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Yes, Major Record Labels Are Keeping Nearly All The Money They Get From Spotify, Rather Than Giving It To Artists

Music Industry

from the who-are-you-blaming-now? dept

Thu, Feb 5th 2015 08:02am -

A small group of very vocal musicians has decided that the new target of their anger, after attacking cyberlockers, search engines and torrent sites, should be legal, authorized streaming services. They’ve decided that the payouts from these services are simply too low, even though almost none of these services are anywhere close to profitable, and most are handing out the vast majority of their revenue to copyright holders. The complaints are often nonsensical. Way back in 2012, we noted that the target of these musicians’ anger appeared to be misplaced, as the CEO of Merlin (which represents a ton of indie labels) admitted that the real problem was that Spotify paid lots of money to labels and it was the labels not giving that money to the artists. Yet, rather than blaming their own labels (or their own contracts), these artists lashed out at Spotify and other streaming services. Just a few months ago, we covered this issue again, with even Bono admitting that the real problem was the lack of transparency from the labels.

And, it appears, there’s a decent reason why those labels haven’t been eager to be transparent: because they’re keeping most of the money. The Music Business Worldwide site has the details on a new report put together by Ernst & Young with the French record label trade group SNEP, concerning where the money from streaming services Deezer and Spotify ends up. Spoiler alert: it’s not with the artists. Here’s the overall share of the 9.99 Euros that people pay for a premium account on these services:

As you can see, the labels get the lion’s share, with songwriters/publishers splitting 10% and the performers getting less than 7%. And, if you look at the specifics of the actual post-tax payout, you can see the contrast more starkly:
The labels end up with nearly 75% of the total payout, with actual artists and songwriters left with the scraps.

Of course, since this project was paid for by SNEP, which represents the major labels, it then tries to spin this as being not only perfectly fair, but a good thing for the artists themselves. What, you say? How can that be? The report claims that 95% of that money that goes to the labels goes to cover all of the “expenses” those poor poor labels have to endure to record and… um… upload(?) the actual music. Sure, in the past, it may have been reasonable for the labels to take on large fees for distribution — but that’s when it meant manufacturing tons of plastic and vinyl and then shipping it to thousands of record stores around the globe. In this case, there’s no manufacturing, and distribution is an “upload” button. Sure, there are some marketing costs, but the numbers ring pretty hollow (especially for many of the artists for whom the labels do little to no marketing).

So, again, rather than blaming these streaming services, it appears that perhaps they should be discussing things with the labels.

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Companies: deezer, snep, spotify

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Comments on “Yes, Major Record Labels Are Keeping Nearly All The Money They Get From Spotify, Rather Than Giving It To Artists”

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147 Comments
Violynne (profile) says:

This is new why? It’s the exact same business model they’ve been using for decades.

This is why I never, ever listen to the complaints of artists.

If they had not given up their distribution copyright, they could have made more money.

Instead, the real pirates are taking it.

I feel absolutely no pity for anyone who signs away their copyright, then complain there is no money being made.

That One Guy (profile) says:

Double, triple, and quadruple dipping at it's finest

The report claims that 95% of that money that goes to the labels goes to cover all of the “expenses” those poor poor labels have to endure to record and… um… upload(?) the actual music.

Unless they do things very different over where this report was put together, most, if not all, of those ‘expenses’ are almost certainly laid right at the feet of the artists, and they are the ones who end up paying for it, not the labels.

Recording costs? Advertising and marketing? Billboard, newspaper or tv ad? The label doesn’t just eat those costs themselves, they charge the band/artists for it, taking it out of the band’s cut of the profits.

Given that, I can’t help but think that even the 6.8/10.9% cut listed is likely heavily overestimating it, the artists probably get even less than that by the time all the money has been divided out. The artists are getting screwed here, there’s no doubt about that, but it’s not the streaming services that’s responsible for it, and the sooner the bands realize this the sooner they can start trying to get their share from the ones actually responsible for keeping it from them.

Tim Griffiths (profile) says:

Re: Re: Double, triple, and quadruple dipping at it's finest

What the artist have to pay back to the label from their share to cover advance is a separate accounting issue to what the artist are getting paid. It’s deliberately done that way so that in most cases the labels get nearly all of the money from sales even long after the album is profitable while talking about how good they are for taking risks on artist pointing to the high percentage that “they lost money on” i.e. didn’t pay back the advance not who wasn’t profitable.

In other words it’s safe to bet your hind teeth that these are the numbers for what technically gets paid out, not what, if anything, artists are actually getting paid from the labels.

Ninja (profile) says:

If copyright wasn’t transferable these pies would see no sign of the labels. If they truly are charging for recording and uploading only then it’s a ONE time fee and does not apply here. Even if they are charging for marketing and other costs the artist should be paying, not the streaming service. The service itself should just distribute its revenue equally among the participants after its own costs and some profit are covered. If the artist doesn’t like it they can go use other platforms and request the service to pull their stuff.

The MAFIAA has no place in the equation. That’s why these clueless vocal minority aren’t seeing decent returns.

