[sleepyfran]

"Spotify already pays nearly 70% of every dollar it generates from music to the record labels and publishers", yet musicians still get paid incredibly bad. Maybe if the only way of making your business model sustainable is by underpaying artists, your business is just not sustainable.

[willvarfar]

artists sign the deals with the labels, who license it to spotify and the other streaming services?

The problem isn't that spotify isn't paying for the content, the problem is that artists sign away the rights to their content?

Is spotify the baddie here?

[Karellen]

Yes, artists have the wonderful choice of being able to sign for one of three labels, with no meaningful distinction between the deals any of them offer, because that's just how oligopolies roll. And they collude^Whave deals with spotify.

Maybe spotify and the labels suck?

https://www.promarket.org/2022/10/03/why-streaming-doesnt-pa...

[dbbk]

They could independently release through Spotify if they wanted to. They're not forced to sign to labels. And even if they were, that's not Spotify's problem.

[93po]

Getting big in music requires a lot of money and connections that I assume labels make intentionally difficult to access outside of them

[troupo]

And what would you have Spotify do in this situation? Sign artists directly? And draw the ire of those three labels who will immediately pull all their music from the service?

[Karellen]

I don't think there is anything Spotify can do themselves

...which is why legislation like the Uruguay bill is a good thing, and important.

[mptest]

True, good point. famously never exploitative music contracts. I don't think I've ever heard of a famous artist being taken advantage of via "deals".

[93po]

I hear this all the time

[HDThoreaun]

Indie artists are all on Spotify too. Neil young is basically the one one who isn’t at this point

[justsomehnguy]

There is no shortage of artists.

Note: the parent changed their comment

[boesboes]

yeah, just get a better paying job!

[madeofpalk]

Right - I'm confused how the record labels get out of this with zero criticism.

[TheOtherHobbes]

Yes, it's an industry problem. Spotify is just the latest and nastiest incarnation.

[zemvpferreira]

Or maybe being an artist is an unsustainable career for most.

[rchaud]

Considering Spotify has never made a profit in its history, they're in good company.

[zemvpferreira]

Quite possibly. Here's what irks me: no one promises businesses/entrepreneurs a right to earn money doing what you want. You find a market to serve and use leverage to extract a price for your service. You don't find your market and leverage, you don't make money. Lord knows I've made and lost plenty.

There's at least a sizeable minority that doesn't believe this applies to professions, especially creative ones. That effort or talent or belief mean you're entitled to make a living at some thing. I'm sorry to everyone who invested 20 years in their promising celloist career but I just don't support that notion.

[rchaud]

> no one promises businesses/entrepreneurs a right to earn money doing what you want.

I dont know if that's true anymore. It seems that investors are happy to make founders incredibly rich well before the company even shows a hint of profitability. Daniel Ek being a billionaire in spite of never turning a profit isn't in line with business orthodoxy.

With creative professionals, they might get a fat advance from their record label, but it'll be clawed back with studio fees, tour logistics and managerial fees.

[zemvpferreira]

For every entrepreneur who gets rich off mooching from vc, 10000 are reading your comment with despair. Most people never get any funding to begin with. Not so different I would say.

[satyrnein]

Apple's App Store pays out 70% of every dollar to app developers, yet most apps make nothing. It's less about the 70%, and more that infinite shelf space and finite human attention leads to a lot of ignored products.

[piva00]

Labels take 50-90% of the royalties money, depending how big the artist is. Huge artists can have their own sweetheart deals, or their own labels, but 50-90% of a cut to the label is pretty usual.

[troupo]

> Maybe if the only way of making your business model sustainable is by underpaying artists

Spotify pays 70% of its revenue to music labels... but its Spotify's fault that this money never reaches the artists?

[jbverschoor]

More like 40% instead of 70%

[troupo]

We can't know for sure because we don't know the exact contracts.

Forbes has an overview, but the numbers mostly come from Spotify: https://www.forbes.com/sites/marisadellatto/2022/03/24/spoti...

You can look up cost of revenue (which is predominantly royalties) in their financials: https://investors.spotify.com/financials/default.aspx

[jbverschoor]

I did already. See my comments.. it’s about half of 70% of revenue.

[troupo]

The comments I saw were you just claiming it's half of the 70%.

According to 2022 annual statement, audit section, page F-3

--- start quote ---

For the year ended December 31, 2022, the Company's cost of revenue was €8,801 million. As of December 31, 2022, trade payables and accrued fees to rights holders was €588 million and €1,665 million, respectively. As explained in Note 2 of the consolidated financial statements, cost of revenue and rights holder liabilities consist predominantly of royalty and distribution costs related to content streaming.

--- end quote ---

- total cost $8.9 billion

of that:

- trade payables $0.59 billion

- fees to rights holders $1.67 billion

The rest (~7 billion aka 78%) is royalties and cost of distribution.

Unless you can argue and show that cost of distribution is over $2-3 billion, only then can you claim that only half of that 70% is going to the labels.

[jbverschoor]

First of all, every single article talks about 70% of revenue (not of the net income)

  Revenue: 11,727
  Fees to rights holders: 1,665

See my list of costs of revenue, all straight out of the financials. With 2 estimates. (all for Q3, not a full year). It added up to about about 720 without support employees, infra, software, hardware, no other cloud partners, real estate etc.

So yeah, that's more than 3B annualized

And some nice crappy disclaimer to further obfuscate their practices:

Auditing cost of revenue and rights holder liabilities was complex due to the number of royalty calculation variables in addition to complex IT systems and a significant volume of data. There was significant auditor judgment related to circumstances where rights holders have allowed the use of their content while negotiations of the terms and conditions or determination of statutory rates are ongoing.

[JCharante]

Artists should stop giving Spotify streaming rights then. And then I'll pirate all their songs and they'll get zilch.

[sleepyfran]

Amazing reasoning. Let's hope not everyone in our industry will also think the same, otherwise we're pretty much doomed :)

[jbverschoor]

Can we please stop the lies about Spotify being the goodie two shoes of royalties? The information is false. Apple pays a LOT more to artists.

[satyrnein]

They both pay approximately the same for premium subscribers, and Apple's trial period pays approximately the same as Spotify's ad supported model. They're both trying to drive premium subscriptions, which make both them and rightsholders more money, but using different strategies to get there