Spotify Refuses to Offer Penny-a-Stream Royalty Payments to Artists

Spotify nostalgia patent

Photo Credit: Logan Weaver

About two weeks back, multiple musicians staged protests outside of Spotify offices in the U.S. and abroad, demanding a higher per-stream royalty rate. Now, the campaign’s organizers have revealed that the Stockholm-based streaming platform has refused to pay one penny per play.

To recap, the Union of Musicians and Allied Workers (UMAW) organized the protests, which included a demonstration outside of Spotify’s World Trade Center offices. A number of individuals turned up at the latter event, photos and footage show, with the vast majority of the participants appearing to have either played an instrument or carried a sign.

One of these signs read “Justice At Spotify/Stop Fighting Artists,” whereas another (perhaps the most popular of those used at the happening) called on the leading music streaming service to pay a penny per play. The royalty rate would represent a considerable increase from the platform’s current average per-stream payout (and those of competing services), though as initially mentioned, Spotify has denied the request, according to the union.

The UMAW detailed the company’s formal follow-up in a lengthy chain of tweets, indicating first: “Spotify has issued a response attempting to address some of our demands. We are pleased that Spotify has recognized the legitimacy of UMAW and the artists around the world who are demanding better payment and treatment.

“However, Spotify has failed to meet any of our demands. The company consistently deflects blame onto others for systems it has itself built, and from which it has created its nearly $70 billion valuation,” continued the union.

“We asked for transparency, but this website” – meaning Loud and Clear – “answers none of our questions about the sources of Spotify’s income in addition to subscriptions and ads, payola schemes for playlist and algorithm prioritization, or the terms of their contracts with major labels.

“We have demanded that Spotify stop fighting to lower songwriters’ royalty rates, but this is not addressed. And of course we have demanded at least one penny per stream. They have not provided any further information on their per-stream rate at this time, which is currently calculated at $.0038,” wrote the organization, citing a figure that may well have been sourced from DMN’s much-cited analysis of Spotify royalties.

A recent study shed light upon the potential advantages – including in terms of securing coveted playlist spots – that major-label artists have on Spotify, which acquired voice-driven audio app (and Clubhouse competitor) Locker Room earlier this week.

Separately, employees at Secretly Group, an Indiana-based family of indie record labels, unionized one week ago – and set a Thursday-night deadline for formal acknowledgement from higher-ups. Just ahead of this deadline, management voluntarily recognized the union, which then thanked its followers for their “continued support” as it entered “the collective bargaining process.”

30 Responses

  1. Avatar
    I Blame Spotify

    The people that run Spotify are stealing from the artists.

    • Avatar
      Tsk

      It’s not just Spotify’s choice. A majority of the $$$ Spotify pays for royalties goes to label companies because that is the way the industry is set. Spotify alone cannot change this.

      • Avatar
        Tom Hendricks

        The labels are just three, called The Big Three Labels that directly control about 80% of the music industry and indirectly all of it that makes money. You can see even in articles here on this site that the Big Three Labels have sweet streaming deals with Spotify etc.
        Warner Universal Sony.
        That’s why the peaceful music revolution of musicians against the Big Three that have ruined music and turned it into a personal marketing ploy.

  2. Avatar
    BAC

    YouTube is the biggest music streamer in the USA and they pay out a fraction of what Spotify pays, if they pay anything at all.

    If any of y’all ever got a royalty statement for your music, you’d know this.

    Nobody’s complaining about YouTube. Why aren’t they marching on Susan Wojickynazi’s house?

    • Avatar
      Meg

      AMEN, the Spotify hate is hilarious.

      Why don’t you negotiate better contracts with your distributors and labels

      • Avatar
        Johnny

        Hey Meg, have you ever had a deal with a Record label? 99.9% of musicians don’t ever have contracts and very very few musicians have any negotiating power

    • Avatar
      Tom Hendricks

      Those connected to the music revolution, started by my Zine Musea in 1992, including me, are against YouTube pay outs, and have been for years. See more about pennies for play below or google The Music Revolution/ Tom Hendricks, or just ask.

