Spotify launches site explaining how it pays artists

·2-min read

Spotify launched a new website Thursday addressing questions on how rights-holders are paid amid growing global debate over the remuneration of musicians in the streaming era.

"Artists deserve clarity about the economics of music streaming," Spotify said on its new Loud and Clear site, adding that it aims to "increase transparency by sharing new data on the global streaming economy and breaking down the royalty system, the players, and the process."

It said 13,400 artists had generated revenues of $50,000 or more last year and 7,800 generated more than $100,000.

But it added: "Spotify does not pay artists or songwriters directly. Instead, Spotify pays the rights-holders... Once that revenue leaves Spotify's hands, how much an artist or songwriter gets paid depends on their agreements with rights-holders."

Artists signed to major labels will typically take only 20 percent of these revenues and may have to split the remainder between band members and managers.

So many of those 13,400 artists may only be earning around $10,000 a year -- and then only if they have paid off their initial debts to labels.

Musicians around the world have been increasingly vocal about their finances in recent months as labels announce record profits from streaming, while all but the top artists struggle to make a living.

A study by France's Centre National de la Musique recently found that 10 percent of all revenues from Spotify and Deezer were being generated by just 10 megastars at the very top.

As to why an artist with a million streams does not earn very much, Spotify said that this was no longer a very high figure and payments are decided on each artist's share of the total, not on a per-stream basis.

With some 345 million users around the world, there are now more than 550,000 tracks with more than a million streams, it said.

Spotify also said they were sceptical of adopting the "user-centric" model, supported by many campaigners, in which each subscriber's monthly fee of $10 goes only to the artists they stream, rather than into one big pot that is shared based on global plays.

"We are willing to make the switch to a user-centric model if that's what artists, songwriters, and rights holders want to do," it said. "However, Spotify cannot make this decision on its own -- it requires broad industry alignment to implement this change."

Studies have shown the user-centric model may only make a small difference to lower level musicians, but many campaigners say it is inherently fairer and will encourage greater investment in niche genres. They accuse major labels of blocking the move.

Soundcloud became the first streaming service to introduce "user-centric" payments this month, but only for the 100,000 independent artists that monetise directly through its site.