Like others in this thread, I naively assumed this was how Spotify already worked, and wondered why the payouts tended to be so low. Now it makes sense, and puts the numbers here (http://www.spotifyartists.com/spotify-explained/) in context.
Realistically, it would be both hard to change structurally and a hard sell for major labels to give up what is effectively a subsidy of popular music by indie fans. Let’s take the author’s thought experiment to its logical extreme:
Imagine “Terry” listened to just one obscure band for the entire month of February. $7 of his $10 subscription fee is going to artists, but let’s say he’s also the only fan of that band on Spotify. So that band has effectively zero percent of Spotify’s plays for the month, meaning that the band gets effectively zero percent of Spotify’s monthly revenue.
Terry thinks $7 went to his favorite band, but it actually got divided up among February’s top 40, with only a fraction of a fraction of a cent going to the band!
That's an interesting problem — this is only true if indie fans listen to less music than pop fans.
Imagine there are 10 users, 9 of whom only listen to pop, one only listens to indy, all of whom pay 10$. Now consider two scenarios: A. everybody listens to 100 tracks per month, or B. pop listeners stream 110 tracks per month, and the indy listener streams 10 track per month
Scenario A:
9 pop * 100 tracks = 900 tracks streamed
1 indy * 100 tracks = 100 tracks streamed
total 1000 tracks streamed
total to pop artists = 900/1000 * 100$ = 90$
total to indy artists = 100/1000 * 100$ = 10$
Scenario B:
9 pop * 110 tracks = 990 tracks streamed
1 indy * 10 tracks = 10 tracks streamed
total 1000 tracks streamed
total to pop artists = 990/1000 * 100$ = 99$
total to indy artists = 10/1000 * 100$ = 1$
The argument remains that you'd expect your money to go to the artists you listen to, but the payment arrangements don't necessarily benefit mainstream artists over indies, unless indie fans listen to less music than mainstream music fans.
EDIT: Now that I think of it, it probably benefits pop music over metal and progressive rock (or, worse still, classical music), because pop tends towards short songs, so more tracks played over the same period of time.
>unless indie fans listen to less music than mainstream music fans
That point is explicitly addressed in the post. Mainstream users listen more because mainstream users are gyms etc. that just let the top 40 run in shuffle 24/7.
One could also mentioned some sort of tiered payout scheme or a non-linear minimum after a certain amount of plays plus a percentage above that. Likely something that Spotify will experiment with over the years.
That would be an interesting spotify hack. Start recording 2 minute tracks. Would be a similar situation to 50s and 60s radio.
About your point with indie artists vs top 40- it seems to me to be a problem with fragmentation. Top 40 has much more overlap between listeners and casual music fans vs a much more curated play list for the indie music lover. So out of 100 casual music/top 40 fans the playlist is more or less the same. However two indie rock fans have a higher probability of having fewer tracks overlap in their playlist.
Right, the key numbers that you've implied are that Scenario A pays out the same whether you use the current artist payment scheme or the one suggested in the post.
It becomes clear that the scheme suggested in the post doesn't make sense either... so I accidentally left "Everything is Awesome" on repeat all night and now this month indie band X gets 1c from me instead of $5, even though I still listened to their album 20 times like usual?
But there's an impedance mismatch here. The copyright holders are being paid per-play but the users are paying all-you-can-eat. That's always going to be an imbalance. The only way to "fix" that would be to charge "Terry" a cent per listen like a jukebox.
This is a bit like being a vegetarian at a buffet and complaining about your admission fee paying for steak which all those other people are eating. It's true, but you came to the buffet because it was much cheaper than a la carte with better service.
That’s not how Spotify works, though. According to the link above:
Every time somebody listens to a song on Spotify it generates payments, but Spotify does not calculate royalties based upon a fixed “per play” rate.
Unless there are some secret deals being struck for fixed per-stream royalties that Spotify isn’t admitting to publicly, every rightsholder gets a percentage of monthly revenue. Which sounds fair, until you consider long-tail producers and consumers, for whom the marketplace is distorted by this model.
Your buffet analogy isn’t really apt here because streams aren’t limited resources, and they all have the same effective wholesale cost to Spotify (again, assuming no secret deals).
So I prefer non-lyrical trip-hop. I wouldn't know I have that preference without discovering it through Spotify. You're telling me I should now start buying those albums on iTunes if I want to actually vector money toward those artists? But I can get most of them for almost free on Amazon Prime. So why not just send money to the artist directly?
I listen to Spotify and Pandora almost exclusively. Mainly Spotify. I probably listened to 300 tracks of Emancipator a month on Spotify. At 0.00786 per play, that works out to 2.85. For the last 2 years: 2.85 * 24. That's $56.59. I seriously doubt I would have spent that much on iTunes. In fact, from their site, I can only spend $46 on their music.
In the long run, it seems to me that Emancipator is winning on Spotify, even if I overestimated by a factor of 3 and only listen to 100 tracks a month. Presumably, I will be listening to Emancipator for a long time.
> But there's an impedance mismatch here. The copyright holders are being paid per-play but the users are paying all-you-can-eat. That's always going to be an imbalance. The only way to "fix" that would be to charge "Terry" a cent per listen like a jukebox.
Or split Terry's money between the artists they actually listen to.
There's another option, which is to calculate the "per play" rate differently for each listener. If one user plays 300 tracks per month (one 10-track album per day), and another user plays music 24/7 (the gyms that have been mentioned before), why should the per-play fee be the same in both cases? If this was a pay-per-play model that would be fine, but this is all-you-can-eat streaming. Users that listen to a disproportionately high number of songs should not dictate which artists get money. That awards those users far more than their normal $10/mo purchasing power.