  3. Avatar
    Johnny

    Twenty years since Napster and what have the musicians done to try and save the music business? The old business model didn’t work too well and now this new business model is a friggin disaster! And what do the musicians do? Oh yes, keep on recording new music for all the fans to get for free on the Internet! Have any of them done anything to try and build their own Platform with direct sales to the fans? NOPE! All they do is sit around and complain then they continue to do NOTHING! Doing something involves money and taking charge of this business while eliminating all the middle men who steal all their money. Pretty obvious what needs to happen but will the musicians all come together and spend some money to make the best Platform possible so they can continue to afford to make quality music (without having to work a day job!). What about doing something Sir Paul McCartney so that future generations of musicians can afford to create great music? And how about you Sir Elton John? How about putting some money up to help build a brand new Platform?

    • Avatar
      BAC

      Johnny, the platform isn’t the problem. It’s all the artists and bands signing crappy contracts with major and minor labels.

  4. Avatar
    ben

    so far, no one is compelled to GIVE his art to Shittyfi for hush hush money.

    bottom line: leave it or stop whining as unhappy toddlers, we all know for years now that this company is an artist killer machine and will never pay a fair share

  5. Avatar
    Eilo

    The labels have enabled Daniel Ek long enough and should now be pressured to turn him loose and start by selling the remainder of their bootstrapped shares, as morally, it’s a conflict of interest. That’s how legitimate music artists and writers might also proceed.

    • Avatar
      tsk

      It is not just Spotify’s choice. A majority of the $$$ Spotify pays for royalties goes to label companies because that is the way the industry is set. Spotify alone cannot change this.

  6. Avatar
    Reality

    According to that website, Spotify paid 5B Euros to labels last year alone, on average labels pass on approx. 15% of the streaming royalties to the artists – per the individual artist/label agreements.

    Why are you angry at Spotify? You were protesting at the wrong offices. Spotify has made huge amounts of money for the music industry, the problem hasn’t changed in a a century – get rid of the major label model.

  7. Avatar
    the clueless march on

    lol

    “make royalties 2.5 times higher than they are now even tho you lose billions of dollars” – the clueless who don’t know anything about business.

    funny how no one asks HIGHLY profitable companies like google, amazon and apple for higher royalties.

  8. Avatar
    MrG

    Question, is that 5B you quoted paid out based on the regular stream rate or part of a negotiated deal? If you have a link please post it.

  9. Avatar
    Tom Hendricks

    The idea of penny per play, was original with my zine Musea that has led the music revolution since 1992. Note that DMN will not talk about it or it’s musicians, or their music , or music ideas.
    The original penny per play is for any creative work : musician, artists, writer, blogger, video maker, etc. etc. on any online site – where a click on that creative work earns the artist one penny.. This eliminates subscriptions and advertisers and data mining etc.
    This is just one small part of the music revolution that everyone is talking about except the music media!

    • Avatar
      Jim

      I commented below, I’ve been talking about the same thing, here.

      We’re on a very very close wavelength.

      It’s like a pre-pay cell phone plan with rollover minutes or something, or like a tracfone plan where you buy for $100 bucks or so, a year of service, 1500 minutes, 1.5 gigs and 1500 texts, or whatever the case may be.

      I like the idea of being able to buy those points (I see it as 10 or 100 points for a penny, so that you can do things that would only cost a 10th of a penny or something) anonymously with a gift card, like you can do with a phone card, buy it at Walmart, with cash, and link your new card to your new account.

      The key thing, the breakthrough, is having a easy way to pay for things without big credit card expenses for very small expenditures. That’s the thing you really want to put at the center of the whole thing. It’s something that you might want to have others use as a payment method, build it so that it could be used as a blocker on various sites who are throwing up interstitials to get you to subscribe for a dollar a month to some local news site in some locality you don’t live in. Instead of “turn off your ad blocker” interstitials or subscribe for 99 cent interstitials, it’s a simple “1 point to read” button to click.