Anonymous Howard (profile) says:

Re: Re:

I can rent a studio for my music to be recorded.
I can commission an agency to run an advertising campaign for me.
I can pay for hosting of my music (or in this case, spotify can pay me) to distribute it.
I can hire a manager to do all this stuff for me.

Nowhere in this process my copyright needs to be reassigned. It’s high time artists forget viewing labels as a huge contributor to the release process, because they’re no longer.

Zakida Paul (profile) says:

People need to vote with their wallets. If they care about music, stop buying from the major labels and support local and independent music by buying direct from artists.

Artists also need to wake up and see who is actually screwing them over and realise that they now have better options.

This is why 99% of the music I buy these days is from here:

https://bandcamp.com/

That One Guy (profile) says:

Re: Re:

Quite, the sooner the major labels die off the better everyone, fans and musicians will be.

Indeed, Bandcamp is a great source for music, both for artists, and fans.

A service that actually pays the artists who use their service to sell their music, and doesn’t demand the musician’s first born in exchange is great for the musicians, and being able to listen to an entire album before purchase, being able to try out new and unknown artists like that is a great way to discover more musicians to throw money at for the fans.

RIAA representative (user link) says:

Re: Re: Re:

Listening to music before you have paid for it is PIRACY. Hearing a track in a record store and purchasing a DVD or Blu-Ray is PIRACY. Hearing a track in a mall without buying something from any of its stores is PIRACY. If you do not immediately stop these illegal actions, we will deport you back to Somalia. You have been warned.

Casey says:

Re: Re:

Zak, I understand your point, but most artists are on Bandcamp, because they have no other option or they use it as a promotional tool, because the label (if they have one) isn’t getting it done.

I buy from my local bands, but with a few rare exceptions, music is a money loser. There’s no doubt that the label shafts artists, but they often the artist’s best shot at making a living. I’ve got friends who were able to take roughly a year off and a year or so to record their album. They could have self released (the music was in the can), but decided that they needed the promotion. I’m sure the deal they signed was better than many young bands, but true indie bands make virtually nothing from Spotify or Pandora.

truth is that Songwriters were always the ones making money from Radio. Until last decade, in the U.S., artists got no money for airplay (OTA or Digital).

Anonymous Coward says:

Re: platform figures

Keep in mind that the Platform percentage is not pure profit. From that, Spotify/Beats/whoever must pay out for all the actual costs of providing the service. This includes bandwidth and storage, but more significantly it also includes the credit card/bank fees on the $9.99 which can be quite significant.

Not an Electronic Rodent (profile) says:

Re: Re: platform figures

Keep in mind that the Platform percentage is not pure profit.

Indeed:

even though almost none of these services are anywhere close to profitable

Lack of profit would suggest all of their percentage is eaten by running costs, making post-tax “payout” to the platform…. Zero.

Think you spotted the attempted “hand-waving of distraction” there…

Anonymous Coward says:

If memory serves, this is almost exactly the same payout percentages that existed in the pre-digital era, and contracts were constructed so an album had to sell about a half-millon copies before the artist got paid a dime.

Since record labels now require artists to cough up a big chunk of their concert touring income, it seems the days of the billionaire rock star are over and will never return.

B says:

Re: Re:

“Since record labels now require artists to cough up a big chunk of their concert touring income…”

Oh? As someone who works in the music industry, this is news to me. Management tends to make money of touring but labels, not really. This could get confusing when management and label are on in the same for an artist though.

Anonymous Coward says:

Re: Re: Re:

“Since record labels now require artists to cough up a big chunk of their concert touring income…”

Oh? As someone who works in the music industry, this is news to me. Management tends to make money of touring but labels, not really. This could get confusing when management and label are on in the same for an artist though.

It’s known as a “360 deal” and it’s amazing that anyone who works in the recording industry would know nothing about this, since the 360 deal has been around for over a decade and has (reportedly) become the standard “take it or leave it” contract offered to artists by all the major labels.

This is what http://www.lommen.com/pdf/bob-donnelly-360-article.aspx has to say about it:

“the power grab is much more insidious because it involves taking a portion of income from categories which—for the entire history of the modern music industry—have belonged exclusively to the artist. Under the terms of a typical 360 deal (which the record company representatives would prefer to call by the more innocuous phrase “multiple rights deal”), labels are demanding a portion of an artist’s income from touring, publishing, endorsements, and sale of merchandise, in addition to the vast majority of the record sale income that labels have always enjoyed. And when you read the fine print, you’ll also discover that the labels want to make money from the books that artists write, the Hollywood movies in which they act, and the fan clubs they create. In fact the labels want to share in absolutely everything.”

jackn says:

“The report claims that 95% of that money that goes to the labels goes to cover all of the “expenses” those poor poor labels have to endure to record and… um… upload(?) the actual music. “

And here’s the kicker. Usually the label just ‘Advances’ the funds for recording, etc. Basically, the artist has to pay back these advances via the royalties. Not a bad idea, but what justifies the large amount to the labels? Marketing? Copyright bullying?