This scheme is similar to the proposal to calculate artist pay independently for each user, but I think it's a little simpler, since you still only calculate the artist pay out of the global pot, you're just weighing each play by the user's total monthly plays. And you can put a minimum on it too, so the per-play weighting doesn't take effect until the user listens to more than a given number of tracks per month (this way the user who has a subscription but just occasionally listens to a song here and there isn't paying the artist $1 per play, which is to say, until you reach a certain point, listening to other songs won't "devalue" your previous tracks).
This is the same problem that any unlimited service has to deal with. Why does a user who downloads 10GB of data per month on their cable modem have to pay the same price as a user who downloads 300GB? They're subsidizing his usage! Why should I have to pay the same price as everyone else for Netflix when I really only ever watch House of Cards?
The reason Spotify specifically works this way is because any other reimbursement model is untenable in the streaming world. Rev share works "off the top" because the overhead of managing reimbursement (specifically the audit overhead) at the subscriber level would wipe away too much margin. Pandora had an overly complicated revenue sharing scheme and it nearly bankrupted the company until they moved to a model closer to Spotify's.
But more specifically, revenue share works this way because that's how it's defined in the contracts that both the major label and the indie label signed. If the indie labels thought it was a terrible idea, they wouldn't have signed it. Most indie artists anymore simply expect to make next to nothing on distribution and playback of their music: they make their money on the live shows.
I always thought bands make their money on tour. live shows & merch; and the label makes more money from CD & song sells. I guess there is a new type of indie. Those that don't go on tour much and want money?
I'm a bit confused by the reasoning here. It's clear that light users are subsidizing heavy users, but why are we assuming that light users prefer indie bands and heavy users prefer pop music?
I think we're assuming that the many users who listen to indie bands spread their listening among many different bands (each use has a difference preference) whereas users who listen to top 40 all listen to the same artists.
There is also the idea that some "users" are businesses playing background music all day, and that they are more likely to all choose the same pop songs (which the most people are familiar with) and to play them all day everyday. Unlike a normal user who typically listens to a wider variety and for fewer hours a day.
> why are we assuming that light users prefer indie bands and heavy users prefer pop music?
The article explained this - because heavy users are playing music 24/7 at gyms, etc., and never play the smaller groups or genres that only some individuals like (and would like to support).
It's not that -- it's all about the impact of a larger denominator. Individually, the pro-rata share of one user's $9/mo for indie bands (say 1/100 plays = $0.09) will be larger than the 1/2,000,000 (worth $0.0000005) plays in the aggregate.
So basically, my dad, who listens to 60s and 70s music all day on Spotify is mostly compensating top-40 stuff. In the olden days of FM, his listening habits were paid for by the sponsors of the oldies station.
This is how a large chunk of music royalty distribution works. For example, fees collected from restaurants, shops and other public places basically ends up in a large bucket.
Later the funds are being distributed after "market share", which means most of it will be sent to Taylor Swift or the Michael Jackson estate, even if the restaurant played nothing but epic fusion mathcore.
I'm guessing that the "big five" asked for a model similar to this when Spotify started, because it was a model they understood.
> Realistically, it would be both hard to change structurally
Perhaps there is a simpler solution. Here's one idea: for accounting purposes, only count a limited number of plays per month, per user. It can be the first 100 plays, or if you want to prevent any biasing, it can be a random sample of 100 of each user's plays.
A random sampling can even be audited to prove that it was fair.
I don't think sampling's even necessary. Presumably Spotify log every play. If they pushed their logs into BigQuery or something similar, it would be trivial to calculate the revenue breakdown the way the OP describes. 'Big data' is here, and it works. With 100 million users at 1000 tracks per month, we're 'only' talking about 100 billion or so rows to process each month.
Why do we consider that the places who play 24/7 of pop music are biasing the system? If it were 1 cent per play, and Mickael Jackson was played 100 times during the day in one shop... shouldn't they get $1?
Well put. I'd like to further the notion that major labels / legacy businesses do their best to eat all the pie and only leave crumbs for the rest of the community. Put in a metaphor, when gorillas fight, nobody cares about the ants until enough of them start stinging together. Not perfect, but hopefully you get the point.
My source is the following article over at Complete Music Update, which elaborates on the tactics employed by YouTube in their goal of competing with Spotify:
Indeed, a casual listener like myself is basically paying money to the top artists while not listening which is a bit absurd. It is a problem that should be possible to at least partly resolve by calculating artist market share without a bias towards users that have Shopify open all the time. Incidentally, I blogged about this some time ago: https://davidlebech.com/thoughtflow/spotify-royalties/
So, under your model, Terry's band gets $7. Total. It's not even worth bothering to get involved with spotify if you only get one single cheap lunch out of it.
As it currently stands, Terry's band also gets a small amount of money from people who aren't listening to it, which is something you didn't include in your argument. There's really not going to be much difference for the tiny artists, however you carve it up. $7 is 'effectively zero percent of Spotify's monthly revenue' as well.
I believe this is how radio works too; my friend had some records of his played on the radio and got together a list of when they were, date time and all and approached the BBC about getting payments; based on the same reasoning/calculations as above he got a big fat £0.00.
It's easier to understand if you remember the major labels got 18% of spotify for their licensing deal. A payment scheme that preferentially paid major labels would then be stunning...
His proposition may sound simple to him, but it really isn't.
It becomes very hard to ensure you are being paid properly in his proposed scenario, I would personally expect it would create even more controversy, or extremely long payment records every month for artists.
For instance say we have 500 paid users. Lets call them user1 through user500. Each user listens to the same number of songs a month as the value following the word user in their name. Then we have 500 different rates at which artists are paid for their song playing ranging from the entire monthly fee to 1/500th the monthly fee. Therefore providing a full accounting of each of those rates would be necessary for an artist to understand why they got paid more the month they had a single play than the month they had 400 plays.
