[bearjaws]

I always found these kinds of hit pieces interesting. Because Spotify does not exactly take a lot of money to the bank, around $200M a quarter.

Spotify pays around 70% of its revenue to their artists. This means if they just fired everyone and only paid for bandwidth it would barely move the needle.

Artists need to remember the alternative isn't 2-4x higher payouts - it's piracy.

[acdha]

> Artists need to remember the alternative isn't 2-4x higher payouts - it's piracy.

It’s more complicated than that. The music industry has famously abused artists almost since the beginning so there’s also room for artists to dramatically increase their income by cutting into the share that the middlemen have been taking. This was true even before most people had computers or went online:

https://thebaffler.com/salvos/the-problem-with-music

One big change, however, is that the alternatives have dried up. A musician used to be able to make more of their income from live performances and merch sales but since the early 90s Ticketmaster/live nation has dramatically removed competition from that market and jacked up their share of what fans pay. These aren’t “hit pieces” (let Spotify PR earn their paychecks, don’t do it for free) but rather the latest in a long story of creators seeing increasingly low returns for their work, and now everyone is wondering how likely they are to get sandbagged by AI splurge being used to drive down their income even further.

[paxys]

In fact streaming is what saved the music industry from piracy. Total industry revenue in the USA peaked in 1999 and was on a steady decline since then all the way till the mid 2010s. It only then recovered when steaming became a thing, and now revenue has finally surpassed those highs and is seeing record growth YoY.

[hn_throwaway_99]

I think there are 2 very important things missing from your analysis:

1. I'm not sure if Spotify still does this, but I think it does, but a couple years ago there was a big kerfuffle over how Spotify allocates its revenue. The way it works now is that only huge artists make anything, because given the power law distribution of music, what Spotify does is take the number of streams for an particular song and divides them by the total number of streams, and then uses this to proportion total revenue accordingly. What smaller artists wanted was division of revenue by individual subscriber. That is, say I pay $10/Mo for Spotify, but I only listened to 10 songs that month, all from the same artist. Under a "divide individual subscriptions" model, that artist would have received the full amount (i.e. approximately $7) of that user's subscription revenue (obviously depending on who has the rights to the song). But the way Spotify does it (again, not sure if this has changed), since that user listens to much less that the average user, when you pool everything together, that obscure artist makes a lot less.

2. The other issue is that Spotify has been using their power to force artists to accept their music being played for free in the first place. Taylor Swift famously removed all her music from Spotify years ago because Spotify wasn't willing to only let her music be played to paid subscribers (and not free users). Few other artists had the power to do this, both because they're teeny compared to Taylor Swift, and because Swift (very smartly obviously) controlled much more of her music rights than most artists.

[fallingsquirrel]

> Spotify pays around 70% of its revenue to their artists

Nit: They pay ~70% to labels, not to artists. The artists make much less.

> The actual recording artists? “They’re keeping anywhere between 5% and a quarter.”

https://www.latimes.com/entertainment-arts/music/story/2021-...

[oktoberpaard]

I saw an estimation somewhere that Lily Allen’s label gets a daily payout of $4000, which is probably much more than what she makes from 1000 OnlyFans subscribers. The issue is indeed that the amount that she gets is probably much lower than that. That begs the question: is it Spotify that is the problem, or the record industry.

[jcdavis]

> Spotify pays around 70% of its revenue to their artists

They pay 70% of revenue to rights holders. For an artist signed to a major label like Lily Allen, they'll get ~20% of that number after they've cleared their advance.

[bearjaws]

Yes, but they can't control the deals artists made with their label.

[davedx]

I'd probably pay more for Spotify if they raised prices, I use it way more than any other streaming service like Netflix and get a ton of enjoyment from it.

Maybe they should do that, or offer a premium tier with discounted concert tickets or something?

The business model hasn't changed in like 15 years...

[paxys]

I'd be happy paying the same and having Spotify stop spending ridiculous amounts of money on podcasts, audiobooks, monthly app redesigns, hardware and all other pointless stuff they keep experimenting with. Stick to music and everyone will be happy.

[transcriptase]

In Canada we’re getting a 24% price increase because of our governments “Online Streaming Act” and costs associated with. So that’s fun!

[_yb2s]

I dislike how Spotify is seen as evil when they charge a low price people can actually afford, and pay almost all of it in artist royalties. They make music accessible and affordable, and actually provide a path for new artists to get music out there without having to sign awful recording industry contracts- which are the real reason most musicians don’t actually get much of the money fans spend. It can help you discover a new artist you have never heard of, and they actually get paid each time you listen to them- pretty amazing really.

[mcphage]

> Artists need to remember the alternative isn't 2-4x higher payouts - it's piracy.

And Spotify needs to remember that if it ceased to exist tomorrow, the artists whose music it depends on would care less than if they lost the ability to sell pictures of their feet.

[auggierose]

There was an article somewhere about how labels fleece their artists through Spotify. So Spotify might not make that much, the artists don't, but the labels do.

