What Does an Indie Get Paid? #4 – Spotify

I’m doing a multiple-part series on how Independent Artists get paid. 
Part one (iTunes).
Part Two (International / Other Downloads).
Part Three (Streaming: All But Spotify).

PART FOUR – SPOTIFY

I get asked this question a lot: “How much do you make from Spotify?” It’s a fair question: Spotify launched, and suddenly we had (practically) the ENTIRE HISTORY OF RECORDED MUSIC! For free (with commercials) or $9.99/month!!

“HOW DID THEY MAKE IT LEGAL?!”, we rejoiced.
“I DON’T EVEN CARE, LET’S LISTEN TO VANILLA ICE ON REPEAT!!”, we decided.

Then came the backlash:

Spotify is detrimental to music buying.

Musicians started sweating.
Listeners shrugged, mostly. (Word to your mother.)

Lady Gaga got paid $167.00 for over a million streams.
Or not.

Musicians  did what we only do when we are significantly spooked: we looked at our books.

Some pulled their music out. Some tweeted, blogged, and gave interviews. (note: if I’d just posted this last week I might have made it into this article which includes a lot more talk from artists about Spotify.)

You can read how much I get paid from other streaming services here, but the more research I did, the more I realized that Spotify was going to have to be its own article. So here goes: (Spoiler: #5 is the most interesting point)

1. IT ACTUALLY PAYS OKAY, COMPARED TO RADIO

As a musician, when you’re used to selling things for $10/album or $0.99/song, it’s a splash of cold water to see a number like $0.005205/play.

I don’t come to all the same conclusions as Kieron Donoghue, but he brings up a good point when he says, in response to @John_Hopkins_:

…his mistake is to compare a Spotify play against a Radio 1 play. Radio 1 has approx 11,000,000 listeners so if you do the maths that’s 0.0000045p per listener.

I guarantee you, I know not a single musician that would be upset about getting a song played on BBC Radio One.

In fact, we even seem excited about getting on the radio here in the U.S. Care to take a guess how much your band (not the writer) will get paid in Public Performance Fees for one play on KISS-FM in Los Angeles or Z100 in New York City?

I’ll give you a hint, it starts with zero.

(it also ends with zero.)

(okay, it’s zero.)

2. IT ACTUALLY PAYS OKAY, COMPARED TO OTHER STREAMING SITES

I posted this on the last blog, but here are the numbers again:

Average Payment (To Me) Per Stream

Deezer: $0.0219
XBox Music: $0.01473
MediaNet: $0.009972
*Rhapsody: $0.0091
Spotify: $0.005205
iTunes Match (Aus): $0.002926
iTunes Match (Can): $0.002837
iTunes Match (EU): $0.002832
iTunes Match (US): $0.002457
Rhapsody Mechanicals: $0.002228
iTunes Match (UK): $0.002139
MySpace Music: $0.002043
Last.fm: $0.00055968

Here’s another bit of fun math. Daniel Ek (CEO of Spotify) has claimed that 200 streams will earn you about the same amount as one download.

Let’s test that using my numbers: I was paid $0.005205/play in 2012. Multiply that by 200, and you get $1.041.

Well, that’s actually more than I make from an iTunes download.

I’d actually only have to hit the mark of 123 streams to match the $0.637 I make from an iTunes sale.

This sounds encouraging, but let’s apply a bit of practicality to this math: check your iTunes play counts. How many songs have you listened to 123 times or more? (I have 9, out of 15,412 songs)

3. IT PAYS A HECK OF A LOT BETTER THAN YOUTUBE.

4. IT’S NOT MEANT TO BE MY ONLY SOURCE OF INCOME …YET.

Full disclosure: I had 31,400 streams from Spotify in 2012, and I made $112.52 (after CDBaby’s 9%). Considering the fact that I paid them $120 to subscribe to their service, I basically just got a really nice employee discount.

I would never make a living from people listening to my music on Spotify at this rate. To earn $40,000 a year (I could pay rent and other bills, feed my family, pay for health insurance, and never ever record another album or buy another pair of socks), I would need 7,686,395 streams on Spotify. But that’s missing the point. Spotify is not the only revenue stream for me or any other artist. At least not yet.

5. SPOTIFY IS *WILDLY* INCONSISTENT WITH THEIR PER-STREAM PAYMENTS

The lowest rate I was payed for a single play was $0.00026547. That’s two and a half hundreths-of-a-cent.

But the highest rate I got from them? $.03395283.

In a world of “point-zero-zero-zero…” payments, three cents for one play is astronomical. I was curious, So I dug deeper. 
..

The $.03 payment rate happened in August of 2012, and it was for a handful of tracks (154 total plays at this rate, for a payout of about $5.23). The three most-played songs were I am Certain I am a Train and Dark Clay (11 streams each for a total of $.3735 each) and Drink (Drink, Drink) (9 streams for a total of $0.3055)

How is this possible? Maybe everyone took a break from listening to music except for my fans?

No.

You see, in the same reporting period of August 2012, one column reports “We’re Tornadoes When We Dance” being played 180 times, for which I was only paid .00171/play (that’s a total of $0.3095
, or almost-the-same-amount-I-was-paid-for-9-plays-of-Drink).

Well, that’s weird.

But this is weirder:

As I dug a little further, I discovered that in the SAME REPORTING PERIOD, 11 other columns appear for Drink (Drink, Drink). They report totals of 2, 49, 49, 62, 1, 1, 2, 3, 4, 6, and 1 times played that month, with a payment-per-play ranging from $0.00050669 to $0.01027848. In fact, as I arrange by song, within the month of August 2012 alone, there are as many as 21 different reports (We’re Tornadoes When We Dance, total plays now up to 427) to as few as 4 (a half-dozen titles) for any given song. Most had around 10 different reports for that same month, and the payment per play varied widely.

