Emailed on January 25, 2019 in The Friday Forward

In a past life, I was a touring musician and had music published on Spotify. I used to get a lot of questions about how that payment structure worked and, honestly, wasn't entirely sure. We just got a very, very small check every month.

Well here's a few fun facts to mull over as you shovel your driveway this weekend. 

What You Would Assume Happens
Fans may assume the $10 they pay for a monthly streaming subscription goes to the artists they listen to most. That’s not the case.

What Actually Happens
A portion of Spotify's subscription revenue is set aside as payment to artists. Let's call it an "artist pool."

This pool is distributed to artists by aggregate play counts. Since the pool is inherently limited, this is like you being paid not just on your performance, but on the performance of your competitors. 

If you have a loyal fan base who exclusively uses Spotify to stream your tracks, you're not necessarily rewarded since Drake is basically being streamed by everyone and their younger sister.

The better Drake does, the less money there is for you. Doesn't matter if you're a classical pianist whose fans have never wondered who Kiki loves, Drake is taking that money.

What this boils down to is massive shrinkage of music's "middle class." You either make very, very small amounts of money or you're huge. There's really no in-between. 

Fun Fact: A 2017 study in Finland found that under the current pay-per-stream model, the top 0.4 percent of tracks in that country accrued about 10 percent of royalty revenue.

It also incentivizes artists to produce content optimized for radio (which is probably the opposite of why a lot of you switched to Spotify.) Songs with a quick intro, clear hook at 50 seconds, and overall length of ~3 minutes get more plays. Unlike your favorite 8 minute jam, the radio cuts will get ~3X more streams (3X more money).

Sleepify Was a Hit Though...
Critics say the current model also invites fraud. In 2014 the funk band Vulfpeck generated $20,000 in royalties through Sleepify, an album of silent tracks that it encouraged users to play on repeat overnight as they slept. It was just silence. Spotify wasn't a fan of that one.

The Solution?
According to a growing number of proponents, the solution is to switch to a user-centric model. In this system, a subscriber’s monthly payment would be split among the artists whom that individual listened to. Light users would reward the few artists they regularly stream with greater royalties. Heavy users would have their subscription money split among a wide swath of acts.

Obviously this is an incredibly complicated system to build and Spotify isn't necessarily incentivized to build it. It would take an artist movement.

If this is interesting to you, here's a deeper dive.

There's always merchandising I suppose.