That One Guy (profile) says:

Re: Re:

Ooh, never saw that one coming, no actual rebuttal to the facts presented, so you go straight for the lies, ad homs and strawman arguments.

Truly, your masterpiece of debating has shown everyone here how flawed their thinking was, and convinced them of the truth of your words.

Now go, go forth, and let those around the globe bask in your brilliant wisdom, for indeed, it is wasted on just a single site, and deserves to be spread far and wide.

Gwiz (profile) says:

Re: Re:

A blog whose readers steal music writes an article complaining about record labels making too much money on streaming.

So much wrong in a single sentence.

First, the whole sentence is an ad hominem. You don’t like the message, so you attack the messenger. That only indicates that you really have no argument.

Second, no one is “complaining about record labels making too much money on streaming”, the gist of the article is to simply point out that the artist’s who are complaining that streaming services screwing them over are actually bitching about the wrong entities.

Third, the phrase “A blog whose readers steal music” is not only an inept over-generalization, it is, in my opinion, incorrect. Take a gander at Techdirt’s demographics. They show that 56% of Techdirt readers make over 50k/yr and 68% are college graduates. Those aren’t pirates, those are people who have expendable income to spend on things like music and movies. Or in other words: YOUR CUSTOMERS.

Mike Masnick (profile) says:

Re: Re:

Don’t the major labels also partially own Spotify, so payout to the platform also goes to them?

They do, but I don’t think it’s accurate to claim that the payout to Spotify goes to them. It’s very unlikely that Spotify is paying dividends to equity holders at this point. It is certainly possible that, down the line, when Spotify goes public or the labels sell their shares, that they’ll get more money — but selling equity and getting a chunk of the revenue are separate issues.

People often get valuation and revenue mixed up, but they’re separate issues.

Anonymous Coward says:

and you get stupid f***ers like Katy Perry screaming blue murder at how the ‘pirates’ are robbing all the artists! she and all others like her need to wake up and smell the coffee! it’s those pesky ‘pirates’ who spend more money on buying media and ensure the artists then get paid! how the hell any artist with a modicum of common sense could think for 1 second that the studios (music and film) are making sure anyone except themselves get paid are in cloud cuckoo land!!

Pat says:

Your assumptions are wrong

First, the %s look about right for what labels usually give to artists. 15% to 20% or the gross sounds about right.

What you have wrong is where you talk about costs and expenses.
Because generally, as it’s always been, all the costs associated with production and distribution, such as recording studios, producing, mastering, printing, packing, shipping, promotion, breakage, returns etc etc etc… ALL those costs are charged back to THE ARTISTS, it ALL comes out of their 15% to 20% share.

The % you see going to the labels is 100% PURE PROFIT, apart maybe from the salary and expense account of the reps going around pushing the album.

The ONLY “risk” the labels take is at the start, when they usually grant the artists an “advance”. That advance is usually pretty substantial and the artists are usually led to believe that it’s a form of pre-payment, when in fact it is a loan. Then all the costs of production are assigned to that loan, which gets reimbursed directly from the share of sales the artists would get, the 15% to 20% has to pay off the advance first.

Now, the LABELS call that a risk because it’s really an initial investment, paying the artists in advance in hope of recuperating the money from future sales. But in REALITY, record deals are usually for more than one record and also usually, the artists rarely recoup the full advance with their first record. So in reality the advance is the tool the labels use to pressure the artists into doing things “their way” for the second record. As in “You still owe us $$$$$$ because your first record wasn’t good enough, now you’re gonna do it OUR way or we’re going to shelf you and you’ll never work again”.

For some good reading on the subject with very good math attached, look up an essay from Steve Albini called “the problem with music”.

Anonymous Coward says:

Re: Re: Wait a sec

And with the measures taken by the music companies and collection agencies, the inequality is made far worse.

They are cutting the starving contracts and reimbursement for indies since the leverage of popular and active artists today is the labels bread and butter with the current focus on making their share tax-like (higher turnover, means more tax income etc.).

John Fenderson (profile) says:

Re: Re: Wait a sec

“You are forgetting that 5% of artists make 95% of the revenues.”

And this is exactly why I am so excited that the internet may put the old-guard label system out of business entirely. If we lived in a world where a majority of artists can make a living wage creating their art instead of the world we have where a tiny minority of artists get rich while most artists need to have day jobs, then society as a whole comes out so much richer.

Anonymous Coward says:

Re: Re: Re: Wait a sec

You’re confusing art with a product.

Music is a form of art, but the ‘music business’ isn’t selling art; it’s selling a product.

You can make Art all day; and you might make some money doing it. But don’t confuse that with big business. And big business always has a few making the most money – it’s called capitalism.

So keep dreaming.

andyroo says:

Main Stream Media

Why are the newspaper and other supposed big news websites not talking about this, why have they not done big stories repeatedly attacks they have done about piracy, Surely if the big media conglomerates had to point out how artists are being raped and it is impossible for a new artist to make any money unless they have a big hit even if they sell many hundreds of thousands of tracks. While those sitting in their chairs phoning around managing for a few advertising agents to promote their talent make all the money, damn even the ad agencies would make more if they had to work directly with the artists, the middleman , the studios need to be broken up and artists pay them a set fee for their service.

