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.
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.
Despite being the king of music streaming, Spotify is struggling financially, but why?
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How much money would they want to skim to distribute the music? 33-66 split doesn’t sound so bad considered that they don’t produce the music, sign artist, promote them, etc
They can always start their own label if they believe that vertical integration will be more profitable for them.
They tried that with podcasts and it didn’t go as planned
33% is a massive amount for effectively just being a download service. massive
For reference, the Steam store of the gaming distributor Valve charges 30% of each sale, however the Steam service provides quite a bit of incentive. Having community and discussions easily accessible, cloud storage that links to screenshots and saves, branches, I'm sure there's more.
Meanwhile Spotify gives you, what, playlist creations?
Because servers and traffic are free. Totally forgot how you don't have to pay the people keeping the service alive either. A steam game you download once? Maybe once a year? Music gets streamed (downloaded) every single time unless you decide to download it. Can we maybe not pretend like Spotify does fucking nothing?
servers and traffic are basically free, it's very low cost - their expenses are salaries not servers.
I didn't mention servers because that is their only cost next to employees.
If they aren't paying artists well, well what's the point of having servers.
Maybe can we not pretend like Spotify is some up and coming startup that barely breaks even because of their benevolence?
Because apparently these servers cost enough that even with 400mil users they aren't making profit? The point of Spotify is giving paying customers what they want so that hopefully Spotify can make a profit. Unsure why that's so unacceptable for you? And small artists have been paid like shit long before Spotify was an idea. Take that up with the actual music industry. Or maybe accept that turning your hobby (making music) into a job just doesn't pay the bills for everybody that tries. I have no idea how you can blame Spotify for payouts bigger than on YouTube or Twitch when it's the music industry fucking with the numbers.
Many of their executives make over $300,000 and the CEO is a billionaire. I don't know how you can't blame Spotify for payouts.
Servers and employees. Nothing else. Got it. No office space, no advertising, no royalties.
What a genius business plan. No wonder they're so successful.
Then I'm sure their executives would be happy to take a pay cut to make the business profitable.
Meanwhile Spotify gives you, what, playlist creations?
Distribution is hardly free. There are massive overheads - do you know all the details of sales tax law in your own country? What about in hundreds of other countries? They're all different. And what about refund laws? That's also different in each country. If someone writes you an email in a language you don't even recognise... do you just ignore it? To give one example in my country if a customer asks for a tax receipt after a purchase, you are required by law to give it to them. That's hard to comply if you don't speak the same language as the customer. Spotify handles all those headaches for you.
What if your bank tells you they have refunded the payment someone made to buy your album, pending an investigation into wether or not the cardholder actually authorised the payment and received what was advertised. Can you prove it wasn't a stolen card? Can you prove the album was delivered to the customer? The bank isn't going to do that for you - they're happy to just refund the payment (and might charge the seller a $50 processing fee...). Spotify is able to provide proof and will fight people who demand unreasonable refunds. You probably can't prove it, which means anyone who wants a free album can just buy it and complain to their bank. And trust me, it will happen. Might not even be your customers asking for refunds - it might be a rival band that wants you to suffer. If there are too many refunds, the bank will just take way your ability to sell stuff.
Spotify takes 30 %, too. The 'one third' in the headline is just rounding.
And the question should be if digital markets and platforms should take 30 % or not. Because every platform does so from Steam to Apple App Store to Spotify.
Besides that Spotify offers more than Steam imho. Playlist creation, discovery algorithms, individualized playlist generation, AI DJs and if you consider Steam to also be a social platform, Spotify is too.
the actual article we are commenting under thinks its outrageous that Spotify only gets 30% and things artists should get less. so it's not "should they take 30% or not", the question posed is "why are the greedy labels not letting spotify take even more" for some reason, madness
Distributing the music is basically free these days - at least for the artist/label anyway. Artists can pay about ten bucks (per album) to various cloud services which will handle distribution - and that includes global physical CD distribution (via an online store, not retail stores). That cost is often $4 per disc and paid by the purchaser.
Recording an album and music video can cost a fortune, and marketing the album can cost an infinite amount of money. That's where the record label spends most of their money and it's not a fixed figure - it gets negotiated for each album. AFAIK the split between the artist and label usually varies depending on wether the label's investment has been paid for yet. And marketing is an ongoing expense, the label can keep spending money on that indefinitely (and the artist probably wants them to keep spending money on marketing).