      And let’s say Springfield Daily News online website is doing their own thing, and this core piece of software that works really well, is used on their website, and this company who makes this game changing software gets some of that money. The streaming of mp3 files, and the paying for that, is just a small part of what this could do. Like mentioned before, news articles, but really, so much. It should be a great music website. There really should be one, there really isn’t one. Myspace was pretty close to a great music website. Facebook definitely isn’t.

      A long long time ago, 23 years now (crazy) I built a Web 1.0, proto Youtube. Started in 1998. It was a pony express youtube. Videos were sent through the mail to me, and I would encode them, create realmedia .rm files, upload them, and physically create .html pages by hand for each of the bands who sent things in, and the bands that I was videotaping. A pretty good number of the bands who were on my top 10 list are now actually huge rock stars in the world of active/mainstream rock radio. So, with those resume bullets, I’d say “I’m good at this”. I did the thing 7 years before youtube, but without the technology to make it a money maker, and the acts that I was pushing forward with the thing, and the other things, were pushed forward, so, in that respect I was good at that. Streaming video site 23 years ago.

      So, I’m thinking that if my forward thinking streaming ideas 23 years ago were good and preceded big success for some bands, the more modern version of the same general area would be good. Not saying that I’m a master coder who would be able to actually code web 4.0 or whereever we are, but I can envision something pretty big that should work if there were good coders to code it and enough people behind it.

      You have 2 things that are interconnected, but separate.

      1) a very robust payments system, capable of much, the software technological centerpiece, where you’re buying points and then spending points at various places, depending on how vast the network becomes.

      If you’re giving stream4penny, which quickly becomes a powerhouse piece of selling software and the worlds best music site, the ability to make pays of points for physical product you could make a lot of money if you’re taking a tiny percent of those purchases. If a whole lot of things can be bought with paypoints, people could just dump a bunch of money in their paypoints / stream4penny account and buy things very quickly. Pretty much, not entirely, but at least often, when you buy something online, you have to check in with the credit card company. Here, you already gave us the money, you could’ve bought $1000 worth of MusicCards at a Taylor Swift or Halestorm, and enter the passwords into the computer, linking everything up, getting yourself a $1000 worth of points, or you could just use a credit card and buy $1000 worth of points. And once you’ve gotten your account stocked up with points, and things like shipping address are entered into your account, you can just click on that 100,000 points ($100) button to buy a festival ticket and it’s done. Maybe someones facebook has a lot of 10 points “click here to stream” on facebook. the robust payment/account system handles this all well. Perhaps you can check on or off “auto confirm for 100 points” “auto confirm for 1000 points” or whatever, point being, you’d want something slick for facebook and for whereever else bands can push forward their “give me money” message. Bands like to do that even when they’re not getting much money but Video premier 1000 points 10c or 2500 points 25 cents is something that bands would go to their fans and try to get.

      2) the best music site ever. Having all the things. It should obviously have streaming. If a penny seems like the right price, might have to consider issues like money that goes to the songwriter and money that goes to the label and things like that.

      I would rather work with the artist exclusively, making sure that they get enough money to pay ASCAP and BMI and whoever else they have to pay. The money gets pass from the consumer to the artist and then ascap and bmi and sesac and record labels. And this will likely mean some kind of headache.

      What Spotify did, to start at least, was to go onto The Pirate Bay (still working) and download everything that was there and then upload it on to spotify. The bands didn’t say to spotify that they wanted their stuff up there for free, spotify just grabbed it. So, the rules about who gets paid what, came from a context where spotify was basically just stealing music from the pirate bay, uploading it and giving it away. The spotify rules are such that work for the spotify situation and context. This site, stream4penny, is not getting the content off of pirate bay. They’re getting it, primarily, or perhaps entirely, from acts. An act, perhaps labels, perhaps venues, perhaps management, but I’d think that for the most part it would be bands, bands would be working hard to drive eyeballs and ears to their stream4penny content, because they get paid more, and paid for things they didn’t get paid for at all, like live streams (not entirely true they are charging for live streams now, sometimes pricing it as if it was a live concent that you actually were at). So basically, the core of this is bands and the things they want to sell. They have an album, they’d want to have that available to stream or parts of it. Songs to download, albums to download. Any type of physical that you want to sell. Tickets I think might be a big one. It seems to me that tickets might be something that bands just could be in charge of. If you look at the number of bands there are in the US, and you look at how many bands typically play in venues that are too big to have everyone just go to will call, where the band hands the venue a list, you will find that there really aren’t that many, I dunno, 500+ cap venue, 1000+ cap venue bands, and shows and there are far more less than 500 cap shows. This system could be very useful in any scenario where there is a band list at the door.

