Spotify Is Letting Artists & Labels Influence Recommendations — For a Lowered “Promotional Recording Royalty Rate”

To Halt Rampant Fake Streams on Spotify, the Music Industry Signs Anti-Manipulation Code of Conduct
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Spotify has revealed that it will allow artists and labels to influence listener recommendations for no upfront cost – provided that they accept a lowered “promotional recording royalty rate” for the plays deriving from the push.

Spotify recently announced the artist- and label-influenced recommendations option in an approximately 500-word-long release. The message begins by emphasizing the streaming service’s role as a discovery tool, stating that its users listen to artists they’ve not heard before more than 16 billion times per month, cumulatively.

As of Q3 2020, Spotify counted 144 million paid subscribers and roughly 320 million total monthly active users. The 16 billion discovery figure therefore represents about 50 new artists per user each month – or an average of just 1.6 (personally) never-before-heard musicians per day, in a stat that provides additional insight into how listeners utilize the service.

Next, the Stockholm-based platform highlights the many factors – including songs’ technical characteristics, the time of day (or night) of listening, and much more – that already play a part in its listener suggestions. “We believe our recommendations should also be informed by artists—their priorities and what they have to say about their music,” the text continues. “And soon, we will roll out a test of a service that gives artists a say in how their music is discovered.”

Within this “experiment,” which will initially debut in the “Radio and Autoplay formats,” artists and labels will have the chance to designate which works they’d prefer Spotify recommend to users. Then, the platform will “add that signal to the algorithm that determines personalized listening sessions,” plugging strong-performing tracks in additional sessions and pulling back poor-performing songs.

“Listener satisfaction is our priority—we won’t guarantee placement to labels or artists, and we only ever recommend music we think listeners will want to hear,” Spotify proceeds.

On the payment front, the leading streaming service indicates that it will forego charging upfront fees for these prioritized recommendations “to ensure the tool is accessible to artists at any stage of their career.” It’s unclear what higher-ups have set the aforementioned “promotional recording royalty rate” at, but for reference, Spotify’s base per-stream royalty rate is around $.003 to $.005.

Moreover, it remains to be seen whether relatively widespread use of the tool (especially among big-name acts) would reduce non-participating artists’ stream counts – and potentially compel them to enroll in the program and accept even lower royalty rates.

In a broader sense, the move represents Spotify’s latest effort to pursue heightened earnings (and ever-elusive profitability) via revenue sources outside of music streaming itself. The company’s multimillion-dollar podcast investments have made a considerable splash this year, and execs revealed in March that they intended to expand their pay-for-promotion program following the trial success of Marquee.

Building upon the development, Spotify and Universal Music Group closed a multiyear licensing agreement in July, and the deal encompasses “collaboration on new, state-of-the-art marketing campaigns across Spotify’s platform.”

11 Responses

  1. Moe Levy

    Wow, these guys figured out a brilliant way to launder payola dough.

  2. Eilo

    SPAYOLA….Swedish Meatball Style….Thanx to Deekie Eekee. He needs more to add to his $BILLIONS and his Battery ? Factory Investments

    • Barry

      Not sure if you’ve seen the recent earnings report, but 70% of Spotify’s profits are pass-through to artists and labels. I think running an entire company and platform on the remaining 30% is pretty reasonable, especially since the music industry hadn’t been profitable (aside from concerts and touring) after the advent of the internet and pirating. Streaming saved the music industry.

  3. meg

    Honestly, this is not surprising news at all and this is done in several other industries as a form of promotional benefit. Let’s compare for example to the grocery industry. Do you know that in order for products to be “on-sale” in the store, the manufacturer of the product actually pays the retailer the difference in price that the consumer is saving? It’s the exact same thing, and this has been going on since grocery stores started putting products on sale. The retailers or the distributor does not see the loss, the brand does. But the cut in profit is worth the additional units sold. If we’re up in arms over this, let’s also start petitioning our local Walgreens to stop forcing P&G to pay for their Tide in-store sales….

    This is basic business in a buying and selling economy.

    • whatevvvverrrr

      Clever legal speak to try to throw morons off of what is really happening….haha

  4. Ruell Bankasingh

    I think it’s obvious that everything thing these companies say, is the opposite. it won’t really benefit the independent artist, we end up where we think it will, but most all companies have been compromised, so ultimately it will be a circumstance where they say it will benefit everyone but it will still only benefit the 1 percent. the industry itself is heavily controlled by big music companies and everywhere that’s what is happening, people will gravitate to what is being pushed. promo and the less equals back to zero, we can’t count on these people to do the right thing, they sit in their offices trying to figure out how not to have to do the right thing. i say, more pay increase and the marketing. i had an ideas where they can ask people to support independent artist by listen to playlist for an hour with credible independent artist, remember people want to support independent artist, between the billions online they could split the playlist between the millions on line everyday and every artist will get a spin from millions of people, and make it a trend to listen to these playlists, more pay, guaranteed listens, plus we can still do out own marketing, it’s perfect. everyone wins, if every company did the same thing, we could all make a decent living and earn real profits every year. no people with money to spend in the economy’s its a win win. they need to increase the pay, structure promo for a good cause and help 100 percent not just the one, that already got millions. i know it can be a great tactic.

    • Eilo

      The same 20% of Major Artists/Labels in the pool who reap 80% of the BIG $$ payouts will have budgets to participate, while the remaining 80% [deemed] Orphan Artists will have no budget to participate, leaving the 20% (M A/L) competing amongst each other, further diminishing potential returns for Orphan Artists with the remaining 20% $$ Pool, estimated. It’s still basically a rout.

      • say what say who

        route its a heist….they own eminem 2 billion dollars and now they want for artists to make less money…haha….

    • ruells hopes get dashed

      Ruell you understand what is going on and you still have hope…i dont want to see that get lost…but….if you think artists are getting a penny..ever..ever…forever…ever…if they can avoid….whew… are new…

  5. whaturmomshouldsay

    Its just so awesome that Spotify will give the independent artists a real shot at making it on their platform,…….sound really reasonable there guys…the independent artists are really going to do so well on there…well a penny a unit…wait penny a stream…wait .003 a play/stream/unit……huh……..just know it has been proven time and again that the listed rates and what the artist get…they are divergent……quick google search finds that….So the industry only cares about making their cash and keeping the indies out……so f word all day to the industry…what did michael jackson say about the head of sony…..