I have published a series of articles on payments by Spotify to artists in my blog. You probably don’t have the time to read all these individuals posts so let me give you a roundup here.



Ever since the story about Lady Gaga receiving $162 for 1 million streams, the Spotify payments have become a hot issue. The Gaga payment turned in to a kind of urban legend that keeps popping up in about every article on the subject of Spotify payments. But how reliable is this story?



To find out the truth I contacted labels, artists, collecting societies and Spotify. No one was willing or able to give me information. They all kept saying it was confidential, because of non-disclosure clauses and stuff. So I decide to use another approach. I contacted a few bands and asked them if they would be so kind to let me release their music on Spotify. Little Things That Kill agreed to this, so I released an album and a single . Being sort of a label owner now I was able to find out what Spotify really pays to an (independent) artist. I’m publishing the results for over a year now. Here is a graph showing the payments per stream from September 2010 till September 2011.

The current payment per stream is € 0.0047 (about $ 0,0063) Need proof? Here is a snapshot of my latest statement.

How Spotify calculates the amount per stream

Spotify operates by paying artists a percentage of the revenue for a specific month. For each month the pay out is recalculated based upon the revenue. That explains for the different rates each month.

That clears up a lot don’t you think? But wait, it isn’t this easy. Have a look at this statement:





Note the different rates for plays of the same song? As far as I have been able to find out, there seem to be different agreements with individual aggregators (digital distributors), like CDbaby or Tunecore. I have released the tracks by Little Things That Kill through Zimbalam, this aggregator receives the same amount for every stream. CDbaby gets a different rate for every tier ( Free, Unlimited, Premium and people who have a free Premium account through their ISP or Telco). So in this case the payout is calculated from the revenue of this specific tier in the given month. In some cases this even leads to a payment per stream of $0.0111.Confusing, but in average the result is near to the $ 0.0063 per stream I mentioned above.

The big labels

Now we know what an independent artists gets. One big question remains: What do the big labels receive per stream? To be honest, I don't know. But I expect that the big labels have a better deal. Spotify has had trouble to get the big labels on board.

Comparing sales to streams

Most artists and labels complain about low revenue by comparing the revenue of streams to sales. But isn't comparing revenue by streams to revenue by sales like comparing apples to oranges?



Paid download:

A one time event: you pay in advance for all of your listens to that track.

Stream:

An ongoing money stream : Spotify pays the artist for each time you listen to a track

One could argue that the last method is a more fair way of rewarding good music, but let’s not start that discussion. Fact is that artists will keep on receiving payments for years and years for as long as people keep listening.

For those who cannot stop comparing apples to oranges. For a sale of a track on iTunes an indie artist gets 70c. At the time you need 111 Spotify streams to make the same 70c. How hard can it be to reach 111 listens?

Some people argue that they never listen 111 times to a track they have bought. Of course you don’t! The big difference is that with streaming you can listen without paying upfront. There is a way bigger audience for that.

Why are all these artists and labels complaining about low revenues?

Hey, it’s the internet, the number one stage for all your complaints. People with a positive experience hardly ever write articles about this. Also take in mind that in this stage only 2,9 % of all internet music users in just 12 countries are listening with Spotify . It has all just started, there is not enough volume yet . Some labels and artists consider a higher payment per stream as the solution, but the real solution lies at the start of the calculation: more streams!

One more thing

I have already been called a Spotify fanboy, an idiot, insane, a Spotify troll and such. I’m not on the Spotify payroll an have no financial interest in Spotify. This is no way an attempt to promote Little Things That Kill with the purpose of filling my or their pockets. 100% of the royalties I receive go to Stop the Traffik, an organization fighting human trafficking and modern slavery.

Why am I doing this then? Because I love music and Spotify is the best thing that happened to me musically speaking. Artists, I would love to listen to your music and you deserve to get paid for this. Streaming can help us both out.

Hans Handgraaf















