One of the big complaints about Spotify is the low royalty rate for artists. While it can be blamed on numerous factors (like an artist's deal with a record label), ultimately Spotify's average stream pays about $0.006. To earn just above the U.S. poverty line, which is $12,000, an artist would need three million streams (not factoring in payouts to label or management). But if you ask Spotify CEO, Daniel Ek, he would push back on the conversation and instead say the artist needs to reassess their marketing timelines.
In a podcast interview with Music Ally, Ek did not hold back and is sure to ruffle some feathers with his push back on low royalties:
“It’s quite interesting that while the overall pie is growing, and more and more people can partake in that pie, we tend to focus on a very limited set of artists,” he said, referring to the reporting of views on streaming royalties.
“Even today on our marketplace, there’s literally millions and millions of artists. What tends to be reported are the people that are unhappy, but we very rarely see anyone who’s talking about… In the entire existence [of Spotify] I don’t think I’ve ever seen a single artist saying ‘I’m happy with all the money I’m getting from streaming,” he continued.
“Stating that publicly. In private they have done that many times, but in public they have no incentive to do it. But unequivocally, from the data, there are more and more artists that are able to live off streaming income in itself.”
“There is a narrative fallacy here, combined with the fact that, obviously, some artists that used to do well in the past may not do well in this future landscape, where you can’t record music once every three to four years and think that’s going to be enough,” said Ek
“The artists today that are making it realise that it’s about creating a continuous engagement with their fans. It is about putting the work in, about the storytelling around the album, and about keeping a continuous dialogue with your fans.”
Earlier in the interview, Ek pointed out that previously the top 10% of streaming came from 30,000 artists, and now it's up to 43,000 artists, showing how many more artists are benefiting from the platform.
In a recent earnings report, Spotify revealed they generated revenues of 1.89bn in Q2, up by 13% from Q2 2019, reporting an operating loss of €167m and a net loss of €356m for the quarter. Read the full report here.
Every Time I Die's Keith Buckley weighed in on the quote saying "Sure, on one hand Spotify is vampiric and exploitative of naive talent. but on the other hand, $.17 split 5 ways every six months is income I never would have earned had I not sacrificed years of my life to making the music found there. so who’s to say, really."
sure, on one hand Spotify is vampiric and exploitative of naive talent. but on the other hand, $.17 split 5 ways every six months is income I never would have earned had I not sacrificed years of my life to making the music found there. so who’s to say, really
— keith buckley (@deathoftheparty) July 31, 2020