Imagine a world where the artists the content creators made 75 % of their sales, we would see so many creating really good content, meanwhile the studios are so involved they only promote those they like and those they can make money from. I thought they were supposed to help all artists especially those at the bottom to shine.

Courtney says:

I’m totally willing to believe that labels may be taking too much off the top, but I’m also willing to consider that they’re doing the jobs they were hired to do. When an artist decides to sign to a particular label, they are signing on to a service that employs some dozens, hundreds, or thousands of people to provide a function. They are signing on to the rent of (often) entire city blocks, and to a network of vendors to produce, promote, and distribute that art. I have no doubt that being a record label is a costly business. In that sense, as likely the biggest cog in the machine, 45% to the label does not really seem unfounded. Unfortunate, but not unfounded. Wouldn’t artists be naive to assume any less?

Anonymous Coward says:

Re: Re:

“Wouldn’t artists be naive to assume any less?”

Naive or idiots or both. The issue is many artists seem to forget that contracts they have knowingly and willingly signed into with the labels are what is earning them “peanuts” and then they turn around and blame someone who isn’t involved at all, at least not directly with what they receive as royalties for their music. By which I mean Spotify, among other streaming music sites/companies.

So the issue gets blown up by the media (among other less than scrupulous people, looking at you Trichordist) and that gets spun into, “Spotify and other streaming sites are paying almost nothing to the artists whose music they make profits off of!” When the actual articles/headlines should be, “Labels are raking in the profits from Spotify and paying the artists peanuts in return, per contracts they signed into with one another.”

Anonymous Coward says:

Re: Re: Re:2 Re:

He’s not “lying”, he’s just being very subjective by saying “laughably tiny”. Who is to say what is laughable, and what the market will bear? Yes, per-play payouts from Spotify are pretty small numbers, but so are lots of things that add up to big numbers — and the point is that whatever the payouts are, they aren’t lowered by an unfair cut going to Spotify. The streamers aren’t trying to screw anyone, least of all artists — they are just trying to build a business that will bring in customers and grow.

And of course it’s always worth pointing out: “per play” is a brand new figure anyway. In the days of CDs and LPs, where a one-time purchase lets you play something forever, the best you could get is an estimate of the “per play” price based on surveyed habits or something like that — but, functionally and potentially, the per play price was infinitesimal.

That One Guy (profile) says:

Re: Re: Re: Re:

I know numerous artists that release music independently and their per-stream payout from Spotify is laughably tiny.

In case you missed it, there is a simple explanation for this, and it is: Because that is how streaming payments work. People are listening to a single song, once. If an artist expects to be paid even remotely the same as what they’d get from a purchase, where people can listen to a song/album as many times as they want without paying a single cent more, then they have shown themselves to be beyond clueless, and incapable of telling the difference between two very different things.

The individual payments are tiny, but they are also repeating. It’s the difference between getting $10 now, or $1 per day, for a month or more. The first may get you more money now, but you’d have to be a fool to claim that just because the second only pays you a single dollar now it means it’s less.

Really, people who hold up the smaller per-stream payments of streaming services compared to services like iTunes where people ‘buy’ the music are basically holding up a a fruit and complaining that it looks nothing like an orange, and tastes completely different. The reason? Because it’s an apple.

PaulT (profile) says:

Re: Re: Re: Re:

“I know numerous artists that release music independently and their per-stream payout from Spotify is laughably tiny.”

Compared to what? What’s their per listener payout per play for radio airplay, for example? Do you know the difference between different revenue streams and why they differ? Or, are you the moron who thinks that Spotify should be paying the same for a stream as they’d get paid for a CD purchase?

This comment is just the typical ignorant rant devoid of reality we’ve come to expect from the music industry apologists and/or self-flagellation fetishists who come here to satisfy their bizarre need to be wrong all the time.

Feel free to post a real argument with actual data if you feel this is unfair, but somehow I doubt you will.

JD says:

Re: Re: Re: Per *listener* payout

So assuming that one stream averages out to one (maaaaaybe two) listeners, how much do your friends make per-thousands listeners from Spotify?

How much do they make per-thousand listeners from radio, given that a single radio play equals anywhere from 5,000 to 500,000 listeners, depending on the station/market/time-of-day?

JP Jones (profile) says:

Re: Re: Re: Re:

/facepalm

Since people haven’t bothered to point it out yet, the entire point of this article was that, per stream, music labels are taking over 73% of the profit.

So, yeah, their per stream payout is laughably tiny, but not because of Spotify. It’s because their own freakin’ labels are taking all the money.

The other points on why this is stupid are valid too, but come on, your anecdotal story actually highlights why this is the label’s issue, not the streaming service’s issue.

I can’t tell if you’re retarded or just trying to be ironic. If the latter, it has to be a little obvious for it to work. My guess is the former.

Anonymous Coward says:

Re: Re:

There’s no way to get a complete window into how the labels spend their money, but there are very few artists — especially small to medium artists — who really believe the label is putting its resources to work fighting hard for them.