[bediger4000]

> Artists need to remember the alternative isn't 2-4x higher payouts - it's piracy.

The implication here is that people as a whole don't value streaming music very much at all, right? I'm not much of a music listener, I've followed the whole evolution inattentively, why is online music of such low value?

[chgs]

I pay for Spotify streaming and I strongly suspect I could buy every song I’ve listened to and save a lot of money

Perhaps Spotify overheads are too high, perhaps that 70% goes to the wrong people.

Certainly in my view the disbursement is very wrong. I spend £20 a month and listen for one hour a day. if I listen to 4 artists equally (either by number or by seconds) then each of those 4 artists should get 70% of £5 a month each.

That’s not how it works though, and I fund artists I’m not interested in and never listen to, who are listened to for 8 hours a day by others

[graemep]

> Perhaps Spotify overheads are too high,

Its says 70% of revenues, so even if they reduced overheads and their profit to zero artists would only get 42% more.

> perhaps that 70% goes to the wrong people.

Possibly. Who are the wrong and right people? Some people get a lot:

https://loudandclear.byspotify.com/

[chgs]

If I spend £10 and listen to only Lily Allen I would expect her to get £7

If you spent £10 and listen to only Taylor Swift I’d expect her to also get £7

Howver I believe if I listen to Lily for 10 hours in the month and you listen to Taylor for 90 hours, then instead Taylor gets 90% of the £14 (£12.80) and Lily gets 10% (£1.40)

That doesn’t seem right.

[crazygringo]

> why is online music of such low value?

Partly because it's such low cost to produce.

A single episode of television requires hundreds of people working for a couple weeks minimum and costs from hundreds of thousands of dollars to millions.

How much does effort does it take to write and record a song? It's closer to a handful of people. And it's usually measured in thousands of dollars, not hundreds of thousands or millions.

A few hit artists spend more because they can afford to, but even that still doesn't compare at all with hit TV/movies.

[goosejuice]

Is that you Daniel Ek?

[meibo]

It's ubiquitous. It's the only way people listen to music - there's nothing else, bar the few nerds that still have their fb2k library or vinyl collection. I think it's easy for people to forget that having legal, instant access to all the music on the planet absolutely wasn't the norm a decade ago.

[sokoloff]

> It's the only way people listen to music - there's nothing else

It’s far from the only way people listen to music. I listen to music on FM radio way more than I do free streaming services (mostly Amazon music’s free tier) for the overwhelmingly majority (essentially all) of my music consumption, and have no user-paid subscriptions. Both are ad-supported and probably pay little to artists, similar to paid streaming.

[idiotsecant]

Yes, there's probably someone somewhere listening to pirate shortwave radio broadcasts, too.

You're being pedantic. Most people do not consume FM radio as their main source of music.

[sokoloff]

The worldwide radio market revenue is about $35B/yr. I think that’s larger than the audio streaming market; the reference point I found for that was $25B/yr.

Granted, not all radio is music (nor is streaming), but (assuming I didn’t get the research wrong) radio is larger, making it at least slightly weird to call it a pedantic argument that the larger of the two markets even exists as a source of music for people.

[nalinidash]

>It's the only way people listen to music - there's nothing else, bar the few nerds that still have their fb2k library or vinyl collection

Not really.Other services exist, like Youtube music.

[fragmede]

hate to break it to you, but Spotify launched in 2008 right after the original iphone in 2007, so it's been a bit more than a decade.

[meibo]

Time flies! Though I guess it really reached critical mass in the early to mid 10s.

[tomashubelbauer]

I miss my foobar2000 layout with foo_facets.

[radpanda]

I don’t know if we fully understand the human psychology there. It seems to me that when there are more options available, not only does our perceived value of each option drop, but our perceived value of the whole drops as well.

[carlosjobim]

People were used for decades to listen to music for free on the radio.

[_yb2s]

Except you only got to listen to a few industry approved ultra popular artists, and it was virtually impossible to ever discover unsigned or unpopular music you might personally enjoy more. About half of the music I listen to on Spotify, I only discovered because of Spotify, and isn’t popular enough that I could have ever hoped to encounter it otherwise, but it has really enriched my life, and hopefully enriched those artists a bit as well by getting another paying fan- that will now also buy lossless albums and concert tickets.

[carlosjobim]

Before streaming, you'd then probably be the kind of person to purchase your music. Most streaming users will listen to industry approved artists, the only difference for them is that they can choose when they listen. And that's why Spotify can't make them pay more, because radio is still free.

[dartos]

This is a big factor that nobody seems to be considering.

Music has been very cheap to consume for many many years.

[KaoruAoiShiho]

I think people still love music but the economic value has been destroyed first by piracy then by the various efforts to make distribution easier than piracy, like youtube or spotify. For me personally the value of books have also gone away due to Anna's Archive and #ebooks on irchighway but YMMV.

I think the value of music and books will soon go to 0 though because of AI.