To be fair assuming the minimum song length on Spotify is 30 seconds this record provided to artists would have a max length of (31 * 24 * 60 * 2)+1 = 89281 items for premium users plus items for add supported users if they did not overlap exactly in rate. Assuming all Premium users paid the same rate, which is not the case.
Edit: I ignored the 0 listen use case, as well as spotify's 30% cut to simplify an already complicated 'simple proposal'. I also forgot to account for daylight savings time in which a day can have 25 hours.
It might not be complicated, but it's cumbersome as hell: "Hey, Rhianna, here's your 65-million line payment breakdown for the week! I know it used to just be one simple intuitive calculation, but isn't this great!?"
> 99% of artists would prefer this model, even if it meant more complex accounting.
What are you basing that on?
Artists paid more might not complain, and those paid less (likely the more popular artists) would complain. Then there are new artists, growing artists, and people who would just be annoyed by the complexity.
The theory is simple, but the implementation is a complete nightmare.
I never said it was a reason to. I simply said this method is anything but simple, as the author called it. Your method would require even more potential lines on the monthly report than the nearly identical method I described above. As yours would require a per user line, even though many of them would have duplicate rates.
Keep in mind things would still need to be split per song also, as rights holders vary per song.
Do you really think giving every artist that many potential lines of accounting every month can be called simple?
> Complex accounting isn't a good reason to pay artists unfairly.
But is it Spotify that pays the artists unfairly? AFAIK, Spotify pays to the record labels, and then it is up to the record label, how they distribute the money to the artists? (Also some of the money, the labels keep them selves, and do not distribute to artists.)
This is a very good point. I'm sure that Spotify could encode the rules and accurately calculate what each artists was owed under such a model, but it would be far more complicated to communicate to people.
There are already a bunch of assumptions in the payment model, do you pay per track? (In which case, the artists could game it by sticking in 30 second intro tracks and things like that). Do you pay per minute? (In which case, artists can increase their revenue by putting in dead time in "bonus tracks").
It would be an interesting experiment for Spotify to calculate what the payouts would be given the proposed scheme, and compare the differences.
Anecdotally, the people I have met that work at Spotify are a lot more sympathetic to the indie artist and non-Top 40 music than the average person listening to Spotify. There is a reason they keep building ways to discover non-Top 40 music. I'm sure they are interested in making things better for these types of artists.
It gets even more complex if you take the fairness he's suggesting to it's logical conclusion. The system proposed still values playing each song equally, but shorter songs comprise less of a user's streaming activity.
So the per play rate should be determined by taking 70% of the user's subscription, dividing that by the number of seconds of streaming that user streamed that month and then multiplying that by the number of seconds that user streamed the artist's song (since songs can be stopped mid-song).
Regardless of how they bill, it's likely that artists will have to, for the most part, just trust Spotify. There can, and should, be independent audits of the billing code. It seems an analogous situation to what the NGC does around computerized gaming systems. Users have to trust that the system is fair, but the NGC is very thorough about checking that code complies with applicable laws.
Right now the payment is easy to understand why you were paid as you were. Listens * payment * .7 = my check.
If the proposal were followed, all transparency is lost.
"Extremely long payment records" is quite an under-statement. Imagine sending a popular artist a 27-million line breakdown (you'd need a LINE PER LISTEN, and what % of a listeners listens that was). That's absurd, and STILL less transparent.
I understand the problem, but this is actually a pretty terrible solution. Future complexities build on existing complexity. I can't even imagine the monstrous data, business, and programming nightmares that would arise from breaking payment down in the proposed manner.
No, but I believe humanity in general wants things to be beneficial to them AND simple. Hell most Americans (being one myself) don't just 'want' they feel entitled to. Because of that, I believe a huge number of artists would not bother to make sense of monthly records which could reach 1800 pages, and would complain even though they were presented with such records explaining why their 50000 plays this month were less valuable than their 3 plays the prior month.
I am not saying the Spotify method should not be changed just showing that the proposal at hand should not be called 'simple'.
Another thing to note (although it represents a pretty useless edge case) is that given a user who spends $10 a month on Premium if they were to listen to 1400 songs in a single month (10/(.005/.7)) bands who he is the only person who listens to and he only listens to once would receive nothing, due to accounting (and the ieee) using round to even, and 0 being the closest even penny.
I realize this the amount they are paying now per song is not too far above the $0.005 amount which rounds to 0, and therefore given changes in the market could potentially drop to an amount which would round to 0 for single play also. I also get that a single penny isn't what anyone is going to be upset about. Also that few artists will have a single play. I just find the low number of plays (1400 in a month isn't really that many) required by a person for an artist to potentially not get paid interesting.
Uber and Lyft don't provide per-ride accounting for rides for this reason. I think spotify could get away with "N plays - total $X" in this case, especially since user privacy is at stake. Also the %30 cut is extremely easy to model -- a user that pays $10 with a 30% cut is like a user that pays $7 without one.
How is this any different than say a phone bill format? that shows totals such as 'minutes' $XX, 'data' $XX' and then you can optionally view the entire logs
Please provide an example. As the examples I have seen of artists showing their Spotify payments do not support this assertion.
Here is a link to one such example I have seen which has each song paid at the same amount per play. This has made the number of items on the payment record to simply be the number of different songs which were played by that artist. http://www.digitalmusicnews.com/wp-content/uploads/2015/02/B...
Vulfpeck is also the band behind Sleepify[1], the album of ten silent 30s songs which fans looped on Spotify while they slept. Vulfpeck earned $20k as a result and used it to organize a tour.