Maybe for some big superstars, it’s true — they are multimillion dollar operations where one individual is themselves being ferried around and maintained by dozens or hundreds of people. Of course, those are the same stars who could at this point easily afford to run the operation themselves, simply incorporating and hiring all the help they need. But when was the last time a major label truly put a small or different or interesting artist on the map? They don’t hold that kind of cultural sway anymore, its moved to bloggers and podcasts and music forums. Labels just still have a few well-protected inroads into the machine of big-money pop culture for their handful of whales, and they’ll exploit the hell out of all the other artists in the world to hold on to that.

Pat says:

Re: Re:

The reason why the system works this way is because the media companies OWN it.

A band cannot get air-play, advertisement, booking, distribution, touring. These circuits are totally CLOSED OFF to bands because they are controlled by media companies and labels.

Bands are not signing to a service… bands are duped into exploitation and for every smart artist who refuses to join the system, there are dozens or poor SOBs willing to sell their soul for the promise of fame. So the labels don’t care and don’t have to change.

nasch (profile) says:

Re: Re:

I’m totally willing to believe that labels may be taking too much off the top, but I’m also willing to consider that they’re doing the jobs they were hired to do.

Even if that’s true, the artists should still be complaining about either A) nobody, because they made their bed with the label and now they can sleep in it, or B) the label, for paying them so little of the streaming revenue.

jupiterkansas (profile) says:

Re: Re:

You make it sound like the artists are hiring labels to promote and distribute their work, when it’s the exact opposite.

The labels hire the artists, and as their bosses they determine the terms of the contract, and they can name any terms because they own the whole network of mass media from radio to retail to concert hall to television.

Do you think your employer is going to do everything in their power to make you rich and happy, or are they going to get as much profit from your work as they possibly can?

Anonymous Coward says:

“the payouts from these services are simply too low, even though almost none of these services are anywhere close to profitable, and most are handing out the vast majority of their revenue to copyright holders. The complaints are often nonsensical”

Is it nonsensical? Or is it maybe that the streaming model is not financially viable?
If they’re not profitable, and can’t afford to pay very much for their product, then why are they there at all?

Adam (user link) says:

Re: Re:

I think they don’t care how financially viable they are as long as they can keep raising venture capital and the company can be valued at $5.7 billion dollars as they prepare for a new round of fundraising with the help of Goldman Sachs.

But it’s a good question. Personally, I feel that if a service like Spotify can’t make money, they’re probably just doing it wrong.

That being said, I do think artists need to see more money from streaming services, because it pays next to nothing as compared iTunes, and I think it takes a significant number of customers away from downloading sites.

Also what about artists who aren’t on the major labels? They basically got cut out of the picture by not being able to negotiate with Spotify directly. There should be a class action lawsuit in all of this. And maybe the major labels should be on the receiving end too.

(http://www.billboard.com/articles/6458093/spotify-5-billion-valuation)

That One Guy (profile) says:

Re: Re: Re:

Personally, I feel that if a service like Spotify can’t make money, they’re probably just doing it wrong.

If the reason a service/company can’t make money is because almost every cent they make is scooped up by other companies, then that doesn’t mean you’re doing it wrong, that means the other companies grabbing all your profits are too greedy for their own good. ‘Killing the golden goose’ comes to mind here.

That being said, I do think artists need to see more money from streaming services, because it pays next to nothing as compared iTunes

Now here’s the million dollar question: Is iTunes a streaming service, or a purchasing service?

If the payments are different, maybe, just maybe, it’s because the services themselves are drastically different. One involves a single, larger payment, the other involves repeated, though smaller, payments. Anyone, whether band, label, or what have you, who expects a repeated payment to be anywhere close to a single payment needs to have their common sense and/or rampant greed checked.

…and I think it takes a significant number of customers away from downloading sites.

And? In either case, whether you’re talking about streaming or downloading, the artists(well, more the label than the artists, as this article shows) is getting paid for their music, and the one doing the paying is getting their music from a legal source, as opposed to the alternatives.

If the labels don’t think that they are getting ‘enough’, then by all means, pull their music from the service, enjoy the nothing they get from it after that point. While they’re at it, best pull their music from radio as well, that might cannibalize CD/download purchases as well, and one can’t be too careful.

PaulT (profile) says:

Re: Re: Re:

“it pays next to nothing as compared iTunes”

Erm, you do understand that there’s a massive fundamental difference between what the two services do, surely?

Expecting Spotify to pay the same money for a stream as iTunes does for a purchase is like expecting Hertz to pay Ford the cost of a new car every time someone rents one. The better comparison is between Spotify and radio, and the per-play, per-listener revenue is on par (and streaming often pays more on that scale).

J.C. Neil says:

What are the actual financials?

Instead of discussing percentages, how about discussing actual dollars and cents? What’s the payout per spin? If the artist got the entire payout, how many spins would they need to be paid a decent amount for their work? The label’s cut may be a problem, but it’s unclear whether these services are charging enough to pay enough. My sense is that the free tiers and low-priced paid tiers have seriously reduced the money coming in and the money being paid out; the record label’s cut just exacerbates the problem.

