It’s a thing.
There are 10 million paying subscribers to the streaming music service in question, but for the many people who use it, including myself, there’s a catch: the knowledge that the artists whose music is available on Spotify receive little payment from having their songs played.
This especially pains the musicians and music industry folks I talk to who love Spotify but feel as if they’re taking money out of the pockets of their own kind.
According to the Spotify Artists Web page (www.spotifyartists.com) the royalty rate ranges from $0.006 to $0.0084 per song stream. Spotify notes that it has paid more than $1 billion in royalties thus far (including $500 million in 2013), accounting for 70 percent of its revenue, and as more people pay for the service, the bigger the compensation pool will grow.
In an article in The New York Times last year, Metallica manager Cliff Burnstein estimated that once Spotify reached 20 million subscribers, streaming royalties would completely compensate for lost album sales, at least for the band in question.
(Already, Spotify says that the top album streamed on its site earns more than $400,000 a month)
That’s only for the biggest artists, though, which brings us back to the whole Spotify guilt thing.
But here’s why you shouldn’t feel bad for using Spotify, or any other streaming service: very few artists have ever made money selling records.
When downloading first started to really eat into album sales, I dug into the numbers for a story on the topic and found that less than 7 percent of artists on a major label sold enough records to begin to recoup the expenses of making the album in question.
Yeah, the Eminems of the world may earn millions by selling millions of records, but if only 5 percent of the workers in a given industry profit from their labors, is that really a system worth defending? What about the 95 percent who get nothing or next to it?
Fact is, an overwhelming majority of musicians have never earned much of anything from their recordings, even before downloading and streaming services took a huge bite out of the industry.
I’ve interviewed artists who’ve sold millions of records who claim to never have made a dime off of album sales. For a lot of bands, selling records is really only a way to make back the money it cost to make the record, not a means of income.
Why do they make albums then? So they can tour and sell merch, which is where the money really is.
Yes, expenses are high when touring, but so are ticket prices, and the profit margins for a band selling a $20 T-shirt that cost them less than $5 to make are obviously far more lucrative than album sales.
And this, in a roundabout way, is where Spotify can benefit artists financially.
These days, there are limited outlets for an artist to get their music heard by fresh ears. Terrestrial radio is the domain of a limited pool of major label acts, satellite radio is better and there’s always YouTube, but Spotify can expose bands to millions of potential new fans.
Some of these fans, in turn, may buy a ticket to said band’s show when they come to town or hit their Web store up and get a T-shirt.
Now, is this a path to riches for most artists?
No, but neither is the traditional model of selling CDs at record stores.
Spotify might not help many musicians pay the rent directly through royalties, but it can benefit their bottom line by serving as a good way for bands to be heard.
So, keep hearing them.
And don’t feel bad about it, either.
Contact reporter Jason Bracelin at email@example.com or 702-383-0476. Follow on Twitter @JasonBracelin.