Spotify Says Artists Aren’t Getting Paid. And There’s a War Brewing Because Of It

This started before Sean Parker was in diapers, but it has everything to do with the future of Spotify and its ‘music OS’ ambitions.

And now, Spotify is saying something about it, and admitting that a serious problem exists.

This is what Parker, a major Spotify visionary and investor just told a SXSW audience.

37 Responses

  1. mance graves jr

    i don’t even have a license, and even though Cdbaby distributed my amateur cds to cyberhell, the spotify, rhapsody, and itunes streams that show up on my account sheet sometimes don’t even amount to a penny.

  2. Tone

    Maybe it’s because nobody is listening to your music?

      • tone

        industry welp? lol…

        i’m curious to know how many streams this guy is getting that results in no pennies

        • Suck One.

          Of course he may not be the biggest artist in the world, but he’s an artist nonetheless, and should be compensated fairly for the time and effort he’s invested in honing his craft. Constructive criticism would be much more effective in this scenario – degrading his efforts is a tasteless attempt at humor and quite callow on your part.

          Also, do us all a favor and do a little research before you drill people on things you clearly know very little about.

          Have a good one

          • Tone

            Sorry if I hurt your feelings but read my comment again. I simply asked a question, never said that artists don’t deserve to be compensated fairly. C’mon.

            As for the article, I read that back in 2010. I wonder if she would earn the same amount today? I’ve read that Spotify is paying more now. Not sure if that’s true though.

  3. Logisticalstyles

    I’ve distributed some songs through Tunecore and after 2766 streams on spotify I earned 2.85.

    • Tone

      Ouch. It seems like it should be more. But HOW much more? I mean, 2k streams is not equal to 2k downloads. I think we all agree that streams are worth less than physical and download. I suppose the key question is: how much less? Also, should artists get paid full for partial streams? Now I’m curious about how this all works.

    • Disrtibutor

      That is accurate. you earn roughly 1 dollar per 1000 streams.

      Here is what has happened so far. When spotify launched the only people subscribing where early adopters these listen to a lot of music. thus the lo per stream rate. However as more normal users start to pay the perstream paymetn is rising because these users do not listen as much. they just enjoy the convenience of it. Things will get better in the coming years.

      • Glacial Concepts

        The per stream rate cannot rise above a penny. This will always be the case when dividing the revenue by a number of streams that is larger than a factor of ten of that revenue.

      • Spotified

        If I buy a single on iTunes and the seller gets 70 cents, then I’d have to listen 700 times in this calculus for the same revenue. That’s not taking into account the value of having the $ up front but it’s also, on the other hand, not figuring all the people who wouldn’t buy the single anyway, but would listen on Spotify.

        Is it realistic that I’d listen that many times? Over the life of the song for an average-aged fan, that would be an average of about two listens per month for 40 years. Of course, that average will be front loaded, but this is a rough approximation. I think that such rough equivalency is certainly realistic.

        Moreover, the income stream for the artist will continue for the life of the copyright, if the song is a good one. Granted, toward the end of the copyright term, a purchase would outweigh the aggregate streaming income, just because there would be less time to pay such “annuity” for a new fan.

        Hardly seems unreasonable at all. Streaming subs will grow soon to hundreds of millions worldwide, and replace the highest year of recorded music sales – at least, or so I’d predict. And I think that, over time, streaming will actually pay artists more.

        My $0.0016 cents.

        • Spotified

          Correction to my own math – make that two streams a month for 29 years. Sounds like a long time to get the income, but my point is that the economics of subscription are an annuity to replace a lump sum, in terms of any one purchaser/subscriber.

          • But remember...

            That “seller” at $.70 is a vague number in this discussion.

            The pie is cut much smaller once the artist signs a deal, regardless of the size of the advance they take (if they get any at all)….

            The numbers you’ve posited would be if the artist self distributed.

          • steveh

            If your wage is $500 per week which would you prefer:-

            $500 at the end of the week – 0r 33cents every week for 29 years?

            do the math….

  4. dangude

    The pace at which the old major label distribution business model entering the 21st is painfully slow. The pain of course is felt most by artists who still sign outdated contracts. It will take several more years of litigation to move forward

  5. get real

    artists.. look at spotify and others like it as PROMOTION OPPORTUNITY, not an INCOME SOURCE.

    You aren’t paying for this promotion, and it may lead to someone investigating your music futher. Maybe they’ll attend a show, buy on your site or i-tunes, donate to your kickstarter..

    You gotta think more than just a quick buck..

    • effin

      in my opinion, spotify should definitely be looked at as an income source, as well as being a great platform/model for content delivery. But i think its revenues should have to increase to the rightsholders; if they maintain the commitment to transparency and increase revenues to rightsholders more fairly, this will be awesome indeed.