Anonymous Coward says:

Re: What are the actual financials?

Back of the napkin says: If the artist got the entire average Spotify payout of 0.7 cents per play, they would need to average about 82,000 plays/week to be earning a $30,000 annual income, or about 137,000 plays/week for $50,000.

That is, of course, assuming that the artist intends to use only Spotify as a revenue stream — no other streaming services or other things at all, no iTunes or Bandcamp, no merchandise, no live shows, etc.

Gwiz (profile) says:

Re: Re: What are the actual financials?

That is, of course, assuming that the artist intends to use only Spotify as a revenue stream…

According to this Future of Music Coalition survey only 6% of the money earned by the surveyed musicians comes from recorded music. That number, in my opinion, is actually bit low when talking about streaming considering the survey also included music teachers, orchestra members & session musicians.

But, if you look further down at some of the breakdowns by genre, about 95% of Rock, Pop, etc musicians rely on copyright for only about 25% of their income.

nasch (profile) says:

Re: What are the actual financials?

The label’s cut may be a problem, but it’s unclear whether these services are charging enough to pay enough.

What makes you think increasing prices would increase revenue? This is a highly competitive market with lots of substitute goods, legal and illegal. What do you suppose would happen if Streamer A changed their price from $10 a month to $15 and Streamer B left theirs at $10?

saulgoode (profile) says:

Re: Re: Pie charts are bad enough...

The problems with 2D pie charts are less important (though they do exist; do a web search on “pie charts suck” or somesuch), but 3D pie charts are almost always misleading.

First, when you map the chart to 3D, slices that are at the 6 o’clock position (for example) will have their angles increased and their length shortened. While slices at the 3 o’clock position retain their length but have their angles narrowed (here is an example). One can’t map a pie chart to 3D with both the angles and the areas accurately representing the data, thus accurate comparison of the information being presented by the slices is a challenge.

Also, the color added to the “front” slices due to the thickness of the pie tends to exaggerate the size of those slices. In the case of the first pie chart in this article, the percentage of green is about 15% larger than the data dictates, while the amount of red, blue, and magenta shown is about 12% less.

Clark says:

Re: Re: Re:2 Pie charts are bad enough...

Honestly, I don’t believe the exact accuracy of the size of each slice of the pie chart is that important to claim that 3D pie charts are the worst as long as each piece looks to be in proportion to the percentages presented.

The reference you provided is an opinion article as the title reveals by claiming “Pie Charts are the WORST.” The word “worst” exposes a value statement based on what the author believes.

nasch (profile) says:

Re: Re: Re:3 Pie charts are bad enough...

Honestly, I don’t believe the exact accuracy of the size of each slice of the pie chart is that important to claim that 3D pie charts are the worst as long as each piece looks to be in proportion to the percentages presented.

There really is no excuse for a 3D pie chart. It distorts the data while adding absolutely nothing but bling.

The word “worst” exposes a value statement based on what the author believes.

Yes, and then he backs it up with facts. You’re free to disagree with his opinion of course, but if you’re interested enough I hope you at least read the facts.

nasch (profile) says:

Re: Re: Re:5 Pie charts are bad enough...

Which is the worst distortion, those 3D pie charts, which may bias people slightly against the labels, but contain accurate figures; or the labels exaggerated claims of how much is lost through piracy.

Are you actually suggesting that because the labels distort facts that it’s appropriate to also distort facts when disagreeing with them?

John Fenderson (profile) says:

Re: Re: Re:2 Pie charts are bad enough...

I find that article pretty unpersuasive. The author seems to be using pie charts in the worst possible way in order to make his point: he’s omitted the actual numerical values from them (a terrible practice that is unrelated to whether or not they’re pie charts), and he’s using pie charts for inappropriate purposes.

For portraying relative percentages of a single whole, I can’t think of a better graphic than properly done pie charts. The article doesn’t actually propose a graphic format that serves the purpose better, either. The closest it comes is presenting a bar chart — but bar charts can be even more visually misleading if the purpose is to express percentages of a whole.

That One Guy (profile) says:

Re: Not a true story

I have no idea why you mentioned the DMCA, as it has absolutely nothing to do with music streaming, but if you can’t grasp the fact that different types of businesses have different types of payments, that a sale is going to get you more money upfront than a single, one-time listen, then that’s your problem, not theirs.

In addition, if streaming profits from Spotify or similar services are your only source of income for your music, then you are doing it wrong, and again, that’s your fault, not theirs.

JD says:

Re: What about radio?

So if you get ~4M people (maybe 5M if some of those streams are heard by 2 people) to listen to your music, you get minimum wage?

Given that an average radio play reaches about 25K people, would getting about 175 plays per month on radio earn you minimum wage? Do you get about $7 every time your song is played on radio?