      streaming audio, that is something that I was doing on band pages 20+ years ago, I was putting up the whole album and individual songs, but, it was so long ago, and the bandwidth was so low – the 90s, dialup, and the bitrate was often 32K, it really wasn’t meant to replace the CD quality, but to give people a good sample, lower quality. Band audio pages and video pages would be just like before, but they can charge a penny a dime whatever they want by integrating with this system. “play all at or below 5000 points” play all at or below 1000 points” The streaming audio component would be key and slick, it’s own section and embedded into band pages. Same with streaming video. That’s a section, a live streaming section is another section. downloads is another section. Physical merch is another section. Could be doing fulfillment for the bands. Schedule should be big and good like the myspace schedule back in the day, or like Pollstar, ideally both the venue and the band have full schedules, and each of the venue and the band is linked in to the show page, where there either is/isn’t a link to buy the ticket to the show using points. Perhaps there’s a “buy tickets for points” section, a filtered version of the schedule list where the shows without “buy tickets for points” are filtered out.

      However it works out, a great payment platform that can do many things and a great music website that can do many things.

      • Avatar
        Tom Hendricks

        Looks like we both are thinking along similar lines, with lots of fun and different details. Perhaps the easiest way is to set up a single site, customer makes a single purchase of say ten dollars and then clicks on creative content for a penny a play for one thousand clicks. The artist gets the penny but must also pay the site a percentage to maintain and expand the site. The payment then is crystal clear, x has 100 clicks or one dollar’ minus a maintenance fee and perhaps a licensing fee if required.
        Later you could charge more for a complete movie or novel or tv show or you could click on sections of larger works at the penny per play.

  10. Avatar
    Bunsen

    I wish a competing service (such as Napster) would commit to a penny per stream payout and then musicians at every level would help inform their consumers to embrace it.

    • Paul Resnikoff
      Paul Resnikoff

      Interesting you say that. I haven’t seen a penny-per-play move, but Apple Music pays far better than Spotify, and SoundCloud just moved to implement direct fan-to-artist streaming payments. So there’s some competition on this front.

  11. Avatar
    Tom Hendricks

    This from my zine Musea blog 2020 on the latest ideas of pennies for play:

    Pennies for Play (fair compensation for creative content)
    This is about the idea of PENNIES FOR PLAY.

    PENNIES FOR PLAY . How does it work to give all musician fair streaming rates?
    First no company taking a cut as large as Spotify, Pandora, iTunes, etc. second, no ads needed ever, so no data mining mess.

    Next you pay like a credit card. You pay for $10 dollars worth of clicks, then access any artistic content under the system, music, art,writing, videos , film, news, school classes, blogs etc. Doesn’t have to limit to music.
    The company that collects the money, pays out to the musician when he reaches say $50. With a check. it’s pay per view but on a very small scale. There are small fees for processing, not large chunks for company profits.

    Let’s say artists got together and decided to do this on their own, even simpler.
    For a fee you post your song. Then music listener buys say an amount of $10 . When he clicks on a song he pays a penny. The end of the month each artist gets a penny for every click he had. He again probably has to reach an amount of $50 or so before they send a check or you would have to send out checks for pennies.

    The only major costs are granting credits to customers, tallying clicks, and paying the musician.

    Positives include , no big company owned, no ads ever, no data mining, no monthly subscription fees ever, no big costs for customer,or musician, very low bureaucracy, and all musicians on a fair playing field, so quality counts more than promotion money. Those are a lot of pluses!!!
    Thoughts?