Agreed that having fans play your music on mute would be just as - if not more - effective, and would work without creating a prime target for banning. But I think in this case it made for a very effective "statement", even if it could've been a more efficient hack.
Vulfpeck is also the hottest funk band that currently rocks this planet. But as it seems, I should rather purchase their albums from Bandcamp than streaming them via Spotify.
Vulfpeck is also also the band behind four really terrific EPs in as many years, and you should absolutely give them a listen[1], although ideally not on Spotify.
1) I think Ek is right - there isn't much money in the consumption of music. I do believe music is extremely effective at getting people's attention, but outside of that, it's value is much lower than we currently give it credit for.
2) I'm reminded of the TED Talk by Clay Shirky on institutions vs collaboration[0] where he explains power law distribution (watch from 6:01 onward specifically) with regard to photos of Iraq on Flickr. He says (paraphrased) "that figure at the bottom at 10 photos per photographer is a lie. it doesn't matter...the top 10% of the most prolific photographers account for almost 75% of the photos. 80% of the contributors are below the average amount of contributions" This is Spotify in a nutshell. People wan't access to all of the rap music in the world even if they are only going to actually consume 20% of it, so that in the rare chance they listen to one song of the other 80% that it's still made available. In other words, the overall utility of Spotify's system is only valid when it's whole, but the individuals who are necessary for it to be whole are unevenly distributed (in this case number of plays). So the argument then becomes who needs who more?
Spotify has been villified since the beginning, and I certainly want a more fair system to exist for artists.
That said, has there EVER been a business model in the US that was profitable for artists? I don't think there was ever money in music for artists from album sales.
The cost of distributing and promoting music is just more expensive than making an album.
Spotify has me and all I know spending 9x12=108 per year on just music. If anyone expected any of us to ever spend more than this, they are very wrong. Even if we go back to the golden days of CD sales, I doubt the average consumer spent more than this, but I might be terribly wrong. I'm sure I wouldn't.
Agreed, I finally admitted last year that I was tired of maintaining my own MP3 library and that $9/mo was a fair enough price to listen to whomever I want.
But ya, that sure seems like that should be fair enough and profitable enough for the artists I listen to, so if Spotify isn't doing a good job of making sure that is the case then I hope someone else arrives on the scene who does. After all, switching costs are now incredibly low for us as consumers and that is where I want my money going.
The average consumer only spends $48 on recorded music per year.[0] At $100+ per year, services like Spotify are much more expensive for all but the most prolific music collector.
In my experience, while Spotify pays little outright, it is one of the few services that genuinely provides exposure in a beneficial way, one that may actually correlate to iTunes sales. That mentioned, Spotify deserves credit for paying anything, rather than sitting around and saying that exposure itself is a tangible payment form (e.g. McDonalds & SXSW). As Spotify expands, I can genuinely see new nations discovering my music, and that's quite interesting and appreciated.
I think it's important to remember that I'm speaking as an "unsigned" and independent artist. My income is not noteworthy from digital sales, and frankly does not even recoup the amount that I spend on distribution. However, unlike the majority of "signed" artists, I have extensive rights management avenues, very little overhead, and if I ever do make a lot of money through digital channels, it will not subsidize a system that I utterly dislike on practical and ethical grounds (ex: no health insurance for signed artists). YMMV.
This. I signed up for spotify for the convinience and it is far too expensive, but it did help me actually find artists that I cared to hear.
However they also have some pretty giant omissions and even for the top tier track they are very hostile to their users, which means I am looking for something better.
> That mentioned, Spotify deserves credit for paying anything, rather than sitting around and saying that exposure itself is a tangible payment form (e.g. McDonalds & SXSW).
> That said, has there EVER been a business model in the US that was profitable for artists?
As far as I know, the various music purchasing services (as opposed to radio or rental services) directly pay the artists a fraction of each purchase of their music.
And if you're sufficiently popular, you can also sell directly to decrease the overhead.
In a completely different direction, there's also Patreon and other patronage-model sites.
Is it actually the case that signing record contracts was always a bad deal for artists? I was under the impression that they reduced risk for artists who could then use money from the contract as a more stable source of income to pay for, say, childcare expenses.
No, whatever money is paid up front for the expenses (recording, shooting music video, child care while doing such things) must be repaid to the label. If you don't "recoup" enough through album sales, you have to pay them back out of touring...and on and on and on...Basically, just have a look at the following article by Steve Albini:
That is my understanding as well; in particular, a lot of popular mythologies about artists "recouping" and being stiffed on royalties seem to be just that: mythological.
No, of course not. Bear in mind that most bands/artists had a manager, who took care of the business side and who earned a percentage of the payout from labels, concert promoters, etc., and was thus incentivized to get the best deal on their behalf.
Sure, touring and sponsorships are extraordinarily profitable for artists. Those able to attract an audience or fill venues.
The Eagles made $100 million last year; Springsteen $81 million; Bon Jovi $81 million; Calvin Harris $66 million; Toby Keith $65m; Taylor Swift $64m; Bruno Mars $60m; Pink $52m; Roger Waters $46m; ... Muse $34m, Gaga $30m, this list just keeps going.
Michael Buble made $1+ million per tour date in 2014 (making $51 million overall).
From the info I can find, there are at least 100 individual artists making over $5 million per year.
Yes, but that represents a very small minority of artists. Most lose a lot of money or break even if they're lucky. Check out this article by Pomplamoose, who are a relatively successful band.
Artists are frustrated. And lite listeners should be too.
Artists who don’t like it or aren’t getting enough value — either through payouts or marketing - should simply opt out of the system (if they can; in many cases control might rest with their record label or another rights holder). Some artists never opted in (the last time I checked, this included AC/DC) or withdrew part or all of their collections (Taylor Swift).