Anonymous Coward says:

PBS/Rosanne Cash

They talked about this on PBS last night. Rosanne Cash was crying that she only made a small amout of money last year (hundreds? I forget), yet Spotify paid out 70% of their profits to the labels. In my opinion, she should have been bitching at her label. They also covered the facts that new artists were drawing major fan bases because of Spotify (people were buying albums and concert tickets were sold out-I believe those two guys were from Denmark), and the fact that Pink Floyd decided to add their entire catalog so that younger people could discover their music.

Anonymous Coward says:

Re: PBS/Rosanne Cash

Also, I forgot to mention, there is a band called Webb Wilder (Human Cannonball), that my friend introduced me to around 1996. I asked why I had never heard of him. He told me Webb refused to any agreement the labels wanted him to agree to. I was lucky enough to see them in Beryn Illinois the next year, and I have bought all of their albums off of their site.

People like Rosanne Cash or Taylor Swift sell their souls, then cry when the bill comes due.

Sheogorath (profile) says:

Creating an excuse

Music pirate: “If I pirate the music, the artist doesn’t get paid, but if I buy it, the money is stolen by the record company and they still don’t get paid. I’d rather pirate and save money since it works out the same for the artist either way.”
Disclaimer: record companies lose money to me not consuming their products full stop. I still get called a pirate by them, but whatever. *shrugs*

Grayzip (profile) says:

why can't it be both?

Two of the sleaziest, least trustworthy and most self-dealing industries on Earth are entertainment and tech. Tech types can only see the first half of that axiom, which leads to blind spots. The music industry is sleazy for keeping most the money. Spotify is sleazy for going for crafting a deal that allows this to happen. The artists are quite right to be livid at both

PaulT (profile) says:

Re: why can't it be both?

Wow… that’s one hell of a stretch. Spotify are “sleazy” for agreeing to a deal with the copyright owners so that they can legally offer music to people willing to pay for it (yes, huge numbers of people do pay Spotify, it’s not all ad revenue)?

No wonder the recording industry is in freefall. You work within the insanely one-sided and dated mechanisms they set up so that you can obey the rules, and you still get attacked as if you’re a criminal.

Anonymous Coward says:

Re: why can't it be both?

Spotify can’t negotiate directly with artists, because artists sold their copyrights to labels. All Spotify can do is negotiate a licensing fee that the labels will accept from it — it has no ability to control or even influence what the labels do with that money afterwards, and it has no means of routing around them since they own the rights.

Anonymous Coward says:

Re: why can't it be both?

copyright law forces spotify to agree with whatever the copyright holder defines as the deal.

Want to see massive change give companies like spotify to negotiate with either the assigned copyright holder or the creator

and see how quickly the artist get paid.

spotify could double/triple the payment to the artist and still make more money.

Anonymous Coward says:

From Madam Wong’s to Starwood
To the Whiskey on the strip
You can hear the crashing, blasting strum
Of bands that come to be real hip
And get a record contract
From a talent scout someday
They’ll sell their ass, their cocks and balls
They’ll take the check ‘n’ walk away
If they’re lucky they’ll get famous
For a week or two perhaps
They’ll buy some ugly clothes to wear
And hope the business don’t collapse
Before some stupid magazine
Decides they’re really good
They’re a Tinsel Town Rebellion Band
From downtown Hollywood
Tinsel Town Rebellion,
Tinsel Town Rebellion Band
It’s a little bitty Tinsel Town Rebellion
A Tinsel Town Rebellion Band
They used to play all kinds of stuff
And some of it was nice
Some of it was musical
But then they took some guy’s advice
To get a record deal, he said
They would have to be more punk
Forget their chops and play real dumb
Or else they would be sunk
So off they go to S.I.R. to learn some stupid riffs
And practice all their poses
In between their powder sniffs
Chop up a line now, snort it up now
And when they think they’ve got it
They launch a new career
Who gives a fuck if what they play
Is somewhat insincere
Tinsel Town Rebellion,
Tinsel Town Rebellion Band
A Tinsel Town Rebellion
A Tinsel Town Rebellion Band
Did you know that in Tinsel Town the people there
Think substance is a bore
And if your New Wave group looks good
They’ll hurry on back for more
Of leather groups and plastic groups
And groups that look real queer
The Tinsel Town aficionados
Come to see and not to hear
But then again this system works
As perfect as a dream
It works for all those record company pricks
Who come to skim the cream
From the cesspools of excitement
Where Jim Morrison once stood
It’s the Tinsel Town Rebellion
From downtown Hollywood

mattblack (profile) says:

Major labels NOT indi labels do this evil

re Spotify/Blackbox income. The article is accurate and its a great pity some well known artists have spoken out from their major label experience ignoring those who didnt take the corporate dick and consequently have a better deal from e.g. Spotify: the case is very different for Indi labels like mine, Ninja Tune, and artists signed to such labels. We fairly and clearly split the streaming revenues with artists, as part of our normal 50:50 profit split. No blackboxing.

Its once again MAJOR LABELS corprats who are the criminals here. Not only do they use blackbox accounting to rip off their artists, they also have forced Spotify to give them substantial shares in Spotify, the value and revenue from which is completely unshared with their artists. Thom Yorkes negative comment presumably comes from his Major label deal and is NOT ACCURATE FOR INDI LABELS AND ARTISTS. UNDERSTAND THIS AND STOP SPREADING MISINFORMATION. Spotify are the good guys cf Google, and the Major labels.

