stream payout from Spotify and the resulting income from Spotify as it tries desperately to erode ownership and sales matters a great deal.
Spotify's appalloing statement proves that the Spotify's business is based on exploiting music from those who make it while the huge main bulk of the income goes to:- SPOTIFY (not to the artists). What arrogance!
It's gratifying that now that Spotify has launched itself in the US market it is coming under greater scrutiny.
The response they have given trying to assert the falsehood that the per stream payout does not matter proves that Spotify are liars and charlatans.
They will not survive! They must not survive! They cannot survive!
@artistsbox Monday, September 19, 2011
The Artists Box
Spottily Defends Its Payout Structure...
Sal Tuesday, September 27, 2011
I completely agree! This is all double speak. I have been interested in this topic as of late. I cannot see how fans of music could support a platform that, for lack of a better word, rapes the artist. Apparently, an artist has to get over 50 million plays just to receive a minimum wage check. I doubt an artist can even reach 50,000,000 plays! Especially in one year!
I found a site, currently in private beta (but I , that I am keeping my eyes on; http://www.baadaboom.com/. Cool platform, even has music videos. And, it looks like they have discerning taste in music. I can't support sites like Spotify. I have friends that make music. Just doesnt seem right!
Versus Monday, September 19, 2011
This is all marketing double-speak.
"Spotify does not sell streams, but access to music. "
What does this even mean? The access is in the form of streams. So Spotify does sell streams.
"Users pay for this access either via a subscription fee or with their ear time via the ad-supported service [just like commercial radio] - they do not pay per stream."
Commercial radio does effectively play per "stream", based on estimated number of plays of an artist work and estimated size of the audience to the respective radio stations.
Spotify: Support the artists. They are your lifeblood. Kill them, and you die.
- Versus
@jamesaviaz Monday, September 19, 2011
James Aviaz
Spotify: 'it's better than nothing'
Spotty Figh Tuesday, September 20, 2011
But what about the people who did pay for music but now use Spotify instead because it is also more convienient than legally downloading music? Is Spotify slowly ruining what's left of the digital music industry...
@sonicviz Tuesday, September 20, 2011
Paul Cohen
Spotify... saying essentially, it's better than nothing!
steveh Tuesday, September 20, 2011
"Spotify... saying essentially, it's better than nothing!"
Yes - and at the same time Spotify are becoming - or seek to become - a multi-billion dollar corporation.
Doesn't the disconnect appear blindingly obvious?
gpretty Tuesday, September 20, 2011
This doesn't seem to be Spotify's fault. I don't know all the details, and apparently no one really does, but it seems that if a band is unhappy with their payouts from Spotify, they need to take it up with their label because they are the ones who agreed to put the artist's music up there. And if the artist has no label, then they should read the terms of agreement that they probably didn't read that told them about they payout. So in that sense, maybe it is Spotify's fault. But, if signed to a label, the argument should be, "Hey, label, get me more money please?"
musicman Tuesday, September 20, 2011
My God, I did not know that Spotify is actually made up of benevolent Angels! Look Spotify, you're a company. Companies exist to make a profit. But please don't try to convince us that you are here to save music. It is to you as it is to virtually all other's doing what you do, a grossly undervalued commodity. (Undervalued by the listening public as well) This, by the way, is what happens to anything that one can acquire or access without limit or effort. You didn't create the problem but, in my opinion, you are very much a part of it.
dhenn Tuesday, September 20, 2011
while i was none too thrilled by my first spodify statements via CD Baby, the music IS a business of pennies. wake the f up! royalties are set at .09 by congress. the whole point anymore is to get a bunch a pennies coming in from as many sources as possible. at this point, i'll take this over all the people that play my music and don't pay me anything!
dhenn Tuesday, September 20, 2011
forgot to say, i would at least like Spotify to match the royalty rate set by congress.
Ignacio Tuesday, September 20, 2011
Just wondering why no one at A2IM, Merlin, or Impala are taking any stand here?
Why did they negotiate such bad deals?
Tal Tuesday, September 20, 2011
I think ultimately it is piracy that is killing the industry. Streaming services, by attempting to compete with piracy with low monthly subscription fees and convenience, are more or less delaying the inevitable, rather than causing it.