I’ve watched the Spotify model appear in the ebooks marketplace, through services such as Oyster and Scribd. They target readers, and ultimately seek to ensure large payouts to investors, platform owners, and large publishing partners. Authors have largely been treated as an afterthought. Kindle Unlimited is even worse, demanding exclusivity and lowering sales of many authors.(1)
I believe the time has come for recording artists, filmmakers, authors, and other media producers to band together to fight unfair or predatory platform practices. Subscription services may be great for consumers, but they don’t pay enough to the people who are creating the products that draw audiences in the first place.
I suspect that the paying users are more likely to listen to more obscure indie artists, simply based on the people I know who pay for premium. Anyone interested in listening to only top 40 likely won't see the value in paying $9.99 a month for it. Thus the less popular artists are bringing in the revenue but the big artists keep more money.
That being said, there's no proof of this without data to back it up.
If I were to speculate, I would expect the number of times a song is played most likely to adhere to a power law and therefor this average number of streams is not an ideal measure.
And yes, I'd would expect the tail to be fragmented. Lots of people listening to but a small and mutual exclusive set of bands. Next to the odd main stream one.
So perhaps it is not really a question of light users sponsoring heavy ones, but more the banality of average taste.
The proposition in the article only works because users pay a fixed monthly rate for unlimited listening, rather than a charge that is metered based on how much they stream.
Jack Stratton's proposition is wagered on the proposition that the users who listen to his tracks are ones who don't listen to very much other stuff. His listeners pay $9.99 per months, but don't stream very much, and a big chunk of what they do stream is Stratton's material. He doesn't want most of that $9.99 going to those other damn artists, who are just random junk whose material isn't sought out by anyone, but streamed randomly in Yoga classes, elevators, supermarkets or wherever.
If there is some user who paid $9.99, 70% of which is $7 going to the artists, and half of what that user listened to was Stratton's tracks, Stratton wants $3.50 for that month, for that user alone. Add to that other similar users, and extrapolate to twelve months and you have some non-negligible cash at the end of the year: better than a fraction of a cent.
Problem is, no matter how you slice the pie, it is a zero-sum game. There is so much revenue and so many artists.
Most artists, likely including Stratton, will lose this zero-sum game no matter how the pie is carved.
There is little difference between 99% of the artists getting peanuts, and 100% of the artists getting peanuts. The proposed rule would just create a tiny group which gets quite a lot more revenue than the rest, at the cost of slightly impoverishing every member of the remaining group, who then gets a slightly smaller fraction of a cent.
It's actually a good rule from Spotify's POV because this tiny group would represent "success stories" which Spotify could use for promotion.
On a different topic, this kind of reminds me of the whiners who complain about online dating sites. "I'm obviously a more qualified bachelor than most of the losers who make profiles on this site, so if only the implementation of the site were based on somewhat different rules, then I would easily get replies from the women I'm interested in. I might have found a girlfriend long ago if it weren't for this damn dating site. Waaaah ... sniff!"
>The proposed rule would just create a tiny group which gets quite a lot more revenue than the rest, at the cost of slightly impoverishing every member of the remaining group, who then gets a slightly smaller fraction of a cent.
Nope, this rule would do the opposite. Currently, only a very small fraction are getting any "real" money at all. This would cut out some chunk of their revenue and distribute it slightly more evenly across all the artists. This is a more "fair for everyone" approach, in the sense that socialism is more "fair for everyone".
(Personally I like the idea a lot, but it sucks for the artists currently making a killing on Spotify. Perhaps for big labels as well, though since they have a ton of small artists typically it might be near neutral for them)
3.5$ per user(!, or should I say a fan ) is significantly more than just negligible compared with fractions of a cent for every user.
It is also more correct, your subscription is distributed to artists whose music you actually listened to. It repeat listens are accounted for, then it would be even more fair, since you usually listen more to your favorite artists.
Currently the distribution just isn't correct. This is probably because of technical reasons.
In the sense that it is a fixed income situation, where the question of how the income is divided does not make everyone richer as a group. If you change the rules for dividing the spoils, those who get more income do so because someone else is getting less. This is consistent with the definition of "zero-sum game".
> that they are paid their fair share of the cut?
There is no unique definition of "fair share" here. It is not inherently "fair" that if some subscriber paid $10 for a month, and forgot all about the service and ended up listening to only one song that month, that some artist should get $7 for that. It's not "unfair", either.
> You just pulled those numbers out of your ass.
That is true, and if you would prefer the numbers out of your ass, then you do the pulling; I'm not going there, sorry. Ass numbers for the sake of example is all we are going to get here, though.
Readit News
Realistically, it would be both hard to change structurally and a hard sell for major labels to give up what is effectively a subsidy of popular music by indie fans. Let’s take the author’s thought experiment to its logical extreme:
Imagine “Terry” listened to just one obscure band for the entire month of February. $7 of his $10 subscription fee is going to artists, but let’s say he’s also the only fan of that band on Spotify. So that band has effectively zero percent of Spotify’s plays for the month, meaning that the band gets effectively zero percent of Spotify’s monthly revenue.
Terry thinks $7 went to his favorite band, but it actually got divided up among February’s top 40, with only a fraction of a fraction of a cent going to the band!
That's an interesting problem — this is only true if indie fans listen to less music than pop fans.
Imagine there are 10 users, 9 of whom only listen to pop, one only listens to indy, all of whom pay 10$. Now consider two scenarios: A. everybody listens to 100 tracks per month, or B. pop listeners stream 110 tracks per month, and the indy listener streams 10 track per month
Scenario A:
Scenario B: The argument remains that you'd expect your money to go to the artists you listen to, but the payment arrangements don't necessarily benefit mainstream artists over indies, unless indie fans listen to less music than mainstream music fans.EDIT: Now that I think of it, it probably benefits pop music over metal and progressive rock (or, worse still, classical music), because pop tends towards short songs, so more tracks played over the same period of time.
