Does Spotify pay? Another look at the numbers

Despite this blog’s basic remit to cover contemporary classical music, one of its most popular posts has been ‘How much do musicians make on online?‘, a quick analysis of a graph published by Information is Beautiful about the relative remunerations of different ways of selling music.

That graph is widely-known, but it’s also four years old now. And since it was produced, Spotify have opened up a lot about how much they pay artists. It turns out that the Information is Beautiful graph was wrong on how much Spotify streams pay by around a factor of 30.

As Spotify themselves now point out, thinking of their royalty rates on a per-stream basis is a bit misleading anyway, since they make their calculations based on a percentage of the total revenue pie. So the more subscribers there are, the larger the effective royalty rate. But back in July 2013, when they started to release this information, they suggested that a figure of between $0.006 and $0.0084 per stream was not a bad basis for calculations. As their subscriber base grows, so that figure will go up.

Anyway, apropos of not much, I thought I would use these numbers to do a quick tot-up of how much money two famous Spotify objectors – Radiohead and Metallica – might have made from the service. I took the figures for number of plays given for the top ten songs on the artist’s Spotify page, and multiplied them by both the low and high estimations of what Spotify says it pays out on average per stream.

Bear in mind that these numbers are not externally verified – they’re what Spotify tell us is going on – but they are worth considering in the context of some recent debates over the long-term viability of paid-for streaming.

Radiohead

Thom Yorke has called Spotify ‘the last desperate fart of a dying corpse‘, and in October last year pulled his Atoms for Peace album, made with Radiohead producer Nigel Godrich, from the site. Yet here’s an idea of how Radiohead are actually doing out of Spotify:

radiohead-top10

That makes 107,302,714 plays (as of Friday 28 March). Based on Spotify’s estimated per-stream pay out, that’s somewhere between $643,816 and $901,342. OK, computer.

Metallica

Despite dragging himself through the mud for a decade over Napster, Metallica’s Lars Ulrich made peace with online music in December 2012 and Metallica’s back catalogue came on stream. In fact, in the same month that Yorke and Godrich made their comments about Spotify, Ulrich claimed that ‘Spotify is working right now‘. The delay in joining probably accounts for Metallica’s fewer plays, but the numbers seem to bear him out:

metallica-top10

That makes 67,151,066 plays (as of Friday 28 March). Based on Spotify’s estimated per-stream pay out, that’s somewhere between $402,906 and $564,068. Sad but true.

None of this is a definitive answer to the ongoing future of music debate, but I think it’s useful to see figures like this while that debate is being had.

24 thoughts on “Does Spotify pay? Another look at the numbers

  1. The beef of Radiohead and Metallica is possibly more due to their record company getting those sums and not paying them on to the writers/performers (either at all or in full). Contracts are structured (sometimes – certainly in the early days and probably still are) such that online plays don’t count towards your basic recoupment, and so you don’t get paid them until you recoup your advance through normal sales. The definition of “normal sales” is also quite devious.

    Secondly: your figures, which are interesting!, are some way short of the amounts Spotify claims that a “global star” would receive in annual payments (on the link in your post). Is that because their figure is wrong, your figure is wrong, or because Metallica and Radiohead aren’t “global stars”?! (Maybe the figures you’ve seen are “so far this year” or “in the last 30 days”? admittedly if you hover your mouse over that top 10, it just says “total plays on Spotify”).

    Lastly: I was out with a friend yesterday who says that Spotify should be pronounced spote-ee-fie, because they are missing a T if they want to be pronounced spot-ee-fie. Ha!

  2. I don’t see how information about the income streams of rock stars is germane to the financial lives of the struggling musicians and composers involved in new classical music. At tenths of a cent per ‘stream’ the guitarist who lives around the corner from me has to be played a thousand times just to earn enough to buy a sandwich. As a listener, I’m endlessly thankful that the music I want to hear is on Spotify, but totally mystified that any of the musicians or composers bother.

  3. I’m actually privy to what a lot of artists make through services like Spotify through my job (although obviously I’m not going to name names or quote exact figures in public) and the $0.003 rate still comes up pretty often. It could be that they do something similar to ASCAP or BMI where certain artists get “bonus” payments if their music is played all the time, or that paid subscribers generate more royalties than people who use the ad-based platform.

    If Spotify didn’t exist, and 1% of the people who listened to Radiohead on Spotify purchased a Radiohead song instead (1 million sales), that would generate between $700,000 – $900,000 in income for the record label (depending on the retail price and after iTunes takes its cut that would then be paid to the band per their royalty rate) plus an additional $91,000 in mechanical royalties (expense for the label, but profit for the songwriters).