Streaming services pay out based on a percentage of revenue (subscription and/or advertising), pro-rated by the number of streams for a given track divided by the total number of streams for all tracks during a period. When revenue is $10 a month per subscriber, pro-rated among millions and millions of streams, the royalties are extremely low. But how do you raise revenue without driving people back to piracy?
The thing I like about Spotify is it lets you create playlists with both limited downloads from the subscription service, and permanent downloads that you get through iTunes and Amazon, and then sync both types across all your devices. It's ultimately up to the labels as to what albums are made available on streaming services. For the most part, labels make their entire catalogs available (except perhaps for stuff like Tool, AC/DC, Garth Brooks, Beatles, etc.), including new releases, so someone with a subscription would have little incentive to purchase through iTunes/Amazon.
I think the solution is for labels to limit which content is available on streaming services (perhaps offering back catalog, or only certain songs on a new album release), and figure out a way to convince people to fill holes in the catalog by buying the rest through iTunes/Amazon/CDs, and not obtain them through bittorrent/rapidshare, etc. However, a balance has to be made here. If the labels don't offer enough content or make it too expensive, the streaming services lose value, and everyone cancels their subscription and goes back to piracy. Just look at what's going on with Netflix. I believe that bittorenting movies is going to look a whole lot more attractive as a result of that mess.
Right now, it looks like we're relying on the ISPs to curb piracy, which doesn't appear to be doing a hell of a lot. The RIAA suing college kids and oblivious parents didn't do much either. So what's next? We won't stop piracy, but perhaps more can be done to make it inconvenient enough so that paying for music on both Spotify and iTunes/Amazon becomes an attractive option. We just need to figure out what that is. I think Spotify may actually become part of the solution (whether they intended it that way or not).
I'm sure there's more to it than that, but that's just my opinion.
Lee M Tuesday, September 20, 2011
The struggling Indie artist...now where have i heard this debate before!?
And to the Indie artists in Australia at least, it's a little known fact that only 30% of public performance fees gets collected by artists. Perhaps that's the bigger opportunity.
When all is said and done, is Spotifying actually making a profit?
Visitor Name Wednesday, September 21, 2011
Very good points made, Tal. Well made evaluations and suggestions which make clear that finding the perfect path and balance is hair-risingly difficult to the labels. Much of the success and responsibility is in the hands of the labels. If they f*ck up, they're going to ruin their own labels. Really difficult game they play. And Spotify is one of the most important players in that game (because of the billion-$ funding they have).
@greenhatdigital Tuesday, September 20, 2011
Julie Giles
They have a point about illegal downloads.
Natalia Talayero Wednesday, September 21, 2011
The problem is that the income generated by Spotify from the people coming from piracy does not compensate at all the drop of the income from people that previously bought in itunes, amazon mp3 etc...
@Innerviews Wednesday, September 21, 2011
Innerviews
Spotify defends it's poverty-inducing payout structure after the band Uniform Motion ripped 'em a new one.
Econ Thursday, September 22, 2011
This is incredibly misleading by Uniform Motion.
Streaming a 12-track album 100 times on spotify (1 time each by 100 users) is roughly the same as getting one song played ONCE on a radio station with 1200 listeners.
How much does Uniform Motion get paid for THAT?? About 1% of what Spotify pays them.
Econ Thursday, September 22, 2011
Here's the NAB rate sheet. Radio pays WAAAAY less than Spotify.
http://www.nab.org/documents/newsroom/pdfs/102510_NABTermSheet.pdf
Consider that when a radio station in a top 20 US market plays a song, 100K people hear it while when Spotify streams a song ONE person hears it.
Sal Wednesday, September 28, 2011
Streaming music may pay more than radio, but I think the issue is that OVERALL, artists are left out of the equasion when it comes to generating revenue for the music they create. They are literally seeing fractions of pennies on both platforms; radio & online. Plus, on radio, I have no control of what I'm listening to. I cannot rewind or hear more from that artist. Radio is simply advertisement for me to go and purchase the music, if I like it. With Spotify and other streaming music, I have control of who and when I listen to music. And with streaming coming in better quality and becoming more accessible thru mobile apps... why would I need to buy the music? So, as music fans, we should seek to find music platforms, where we canexperience the music we love AND, where the artists/musicians are fairly compensated.
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