But why is this so insanely complicated?
Tunecore CEO Jeff Price is an expert in online artist compensation whose business revolves around the very subject. Yet the guy who brought you simple iTunes distribution and created one of the largest DIY distribution platforms in the world was totally perplexed by on-demand streaming payouts.
In fact, Price spent three full months trying to figure out what stores like Spotify, Rhapsody, and Rdio actually pay artists. And here’s what he told Rolling Stone Magazine when they asked ‘what exactly do these services pay artists?’
“It is beyond complicated. It took me literally three months to understand this thing.”
Generally speaking, record labels make about 10.5 percent of Spotify or MOG revenue, then split that with the artists according to their contracts. “However, each service has to run literally five formulas each month — on calculation number one, they have Subsection Number One and Subsection Number Two,” Price says. “They throw out the higher of those and then compare that one against the other three. After that, they have to run this formula five different times.”
Laugh/cry. Any questions?