1y ago

Spotify doesn't make profit from music streaming, despite having over 400M monthly active users, because it pays two-thirds of all its revenue to the rights holders.

open.substack.com Why Spotify Struggles to Make Money from Music Streaming

Despite being the king of music streaming, Spotify is struggling financially, but why?

You're viewing a single thread.

208 comments

Man, a lot of people here don't understand how the music industry works. From the perspective of someone who's been loosely following the music industry, what I've learned is that it doesn't matter if Spotify gave up 2/3rds of their revenue, or 100% of it, the artists would still make fuck all.
Why?
The labels love taking their cuts and as a result, artists make very little. Instead of taking the blame for giving artists a <10% cut of the label's revenue from their music (my understanding is that it's pretty common for musicians to get <10%, sometimes <5% if you're on a particularly shitty label), the labels are blaming platforms like Spotify.
Now, I'm not saying that Spotify is blameless, however I think there's a lot of misdirection from the labels going on. I don't remember anyone complaining about pre-spotify services like Pandora Radio for not paying out enough when they were largely ad-supported, which is another reason I'm not totally buying the, "it's cause it's free" argument either.
Fuck, remember Pandora?
- Labels are an outdated concept that needs to die. Now that you can find any music from just a quick search artists shouldn't have to rely on them, at least not as heavily, for advertising.
  
  There was a very, very brief moment from about 2005 to 2011 or so where there was money to be made directly by artists on iTunes or the other music stores where the tracks were like 99 cents each.
  But people stopped buying as soon as Spotify became popular, and now any artist that wants to release on Spotify without a label still doesn't make much money.
  
  Relatively “large” truly independent bands like KNOWER are starting to give true home recording a base of proof of functionality.
  Power to bandcamp.
  
  You've got my heart working overtime. Louis Cole is a monster.
  
  Why isn't there some kind of genre music search for all artists without a label, Foss of course. From what I understand, when you're starting out in music, getting people to hear it is the hardest part.
  
  Artists aren't forced to sign a contract with a label. They do it because they want to.
  They do it because the label will often invest a million dollars in the artist upfront before the songs are even available for the public to stream.
  Good recording studios are expensive to hire. And if you want a video track to go with it... those are even worse.
  
  Uhhhh, dunno about that one. Pretty sure it's public knowledge labels will go to almost any lengths to ensure artists cannot be independent, especially when they're small. Good recording quality is quite readily available in many large cities, either as a paid service (which sometimes is still outbid by labels), or through a public library. Many of the issues of "labels investing in artists" loop back around to "labels have made it physically impractical or impossible for the artist to invest in themselves".
  
  Ehh, you've got a different but similar problem these days. Before, it was hard to get the word out so even finding new bands was difficult. Now, there are so many artists that you've got to find a way to stand out. Still need marketing. That's what labels provide.
- Indies are on sporify too. Spotify pays them shit too. Label or not.
  
  They just changed the rules so that if smaller artists don't get a certain number of plays they don't even get a payout.
  
  With less than 1000 streams per year.
  This is solely to kick out the AI generated music, which is already taking a significant share of the payout from the musicians.
  This change is not against smaller artists, but for them.
  
  I kind of call bullshit on that take.
  There's definitely AI generated music that can surpass 1000 streams per year and many real bands that cannot.
  
  Less than 1000 streams is like a band being unable to fill up a 100-person venue for a 10-song set once in a year (for the kind of band that plays live gigs). Opening acts for obscure bands play more than that. If you're that unpopular, you're hardly a band at all.
  They didn't say all AI generated music gets less than 1000 streams; they implied most of it does.
  
  But then are you implying that those bands that are that unpopular are undeserving of getting paid even a little? Because they're not a "real" band?
  
  Stuff that nobody wants to listen to just takes up space and clutters up searches, making it harder for people to find the stuff they actually want. It had negative value for the platform and for users. That's why they went the AI stuff gone. If a few actual bands miss out on a few dollars of revenue as a result of Spotify getting rid of the outright junk, I'm not gonna shed a tear over it.
  
  You don't have to shed a tear. But I find your take incredibly harsh on bands that are trying to start out and find their audience.
  Eliminating low quality AI content is desirable for me as well, but nuking even more incentive for bands that are starting out is the wrong thing to do in IMHO
  
  Even if you are starting out thousands streams is nothing. I have a few friends who have a band. Its really small, basically everyone who listens to them knows them personally. They have 20 monthly listeners, but almost all of their songs on their own have 1.000 yearly streams – because Spotify puts them randomly into their automatically generated playlists.
  Meanwhile kicking all the 'bands' out with less than 1000 streams allows them to pay the rest more.
  
  I don't actually know anything about where bands are supposed to find an audience, but I don't think bands who haven't found an audience should expect to get paid, the same way I don't expect to get paid for going to a job interview or engaging in a hobby. If a band doesn't have an audience they can reliably entertain, what they're doing is self promotion for their own benefit, not entertainment for the benefit of an audience.
  
  I thought it was 2,000?
- Pandora didn't replace buying music. They did not add the "on demand streaming" option until after Spotify was prevalent.
- I still use pandora free daily!
- Lots of people still use, and even pay for, Pandora.
- Do you know how the merch shops works? Spotify seems to be a reseller of some kind. How many % of the money is going to the artist usually?
  
  Not talking about Spotify merch, didn't even know that was a thing. I was talking about buying merch from the artist themselves.

208 comments