That point is explicitly addressed in the post. Mainstream users listen more because mainstream users are gyms etc. that just let the top 40 run in shuffle 24/7.
One could also mentioned some sort of tiered payout scheme or a non-linear minimum after a certain amount of plays plus a percentage above that. Likely something that Spotify will experiment with over the years.
About your point with indie artists vs top 40- it seems to me to be a problem with fragmentation. Top 40 has much more overlap between listeners and casual music fans vs a much more curated play list for the indie music lover. So out of 100 casual music/top 40 fans the playlist is more or less the same. However two indie rock fans have a higher probability of having fewer tracks overlap in their playlist.
It becomes clear that the scheme suggested in the post doesn't make sense either... so I accidentally left "Everything is Awesome" on repeat all night and now this month indie band X gets 1c from me instead of $5, even though I still listened to their album 20 times like usual?
This is a bit like being a vegetarian at a buffet and complaining about your admission fee paying for steak which all those other people are eating. It's true, but you came to the buffet because it was much cheaper than a la carte with better service.
Your buffet analogy isn’t really apt here because streams aren’t limited resources, and they all have the same effective wholesale cost to Spotify (again, assuming no secret deals).
I listen to Spotify and Pandora almost exclusively. Mainly Spotify. I probably listened to 300 tracks of Emancipator a month on Spotify. At 0.00786 per play, that works out to 2.85. For the last 2 years: 2.85 * 24. That's $56.59. I seriously doubt I would have spent that much on iTunes. In fact, from their site, I can only spend $46 on their music.
http://emancipator.shop.redstarmerch.com/Dept.aspx?cp=69283_...
In the long run, it seems to me that Emancipator is winning on Spotify, even if I overestimated by a factor of 3 and only listen to 100 tracks a month. Presumably, I will be listening to Emancipator for a long time.
Or split Terry's money between the artists they actually listen to.
This scheme is similar to the proposal to calculate artist pay independently for each user, but I think it's a little simpler, since you still only calculate the artist pay out of the global pot, you're just weighing each play by the user's total monthly plays. And you can put a minimum on it too, so the per-play weighting doesn't take effect until the user listens to more than a given number of tracks per month (this way the user who has a subscription but just occasionally listens to a song here and there isn't paying the artist $1 per play, which is to say, until you reach a certain point, listening to other songs won't "devalue" your previous tracks).
The reason Spotify specifically works this way is because any other reimbursement model is untenable in the streaming world. Rev share works "off the top" because the overhead of managing reimbursement (specifically the audit overhead) at the subscriber level would wipe away too much margin. Pandora had an overly complicated revenue sharing scheme and it nearly bankrupted the company until they moved to a model closer to Spotify's.
But more specifically, revenue share works this way because that's how it's defined in the contracts that both the major label and the indie label signed. If the indie labels thought it was a terrible idea, they wouldn't have signed it. Most indie artists anymore simply expect to make next to nothing on distribution and playback of their music: they make their money on the live shows.
There is also the idea that some "users" are businesses playing background music all day, and that they are more likely to all choose the same pop songs (which the most people are familiar with) and to play them all day everyday. Unlike a normal user who typically listens to a wider variety and for fewer hours a day.
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The article explained this - because heavy users are playing music 24/7 at gyms, etc., and never play the smaller groups or genres that only some individuals like (and would like to support).
So basically, my dad, who listens to 60s and 70s music all day on Spotify is mostly compensating top-40 stuff. In the olden days of FM, his listening habits were paid for by the sponsors of the oldies station.
Later the funds are being distributed after "market share", which means most of it will be sent to Taylor Swift or the Michael Jackson estate, even if the restaurant played nothing but epic fusion mathcore.
I'm guessing that the "big five" asked for a model similar to this when Spotify started, because it was a model they understood.
Perhaps there is a simpler solution. Here's one idea: for accounting purposes, only count a limited number of plays per month, per user. It can be the first 100 plays, or if you want to prevent any biasing, it can be a random sample of 100 of each user's plays.
A random sampling can even be audited to prove that it was fair.
My source is the following article over at Complete Music Update, which elaborates on the tactics employed by YouTube in their goal of competing with Spotify:
http://www.completemusicupdate.com/article/independent-label...
As it currently stands, Terry's band also gets a small amount of money from people who aren't listening to it, which is something you didn't include in your argument. There's really not going to be much difference for the tiny artists, however you carve it up. $7 is 'effectively zero percent of Spotify's monthly revenue' as well.
http://help.grooveshark.com/customer/portal/articles/669416-...
It becomes very hard to ensure you are being paid properly in his proposed scenario, I would personally expect it would create even more controversy, or extremely long payment records every month for artists.
For instance say we have 500 paid users. Lets call them user1 through user500. Each user listens to the same number of songs a month as the value following the word user in their name. Then we have 500 different rates at which artists are paid for their song playing ranging from the entire monthly fee to 1/500th the monthly fee. Therefore providing a full accounting of each of those rates would be necessary for an artist to understand why they got paid more the month they had a single play than the month they had 400 plays.
To be fair assuming the minimum song length on Spotify is 30 seconds this record provided to artists would have a max length of (31 * 24 * 60 * 2)+1 = 89281 items for premium users plus items for add supported users if they did not overlap exactly in rate. Assuming all Premium users paid the same rate, which is not the case.
Edit: I ignored the 0 listen use case, as well as spotify's 30% cut to simplify an already complicated 'simple proposal'. I also forgot to account for daylight savings time in which a day can have 25 hours.