    As an independent artist/composer, when I sell a track on iTunes, I get approx. 70 cents (I don’t get mechanical royalties because I’m also the record label and it’s silly to go through the trouble of paying myself). My projects typically sell in the 2,000 – 3,000 unit range, some have sold more, some have sold less, but they usually wind up at least paying for themselves, which is awesome. That wouldn’t be possible if my music was on Spotify. My $21,000 for a 3,000 unit project would become approx. $90 -$180 (assuming that everyone who checks the project out listens to every song once and only once). That’s for the entire project! Currently, the way my income works for my projects is the way most recording projects go: there’s a spike when a project first comes out and then it settles down and I get between $50 – $100/mo. when I’m not actively promoting my music or going on tours or anything. That’s not a lot of money, but I’m not really famous (esp. not when compared to my clients) and it’s better than a lot of artists, so I can’t complain.

    I suppose what dismays me is that I want to do ambitious projects. Recording “The Porpentine” from my album The Lionheart cost a fortune. I was fortunate to be able to earn it back but there’s noooo wayyyyy I would have been able to do that if my music had been on Spotify. However, I want people to listen to my music, and there are a ton of people who only listen to music on Spotify and thus don’t have access to any of my studio recordings.

    There isn’t any easy answer. One solution I considered was Spotify adding an option where selected artists could only be heard as part of a “radio” program but not be subject to on-demand streaming (like Pandora, which has proved to be good promotion for me and isn’t on-demand so I don’t care about the royalty rate because it’s not competing with my on-line sales).

    I suppose ultimately that ANY number times hundreds of millions is going to add up to a big number, but hundreds of millions of plays isn’t really a viable option for your present-day composer.

    Anyway, I think you’re awesome and I love your blog, so hope I’m not coming off too bitchy.

    Chris

    1. Chris, not too bitchy at all. This post isn’t about contemporary music at all – hence my first sentence. The economics there are completely different, and comparisons can’t really be made I think.

      One thing I will say: “If Spotify didn’t exist, and 1% of the people who listened to Radiohead on Spotify purchased a Radiohead song instead” – those are two pretty big ifs, it seems to me. Streaming isn’t going away, and the way technology and consumer desires have drifted over the last few years it, or something very like it, was always going to emerge. Secondly, it’s just not possible to think of Spotify plays as lost (physical/iTunes) sales. Also, those 100,000,000 aren’t individual users (Spotify isn’t that big yet) – most of those streams will be repeat plays. That’s different from the one-time sale of a CD or mp3, and again makes direct comparison different.

      Short story: we simply don’t know how the economics of Spotify will play out in the longer run. Its user base still has a lot of room for expansion – and as that happens the ‘per-stream’ payment will grow (as the overall revenue pie gets bigger). The only reason I put this post up was to get on record how far things seem to have moved on in the couple of years since a lot of the stories about it being impossible to make money off Spotify started to do the rounds, and since I last wrote about it. No, it’s not perfect yet, especially for musicians at the lower end of the audience scale, but it is developing rapidly and I find that hopeful.

    2. I was just about to pick up your “ifs” but Tim RJ beat me to it!

      What Spotify would say in response to your “ifs” is that those 1 millions plays would NOT have translated into CD purchases or MP3 track downloads. They would have translated into illegal downloads or sharing. I’m sure we all know “someone” who has a big stash of MP3s and in that stash I’m sure there are plenty of Radiohead songs and perhaps the odd Metallica number too. It’s much easier to get a Spotify Premium sub and stream from there, at high quality, to any of my devices. My MP3 collection (all entirely legit…) has just gathered dust since I’ve used Spotify.

      I would also like to address you and your Porpentine album. Now then, I thought, “that sounds interesting, and anyone who posts about their music on The Rambler is going to be a cut above the rest, so I’ll check it out”. Sadly, I can’t, because you’re not on Spotify and I don’t use iTunes for a number of reasons. If perhaps I’d heard a few of your tracks on Spotify, here’s what might (might, of course) have happened:
      – listened to The Porpentine (you just got paid a tiny amount)
      – cool! listened again (you just got a bit more)
      – listened a few more times (you got a bit more)
      – I saw you have a gig in my area, well I liked Porpentine, I’ll go along (now you just made pounds rather than pennies)
      – I bought your CD at the gig, perhaps it has CD-only tracks, perhaps it has cool packaging (you just made even more)
      – I recommend you to my friend, he books you at his festival, etc.
      – I’m sure you get the picture.

      My point is that if you hold your music hostage until people pay what you think it’s worth (and I bet you think it’s worth more than 79p at iTunes too), then you will never succeed. It’s you that people will pay for, not so much your music.

      (Yes I do have a CD collection, that’s a different beast to my unused MP3 collection. CDs are for keeps, they are treasured objects, a physical manifestation of my listening history, kind of souvenirs – reminders of what I most enjoy in music. I’d never buy that Strauss set, much as I enjoy Strauss; I’d listen on Spotify or more likely watch the operas on DVD/streamed, but if I came to your gig and loved it I’d certainly buy a disc or two from your merch stall.)