As to why there was such a huge variation: I have …guesses?

Maybe each of the reports was from a different country. I’m sure some of these listens were from paid subscribers, and some from free listeners. Maybe commercials pay more during peak listening hours?

Probably, Sure, and Maybe.

But the fact is, I don’t know. Nobody does. And Spotify refuses to give any further details (citing “strict confidentiality requirements”), other than to acknowledge that major label artists do, in fact, get paid more than indies per play (68th paragraph on that article, about 2/3 down).

Look, I know I’m a tiny fish in this very deep pond. But as far as I know, no one outside the 4 major labels signed that confidentiality agreement, so even if they don’t tell YOU why I’m getting paid what I’m getting paid, and even if they can’t tell me how much more (than me) major label artists are getting paid, I don’t think it’s unreasonable for me to ask how I’M getting paid what I’m getting paid.

“But we do tell you”, says Spotify. “In fact, we released an official statment about how artists get paid.” they say.

To quote: “…Spotify pays royalties in relation to an artist’s popularity on the service. For example, we will pay out approximately 2% of our gross royalties for an artist whose music represents approximately 2% of what our users stream.“)

“Approximately”.

Big word, bigger meaning.

Based on my numbers, “approximate” either means false or, at best, incomplete.

6. IT GETS BETTER (MAYBE?)

There is evidence, based on Spotify’s history in Sweden, that the longer the service is in place, the more people will become paid subscribers, and the bigger that “70% of the income” pool for artists will get.

I will say that I wildly disagree with the part of Spotify’s official statement that states “if the 40M paying downloaders in the US became Spotify subscribers, artists would earn twice as much for their music than they currently do.” (Typing this statement without so much as a “The Onion reports” or  “LOL HAHAHAHA JUST KIDDING” at the end is the written equivalent of Jimmy Kimmel Math.)

But for now, I’m content to weather the initial storm and see what happens. I would love to get to the point where 30-50 plays meant I was making as much as I would from a download. That seems fair. However…

7. IT ALSO GETS WORSE.

Ultimately if Spotify doesn’t ever get any better for us indies, it won’t be because of us angrily tweeting about it, or getting all rage-faced about wanting to know if our streams came from Texas or Italy or New Zealand, or why we get paid such wildly varying numbers.

If Spotify fails us, it will be for these four reasons:

Universal Music Group
Sony BMG Music Entertainment
EMI Group
Warner Music Group.

Here’s why.

(Even if you don’t click on any of the other links in this article, click that one.)

This also means that even if you have striven to avoid major labels, they are still, on some level, determining your paycheck.

If Spotify does ultimately succeed? Well then, the bigger it gets, the more the “Big Four” will control your income, even if you’re not signed to them.

Not much makes me want to quit making music. But this is close.

(News room is silent, I solemnly tap papers on the news desk. No music as we cut to commercial.)

Next up: Profit Margins on physical merchandise.

-Levi Weaver
Facebook / Twitter

 

13 Responses to “What Does an Indie Get Paid? #4 – Spotify”

  1. I’m a fan who just wants to support musicians the best way possible. If other fans and I stream our indie artist like crazy on Spotify is that the best thing we can do? ( vs iTunes, lastfm, etc).

  2. So, maybe I accomplished something all those times I left Spotify playing its way through your entire catalog, after I’d already gone home for the day. :)

  3. Thanks for posting this. It’s really informative, and I hadn’t looked into the issue in depth until now. Do you know anything about the numbers for MOG.com?

  4. I don’t, actually. Either my music wasn’t sent there by CDBaby, or no one used it to listen to my music in 2012. (sorry)

  5. Maybe! I have heard rumors that Spotify has “fraud detectors” in place to prevent people from doing this. I do know that for people who aren’t paid customers, you can’t mute your computer during the commercials – Spotify detects it and pauses the commercial until your sound comes back on. I suspect there is something in place for this sort of thing as well.

  6. The list of who pays the best is upon the previous blog post here (short answer: if you have Deezer available in your country, use that!) (other short answer: last.fm sucks!)

  7. Yup, a whole lot of us are doing music ‘cos we love it, not for the “money”…

  8. Thanks for the info. I have been curious about the details of how the “business” of making music has been impacted by the various streaming services out there. I have not joined Spotify for this reason, but have used last.fm for years. I guess I will reevaluate. I have also wondered about finding a way to directly support an artist I care about and want to see continue making art. I am not rich, but is there a way to become a ‘patron’ like there used to be during the Renaissance? Is that possible on a small scale? Is that what Kickstarter has become? Thanks again for the info. It is eye opening.

  9. So, do you get paid whether I listen to 1 second or the whole song?

  10. I think there is a required amount of time a song has to be played; I’ve heard 60 seconds and “half of the song” but I haven’t seen an official statement from Spotify.

  11. A really interesting series of articles Levi, thanks.

  12. I’m preparing to take to take the next step as an independent artist and will be putting the few dollars I have to my name into recording, producing and so on. I’m doing all the research I can so I will be prepared with what services will be most beneficial to me. Pennies start to add up when all the money you have is tethered to the cost making music and your praying there will be a return so you can continue following your dreams. Out of all the articles I’ve read on music distribution, these articles have been by far the most informative and easy to understand. Thank you for putting all the time and effort into gathering and interpreting this information for people like myself. It’s very much appreciated.

  13. Thank you for writing this. I listen to a lot of music and I have always wanted to do it in a way that it gets the good ones the money they deserved. I have been listening to Spotify lately because I thought they would be fair to the artists but after reading this I will keep it to a minimum.

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