Having said that, the accounting doesn't have to be that complex:
1. When paying out an artist, list out the (anonymous) users who listened to their music on Spotify.
2. For each user:
a) Show the what percent of the user's total listening was spent listening to that artist. (e.g. 40%)
b) Multiply the amount the user paid by the percentage from (a). (e.g. $10/month * 40% = $4)
3. Sum all of the amounts from #2. (e.g. $4 + $3 + ... = $total)
Also, accounting would only be a problem for Spotify. 99% of artists would prefer this model, even if it meant more complex accounting.
> 99% of artists would prefer this model, even if it meant more complex accounting.
What are you basing that on?
Artists paid more might not complain, and those paid less (likely the more popular artists) would complain. Then there are new artists, growing artists, and people who would just be annoyed by the complexity.
The theory is simple, but the implementation is a complete nightmare.
Keep in mind things would still need to be split per song also, as rights holders vary per song.
Do you really think giving every artist that many potential lines of accounting every month can be called simple?
But is it Spotify that pays the artists unfairly? AFAIK, Spotify pays to the record labels, and then it is up to the record label, how they distribute the money to the artists? (Also some of the money, the labels keep them selves, and do not distribute to artists.)
That wasn't ever mentioned or implied. The point was, the author doesn't understand how complex his simple solution is.
There are already a bunch of assumptions in the payment model, do you pay per track? (In which case, the artists could game it by sticking in 30 second intro tracks and things like that). Do you pay per minute? (In which case, artists can increase their revenue by putting in dead time in "bonus tracks").
It would be an interesting experiment for Spotify to calculate what the payouts would be given the proposed scheme, and compare the differences.
Anecdotally, the people I have met that work at Spotify are a lot more sympathetic to the indie artist and non-Top 40 music than the average person listening to Spotify. There is a reason they keep building ways to discover non-Top 40 music. I'm sure they are interested in making things better for these types of artists.
So the per play rate should be determined by taking 70% of the user's subscription, dividing that by the number of seconds of streaming that user streamed that month and then multiplying that by the number of seconds that user streamed the artist's song (since songs can be stopped mid-song).
Regardless of how they bill, it's likely that artists will have to, for the most part, just trust Spotify. There can, and should, be independent audits of the billing code. It seems an analogous situation to what the NGC does around computerized gaming systems. Users have to trust that the system is fair, but the NGC is very thorough about checking that code complies with applicable laws.
If the proposal were followed, all transparency is lost.
"Extremely long payment records" is quite an under-statement. Imagine sending a popular artist a 27-million line breakdown (you'd need a LINE PER LISTEN, and what % of a listeners listens that was). That's absurd, and STILL less transparent.
I understand the problem, but this is actually a pretty terrible solution. Future complexities build on existing complexity. I can't even imagine the monstrous data, business, and programming nightmares that would arise from breaking payment down in the proposed manner.
I am not saying the Spotify method should not be changed just showing that the proposal at hand should not be called 'simple'.
I realize this the amount they are paying now per song is not too far above the $0.005 amount which rounds to 0, and therefore given changes in the market could potentially drop to an amount which would round to 0 for single play also. I also get that a single penny isn't what anyone is going to be upset about. Also that few artists will have a single play. I just find the low number of plays (1400 in a month isn't really that many) required by a person for an artist to potentially not get paid interesting.
Fortunately, the 25-hour day is in November, which is only a 30-day month. So you're okay on that front.
Here is a link to one such example I have seen which has each song paid at the same amount per play. This has made the number of items on the payment record to simply be the number of different songs which were played by that artist. http://www.digitalmusicnews.com/wp-content/uploads/2015/02/B...
[1] http://en.wikipedia.org/wiki/Sleepify
May as well ask people to play some more normal 30s songs and turn off their speakers, avoid being delisted as a non-album.
Thanks for the suggestion.
[1] http://vulf.bandcamp.com/
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1) I think Ek is right - there isn't much money in the consumption of music. I do believe music is extremely effective at getting people's attention, but outside of that, it's value is much lower than we currently give it credit for.
2) I'm reminded of the TED Talk by Clay Shirky on institutions vs collaboration[0] where he explains power law distribution (watch from 6:01 onward specifically) with regard to photos of Iraq on Flickr. He says (paraphrased) "that figure at the bottom at 10 photos per photographer is a lie. it doesn't matter...the top 10% of the most prolific photographers account for almost 75% of the photos. 80% of the contributors are below the average amount of contributions" This is Spotify in a nutshell. People wan't access to all of the rap music in the world even if they are only going to actually consume 20% of it, so that in the rare chance they listen to one song of the other 80% that it's still made available. In other words, the overall utility of Spotify's system is only valid when it's whole, but the individuals who are necessary for it to be whole are unevenly distributed (in this case number of plays). So the argument then becomes who needs who more?
[0] - https://www.youtube.com/watch?v=sPQViNNOAkw&t=361
Depends how you consume it. I had to pay nearly £100 to see the Stones live. Online of course you can download it for nothing.
That said, has there EVER been a business model in the US that was profitable for artists? I don't think there was ever money in music for artists from album sales.
The cost of distributing and promoting music is just more expensive than making an album.
But ya, that sure seems like that should be fair enough and profitable enough for the artists I listen to, so if Spotify isn't doing a good job of making sure that is the case then I hope someone else arrives on the scene who does. After all, switching costs are now incredibly low for us as consumers and that is where I want my money going.
[0]http://recode.net/2014/03/18/the-price-of-music/
I think it's important to remember that I'm speaking as an "unsigned" and independent artist. My income is not noteworthy from digital sales, and frankly does not even recoup the amount that I spend on distribution. However, unlike the majority of "signed" artists, I have extensive rights management avenues, very little overhead, and if I ever do make a lot of money through digital channels, it will not subsidize a system that I utterly dislike on practical and ethical grounds (ex: no health insurance for signed artists). YMMV.
