In response to recent criticism from esteemed musicians like Nigel Godrich, Thom Yorke, and David Byrne, Spotify has launched a new site called Spotify Artists. The site’s main function is to educate music artists on the company’s business model as well as displaying analytics for the streaming patterns of their own music. It aims to show how Spotify calculates its payouts for streams of artist’s music, and convince them that as the company grows, their streaming earnings will make up for any fall in sales of CDs and downloads.
The position we take is look, we know Spotify is not perfect for all artists yet, but this is the theory behind it, this is where we are, and this is where we’re going… With any format change in music–CD and iTunes included–there’s a lot of confusion around how these different models work, and quite often some serious skepticism. We understand that’s out there, so we want to be as clear and transparent as we possibly can explaining how Spotify fits in.
The company claims that nearly 70% of Spotify’s total revenues go to “music industry rightsholders” like abels, publishers, distributors, which pay musicians and songwriters, and through certain digital outlets, independent artists themselves. Spotify has paid over $500 million to them in 2013. Spotify has also shared that the average payout for a single track stream is between $0.006 and $0.0084. However Spotify’s director of artist services, Mark Williamson, argues that payouts are determined by a more complex formula:
"Per-stream is a really flawed way of thinking about it. We want to put the figures in context of what these payments will be when we launch in new countries and get to 40m paid subscribers. That small indie band whose album made $3k a month in July will now be looking at $17k a month from Spotify alone, and the global pop superstar will be looking at over $2m."