Spotify is an online music, video streaming company. It was founded by a Swedish Business man Daniel EK, and was officially launched on 0ctober 7th 2008. Spotify is available in many parts of Europe, America, New Zealand, Australia, and Asia.
The question that most people ask is, how much the artist gets paid per play on spotify. Of course there are some pundits and publications that like to give out certain dollar amounts, which in most cases are made up figures.
First, in order to understand the artist payment, it is crucial first to understand how the streaming royalties are divided. The following is a breakdown of the calculations:
- The number one step is calculation of a service rendered on spotify.
- The record labels must get their share of their revenue as they have deals in place to get their royalty flat and right off the top.
- The next in line after paying the record labels are the PROs. The PROs also have flat-percentage in place.
- Naturally, the streaming company, which in this case is spotify, also retain a certain percentage, which generally ranges from 15-20%.
- Then there are back office services that of course require employees who get a certain percentage as well. At this point, there is only around 40% remaining revenue and this is before the songwriters, artists, and publishers even get their share.
- Each publisher will then get a lump sum of all the plays he or she owns.
- The publisher will now divide royalties to the artists and songwriters. The publisher will know how to divide the payment
Having analyzed how Spotify income is divided begs the question of how much an artist will get. It is not safe to speculate on the average pay that an artist will get because there are many ownership cases that determine the total pay. Below are some of the cases that can determine the artist pay.
- If an artist owns 100% of the master recordings and the compositions, as well as performing their own publishing, that artist will get a high payment per play.
- An artist, who owns 100% of the compositions, performs their publishing but does not own the master recordings will earn semi high payment per play.
- One who owns 0% recordings, 100% of the composition but has a publishing company as the sole administrator gets a medium payment.
- Those that own 0% of the master recordings, 25% of the compositions but employ a publishing company gets a low payment per play.
Some artists like Lady Gaga have received a relatively low pay. According to reports, Lady gaga apparently received only $167 dollars for her popular hit ‘poker face’ that had a million plays over five months. But what people need to know is that artist payment is complicated owing to the many ownership scenarios. Nevertheless, the Spotify CEO says that the company has paid out over $2 billion to record labels and publishers since its establishment in 2008 to date.
Streaming services cannot normalize artist payment but their mandate is to fulfill the written contract. Payment will differ depending on the written contact. Therefore it is not possible to determine exactly what each artist will earn from spotify.