Sparrow Roberts (user link) says:

They Oughtta Be Wearing Stripes Instead of Suits!

Major labels have often been guilty of not paying what they are SUPPOSED to pay. I’ve collected unpaid royalties for Barbra Streisand, Led Zeppelin, Mongo Santamaria, Robb Royer of Bread, Astrud Gilberto, Airto Moreira, the estate of Duke Ellington, Aretha Franklin, Jim Hall, Philip Glass and others. There was unpaid money out there for the estate of Sam Cooke, controlled by Allen Klein at the time (who tried to wheedle what he could out of me so that he could go after it), which remained unpaid and for all I know still is.

Isn’t part of the Spotify plan for the majors to buy in? The more things change…

I’m doing my own small part for the real music world from here in a very musical place, Brazil:

http://www.salvadorcentral.com/codex

Tom Oswald (user link) says:

Time for a change

This is exactly why videscape.com was built, currently in beta but paying out unprecedented streaming rates by utilising a new unique revenue sharing model. Over the course of January 1.1 cents per stream was paid out. Combined with the new site that will be launching in March, the worlds first fair play video and audio streaming platform is growing fast.

Nargg (profile) says:

Makes you wonder...

This kind of makes me wonder if this is why we don’t see many good acts any more. Sure there are some real stars today, but it doesn’t seem to be as many as in the past. The artists are getting smarter and choosing different paths for their passions. So we, the fans see far less of it than before. Why would any good artist go through all this B.S. to try to do what they love? And older artists no longer seem to want to produce new music either. Instead they just tour and perform, which I understand is far more lucrative to the performers than producing new material. Bottom line in my view is that the Record Labels are eating them selves out of work due to their greed and mis-management.

That One Guy (profile) says:

Re: Makes you wonder...

Good, the sooner the better.

Once the current batch of parasites die off, maybe we can see a nice growth of music services, enabled by them no longer being tied down and hamstrung by record labels so desperate to cling to the golden age of CD sales that they make it incredibly difficult for any other avenue of sales and listening to succeed.

PaulT (profile) says:

Re: Re: Re: Makes you wonder...

Why is “rock” the only type of music you’re considering? If the innovation has been happening in other styles and genres while rock itself has stayed somewhat stagnant, that doesn’t mean that innovation has not been taking place. It just means that today’s artistic minds are moving in different directions.

That’s kind of AC’s point, I think. When my parents were complaining that there wasn’t any good new music when I was a teenager in the late 80s/early 90s, that didn’t mean that there wasn’t good music. It just meant that the increasing amounts of hip-hip, electronic and heavy rock music that made up the music of my generation was where the new musicians were heading. The blander (to my ears) pop of the 70s & early 80s that they preferred was going out of style, so it played less in the modern mainstream and less people gravitated there.

Personally, I think that even rock has still been pretty innovative over the last decade. It’s just not the preferred genre for the mainstream teen-aimed outlets that people are used to any more, so you have to look harder.

PaulT (profile) says:

Re: Re: Re:3 Makes you wonder...

“Ah well to me hip hop, electronic, pop, etc. are all basically forms of rock music,”

OK, you’re using a completely different definition of the word to me, then. Rock to me means guitar bands, although pop can be a subgenre of that.

“I hear very little today that doesn’t sound like 60s, 70s or 80s.”

You also listen to very different modern music.

“But that’s just me.”

Hey, each to their own. I’ll just maintain that I can’t see how on any kind of objective basis modern musicians aren’t innovating. I can, however, accept that your subjective opinions may be different.

CitySide Records (user link) says:

Partial says CitySide Records

CitySide Records says: Well they explain the subscription monies but never the monies per ad sold against the songs played. Pharrell was paid $2000 for happy on Pandora with millions of plays, how many ads was that on that song. Furthermore WHY IS IT NO ONE IS ASKING WHAT DO SPOTIFY AND PANDORA GET FOR ONE AD, this will tell how much is owed for those non paid subscribers, so why are we focused on the 9.99 only, please enlighten this as audience.

Anna2407 says:

I can understand artists anger! They work hard but don`t get what they must! It1s not fair! Of course artist salary is much bigger then in manager in a small company. But I was shocked that singer get only 6,8 % from all income! It`s peanuts! My work is to sell toys and my fee is very small. That’s why when I have tight budget I get loan. If you have the same issue than payday cash advance is helpful for you!

BenJammin says:

Record Companies

The Rap artists had the right idea…they created their own record labels. All it takes to start a record label is 1. A name. 2. A tax ID # and 3. A business license. Of course one has to promote or hook up with a promoter. I sell physical CDs as well as downloads. My average profit is 6 to 8 dollars per unit. Of course I’m not a big name artist and I’m miles away from being platinum but if I did go platinum by some flukish stroke of luck, I would be worth 6 to 8 million dollars. I say to hell with those big record labels..they’ve been ripping off artists for decades. START YOUR OWN LABEL!!!

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