However they also have some pretty giant omissions and even for the top tier track they are very hostile to their users, which means I am looking for something better.
Or the pro-piracy crowd...
As far as I know, the various music purchasing services (as opposed to radio or rental services) directly pay the artists a fraction of each purchase of their music.
And if you're sufficiently popular, you can also sell directly to decrease the overhead.
In a completely different direction, there's also Patreon and other patronage-model sites.
http://www.negativland.com/news/?page_id=17
Here's a good post:
https://news.ycombinator.com/item?id=3850935
The Eagles made $100 million last year; Springsteen $81 million; Bon Jovi $81 million; Calvin Harris $66 million; Toby Keith $65m; Taylor Swift $64m; Bruno Mars $60m; Pink $52m; Roger Waters $46m; ... Muse $34m, Gaga $30m, this list just keeps going.
Michael Buble made $1+ million per tour date in 2014 (making $51 million overall).
From the info I can find, there are at least 100 individual artists making over $5 million per year.
https://medium.com/@jackconte/pomplamoose-2014-tour-profits-...
Artists who don’t like it or aren’t getting enough value — either through payouts or marketing - should simply opt out of the system (if they can; in many cases control might rest with their record label or another rights holder). Some artists never opted in (the last time I checked, this included AC/DC) or withdrew part or all of their collections (Taylor Swift).
I’ve watched the Spotify model appear in the ebooks marketplace, through services such as Oyster and Scribd. They target readers, and ultimately seek to ensure large payouts to investors, platform owners, and large publishing partners. Authors have largely been treated as an afterthought. Kindle Unlimited is even worse, demanding exclusivity and lowering sales of many authors.(1)
I believe the time has come for recording artists, filmmakers, authors, and other media producers to band together to fight unfair or predatory platform practices. Subscription services may be great for consumers, but they don’t pay enough to the people who are creating the products that draw audiences in the first place.
1. http://www.kboards.com/index.php?topic=202571.0
However, he then makes the leap that that means that less popular artists are subsidising the popular ones, which has yet to be proved.
That being said, there's no proof of this without data to back it up.
And yes, I'd would expect the tail to be fragmented. Lots of people listening to but a small and mutual exclusive set of bands. Next to the odd main stream one.
So perhaps it is not really a question of light users sponsoring heavy ones, but more the banality of average taste.
Would love to see some stats.
Jack Stratton's proposition is wagered on the proposition that the users who listen to his tracks are ones who don't listen to very much other stuff. His listeners pay $9.99 per months, but don't stream very much, and a big chunk of what they do stream is Stratton's material. He doesn't want most of that $9.99 going to those other damn artists, who are just random junk whose material isn't sought out by anyone, but streamed randomly in Yoga classes, elevators, supermarkets or wherever.
If there is some user who paid $9.99, 70% of which is $7 going to the artists, and half of what that user listened to was Stratton's tracks, Stratton wants $3.50 for that month, for that user alone. Add to that other similar users, and extrapolate to twelve months and you have some non-negligible cash at the end of the year: better than a fraction of a cent.
Problem is, no matter how you slice the pie, it is a zero-sum game. There is so much revenue and so many artists. Most artists, likely including Stratton, will lose this zero-sum game no matter how the pie is carved.
There is little difference between 99% of the artists getting peanuts, and 100% of the artists getting peanuts. The proposed rule would just create a tiny group which gets quite a lot more revenue than the rest, at the cost of slightly impoverishing every member of the remaining group, who then gets a slightly smaller fraction of a cent.
It's actually a good rule from Spotify's POV because this tiny group would represent "success stories" which Spotify could use for promotion.
On a different topic, this kind of reminds me of the whiners who complain about online dating sites. "I'm obviously a more qualified bachelor than most of the losers who make profiles on this site, so if only the implementation of the site were based on somewhat different rules, then I would easily get replies from the women I'm interested in. I might have found a girlfriend long ago if it weren't for this damn dating site. Waaaah ... sniff!"
Nope, this rule would do the opposite. Currently, only a very small fraction are getting any "real" money at all. This would cut out some chunk of their revenue and distribute it slightly more evenly across all the artists. This is a more "fair for everyone" approach, in the sense that socialism is more "fair for everyone".
(Personally I like the idea a lot, but it sucks for the artists currently making a killing on Spotify. Perhaps for big labels as well, though since they have a ton of small artists typically it might be near neutral for them)
It is also more correct, your subscription is distributed to artists whose music you actually listened to. It repeat listens are accounted for, then it would be even more fair, since you usually listen more to your favorite artists.
Currently the distribution just isn't correct. This is probably because of technical reasons.
How on earth is it a "zero sum game" that they are paid their fair share of the cut?
> There is little difference between 99% of the artists getting peanuts, and 100% of the artists getting peanuts.
You just pulled those numbers out of your ass.
In the sense that it is a fixed income situation, where the question of how the income is divided does not make everyone richer as a group. If you change the rules for dividing the spoils, those who get more income do so because someone else is getting less. This is consistent with the definition of "zero-sum game".
> that they are paid their fair share of the cut?
There is no unique definition of "fair share" here. It is not inherently "fair" that if some subscriber paid $10 for a month, and forgot all about the service and ended up listening to only one song that month, that some artist should get $7 for that. It's not "unfair", either.
> You just pulled those numbers out of your ass.
That is true, and if you would prefer the numbers out of your ass, then you do the pulling; I'm not going there, sorry. Ass numbers for the sake of example is all we are going to get here, though.