  6. I want to know

    How much is Sean Parker making from Spotify, per month?

  7. DD

    You Americans are such cowards. If that asshole was living in my country and talked like this for musicians’ rights, people would find him at whatever cool bar he was hanging with his prostitutes and they would kick his pirate ass until it was really transparent.

    Man up, go find the guy and slap his pretendious face to the asphalt for a couple of minutes.

    Or shut the fuck up and let Spotify continue to make money from you while you pretend to be someone on Twitter.

    • Voice of Reason

      Wow, that’s really sound advice…Thanks!

      So what country do you come from? Moronia?

  8. Bif Johsson

    New artists have a choice. Simply don’t sign up for any streaming service if you don’t like it. I don’t necessarily agree to do that considering I love Spotify, Rdio and other and feel its the future of music. Radio doesn’t pay you anything (unless you are a publisher), and I’m sure you would take free radio plays if you could. However, you can sell directly to you fans instead of complain.

    Or…focus on what really counts, such as touring, merchandise, and possibly sync licensing.

    It’s not rocket science…just stop complaining.

    • What?

      “Radio doesn’t pay you anything (unless you are a publisher)”- Shouldn’t an artist be self publishing or at least getting a check from his or her publisher? Please don’t give in to this “It’s all just publicity” bull, These companies are making or will soon be making large amounts of money and if artists don’t wise up quick they will be screwed.

  9. reality check

    just because you wrote a song doesnt mean you should be paid for it. shoot, anyone can write a song and record it these days.

  10. streaming eyez

    maybe music isn’t meant to be a business…. just a hobby? discuss….

  11. Tom Siegel

    I am curious to know what the payout structure is for the various streaming services. I thought that Rhapsody has the largest paying subscriber base. Does this mean that they pay out more to the rights holders? This could, in the end, create a winner amongst these streaming services. An aritst can control where their music is available. If all of the artists choose one service over the other because that is where they get paid, the public will start to use that service exclusively. Just a thought.

  12. Jay

    The (major) labels have lots of money and negotiating power. Their practice of charging massive advances and sharholder stakes eats up all the money up front. So streaming services are left with nothing more to pay the artists with. The labels claim that the money pays the artists, but that’s not happening. The solution is twofold: stop charging ridiculous advances and make it manditory to pay the artists.

    I would like to see the government set statitory rates for streaming services. The artists and labels would be left with one choice, either to be involved or not to be involved. If they opt to be involved, they are bound to the rates that are pre-set. One rate for master recording rights, one rate for mechanical rights – no more negotiations. This method has seemed to work well for other models including terrestrial radio as well as internet radio. Look at SoundExchange for example, the evidence I’ve been reading about shows that it’s working and royalties are flowing strong.

    When we have pre-defined rates, businesses can finally start working on growing productive businesses. Right now there is too much emphisis on dealing with those greedy labels and negotiating deals. The music industry needs to standardize and simplify. Then everyone gets paid from the revenue streams that result, including the artists.

    • Glacial Concepts

      I think a set Statutory rates will kill the industry. We don’t know how much streaming will be adopted and if streams rise too far above revenue then no service will be able to exist.

      If the stauatory rate was variable ( like mechanical publishing ex-US) then it could work.

      A sample formula would be

      Total Streams in a period/ 60% of gross revenue

      The overall revenue would be the variable – and the negotiated statuatory rate would be the % of revenue. It could start at 50/50 and move up as the business category matures.

  13. leslie

    When a label or publishing company was acquired by another label or publishing company with considerable sums of money, is there any share of the price paid going to the original rights owners involved?

  14. leslie

    When a label or publishing company was acquired by another label or publishing company with considerable sums of money, is there any share of the price paid going to the original rights owners involved?

  15. Visitor

    Truth is the PROs and record companies and national governments are in together on a scam to take all the publishing from your songs whether you authorize them to do it or not it’s called grand theft and it’s not fantasy it’s a common fact. See Jeff Prices insightful exposé below. Until the greedy bastards are reigned in no independent artist will ever get paid regardless of how popular they are.

  16. Ben Sheehan

    I used digital distribution through CD Baby for songs from my first (and only) independent album, and they’ve received 273 plays on Spotify and $0.60 cents in revenue (I’m not really active anymore–plus it’s of debatable quality). I think the $1.00 / 1,000 plays applies to artists signed to labels (both independent and major), but as an independent artist with no affiliations it works out to about $2.20 / 1,000 streams. However, I wonder if the discrepancy between label stream royalties (majors get more $ per stream than indies) applies to distributors as well (does CD Baby get more than Tunecore, or vice versa).

  17. @AJCardoo

    Agree with this sentiment…

    “…the biggest contribution we can make is transparency.”