      Personally I’m not big into recordings, however I’m pretty into writing stuff down for people to play. I give all my scores away free and while this has undoubtedly annoyed a lot of people, thinking that I’m somehow “devaluing” their work by proxy, it’s actually got my music played all over the world in places I’d never have reached otherwise. People then approach me from these distant places saying “hey can you write something specially for us?” and sometimes, just sometimes, there’s money attached. That’s not a living, I grant you, but then neither would be my sheet music sales, that’s for sure! And which approach leads to the music being heard and played more?

      1. P.S. I have just googled you to try and see if I can hear your music, step 1 in my list above, as I do like a bit of Zappa and it seems there’s some relation to it. While lots of results come back, I can’t preview on Amazon’s MP3 store, and you don’t have tracks (only a profile) on Last.fm, and none of the other places (even your own site) let me hear any.

        What DID come up were 9 videos on Youtube of you performing. I think they are “improvisations on” your pieces rather than the pieces themselves? The camera was shaky and hand-held and the recording quality poor, and there’s Youtube’s dodgy encoding too. DId you spend all that time in the studio recording your music perfectly only for me, the uninitiated punter, to find the poorest impression of it on Youtube?

        Better not get started on how much money you just made from me hearing you on Youtube. But I’ll give you a clue, it starts with a 0!

      2. Hi Tim,

        It’s very nice to meet you! Thank you for your well-mannered and argued reply. Perhaps I am being short-sighted in the sense that if someone doesn’t know me or my music at all the first thing they are going to encounter are YouTube videos of improvisatory works (except for “T. Williams”). That probably doesn’t present me in the most positive light, and it would be super convenient to just tell people to check out my music at Spotify because then at least they’re checking out full studio recordings (for the most part, there is a live album of a lot of improvisatory material — improvising is a real thing with me). In terms of web presence, I could be doing a lot more, but it’s tough to find time when you’re working, teaching at two universities, and are a full-time Ph. D. student…but someday…someday! I suppose that’s all the more reason to make sure that people can find the best stuff pretty easily.

        I actually agree with you completely about giving your scores away for free. I do have some customers that purchase all my scores, but if someone e-mails me and wants to play my piece, I usually just send them everything, because the music is there to be played.

        I work very hard on the packaging for the CD’s that I released, but we live in a digital world now, so I don’t foresee myself having much more physical product in the future (other than the inventory that I still have).

        I also checked out your website and was thoroughly impressed, especially with the quality (of both the music and the sound) of your videos. Writing an opera and getting it performed is a truly remarkable accomplishment (as I’m sure you know). Let’s be friends.🙂

        And I e-mailed my digital distributor to see about getting my music on Spotify. I’ll try it for a couple years and see what happens. Maybe I’ll get a killer gig and have you to thank for convincing me.

        Chris

      3. P.S. You hit the nail on the head with the Zappa thing. I’ve performed with dozens of his musicians including Steve Vai, Mike Keneally, Ike Willis, Robert Martin, Ed Mann, Terry Bozzio, Warren Cuccurullo, etc., etc.. and it was Frank’s music that inspired me to be a composer.

  4. Just as an example, I saw an ad on Facebook: The “Richard Strauss – Complete Operas” box set features 33 discs covering all 15 of his classic operas & more! Buy it at Amazon for $169.72 now!

    That’s 202 songs! Already a total bargain.

    However, why would I (or anyone) do that when I could listen to it for free on Spotify (which I can) and read the libretto/score on-line? Instead of the wholesale price from $162.72, Universal would receive between 60 cents and $1.20, less than the cost of the Facebook ad.

    1. Spotify free does have a number of disadvantages—lossy compressed audio, advertisements, the need to be connected to the internet to listen, inability to edit metadata. (At least it did last time I tried using it.) Probably more. I suppose the more important question is why someone would buy the box set for $169.72 when someone else has almost certainly ripped the entire thing to FLAC and put it up on RUTracker or some similar file-sharing website for free download.

      Streaming definitely does have a future, if only for preview purposes, but I think people are still quite attached to having control over the music they want to listen to. I wonder if a successful business model is possible that bases itself on the existing illegal file-sharing systems—e.g. a record label offering MP3 streams + booklets for free users and then for a “premium” account at eg £10-20 a month lossless downloads + PDF booklets at fairly high speed, including deleted, out-of-print and archival recordings where contracts and copyright law permit. Basically sort of like Naxos Music Library, except your subscription allows you to download rather than merely listen. Probably the economics won’t work out so neatly esp as regards bandwidth, but I do not see people’s willingness to pay for streaming to be on the rise, whereas downloading is something it’s at least usually acknowledged you *should* be paying for, even when you aren’t.

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