    • Avatar
      Jim

      You’re exactly right.

      I’ve been typing something similar here for years.

      As I see it, you’re buying points, and points can buy a number of different things.

      What you’re talking about is the core, bare bones version of it.

      You could buy tickets from these points, you could buy all types of merch. You could also buy gift cards, if you wanted additional privacy.

      But we’re largely in agreement on the key innovation which is pretty much necessary – pre pay, putting money on your account, and money (or points) are deducted as you consume the thing. The thing could be a stream, but it could be a number of different things. And you can vary the cost of the thing over time. Perhaps the video premiere might get you more than a penny.

      If it was worth her while, monetarily, Taylor Swift might monetize a live stream of herself going about her day. There is a lot of internet content that doesn’t exist because it’s not economically reasonable to do so, but if you charge, maybe, a penny a minute of a live stream, decent money would start to add up.

      • Avatar
        Tom Hendricks

        Yes! Well said! You are now oars of this positive change in music.

        • Avatar
          Tom Hendricks

          You are Part of this positive change!
          Auto typo!

  12. Avatar
    Tommy

    80% of fans will not pay for music . They all think musicians should work for free. Screw them all I say. Stop recording new music for these Aholes who created this huge mess by stealing music in the first place. Take all your music off YouTube is a good start!

  13. Avatar
    Jim

    “the sources of Spotify’s income in addition to subscriptions and ads, payola schemes for playlist and algorithm prioritization, or the terms of their contracts with major labels.”

    This is interesting right here.

    I, too, would like to know much more about any “payola schemes for playlist and algorithm prioritation” if there are any, also “the terms of their contracts with major labels”. Also the same thing with youtube.

    So, Spotify, bad, Youtube, bad. But on the other hand, why don’t these artists take their music to the other services that do pay a penny a stream? Is that just not possible at this point? There’s nothing you can do to take your music off of Youtube and Spotify, put your music on the services that pay you what you want?

    If enough acts said “we’re all going to put all of our music on this other site, that pays us what we want, and we’re going to take everything of ours down from youtube and spotify, except for our singles, maybe” that would hurt Spotify and Youtube.

  14. Avatar
    Keith

    Spotify is a crappy platform. Inependant artists will receive between 80-100% of their royalties. The pay per stream works out to about .0038 like the article states. If you are signed to a record lable good luck to you. Spotify’s playlist system is corrupt thier stream security system is corrupt as they will arbitrarily remove streams with no justification or informatio…your stream count just goes down. They say that it is against their terms of service to pay 3rd parties for playlist placement but it runs rampant. How do they think all these playlists pop up? They say they combat bot streams but they only sort of do…soundcloud and apple on the other hand have great bot detection and will not pay you for bot streams. They also dont pay artists for their actual fanbase. You get paid by market share which is crazy for small indie artists. Soundcloud is the first to pay for actual fans streams. As far as overall pay goes Napster pays extremely well followed by Tidal and maybe apple next.

    • Avatar
      Sam

      Waah Waaah Waaaah! Complainers love to point fingers, but rarely do anything about it. Build your own platform if you think it’s so easy.

  15. Avatar
    Anon

    A penny per play model won’t work simply because of the fraud element. Think of how awful the UX would be if you had to complete a Captcha after every song or two. Without it, think of how many bots would be out there driving up royalties for artists that could afford to hire such a service. A point system could mitigate this, but it over complicates a relatively basic service. If Spotify customers have to think twice about listening to a song or not because of their point balance, it takes the fun out of discovering new music, which is one of the biggest benefits of the big platforms like Spotify. I’m sure Spotify could spare some more of their margin for artists, but I think the big takeaway is that artists sign bad deals and then blame spotify.

    To me, the future of the industry are the aggregator services that charge artists relatively small fees, and in some cases also offer marketing tools for artists. Recording an album is not as expensive as it used to be. Artists who make good music and market themselves well can be successful without needing a label. They may not get access to the advances that major labels can provide, but they can make much larger per stream rates if they cut out the labels.