[rwissmann]

Yes, the article really missed this point.

One could also mentioned some sort of tiered payout scheme or a non-linear minimum after a certain amount of plays plus a percentage above that. Likely something that Spotify will experiment with over the years.

[exelius]

I doubt it. The business overhead of distributing payment this way is enormous. Right now, Spotify just runs a report that takes some top level numbers, splits them out by copyright owner and divides a single pool of money. This means they manage only as many pools of money as they have copyright owners.

If they start doing it the way OP suggests, they DRAMATICALLY increase the number of pools of money they manage (and thus, would need to audit). They'd now be managing (number of copyright owners) * (number of subscribers) pools of money, which is a lot more. Additionally, they likely have some errors in their data, and the impact of an error in this scheme is huge.

tldr: It's too much work for too little money. Improved technology will not change anything because it's a finance process problem, and finance processes have to be regularly audited. The more complicated it is, the more expensive it is to audit.

[rwissmann]

They likely already record and store all the necessary data (and more) in order to build out people's listener profiles.

Pools of money is not really a relevant metric. They collect all the subscription premiums and pay a portion of them out according to their contractual agreements.

Pay(artist_i) = 0.7 * sum_j [ premium(viever_j) * ratio_ji ]

is not that much harder to do.

I agree that auditing would be more complicated, but usually one does selective audits anyway. I doubt this would be a show stopper.

The confusion on the receivers' side would increase massively though. As someone else has pointed out, there would be a lot less correlation between #plays and payout.

(To be clear, I have no real opinion on whether this would be a better schema.)

[exelius]

Actually, it is computationally much more difficult. You're masking another step in that the "ratio_ji" has to be calculated and stored for every artist-subscriber combination, which is significantly more complicated than calculating a percentage overall. Since they are almost certainly using map-reduce to calculate these metrics, you're basically running a nested map-reduce. I mean, it's not an unsolvable problem, but it takes a non-trivial amount compute resources that aren't free to solve a problem that isn't really a problem.

But yeah, there are many reasons its not calculated this way. Revenue predictability is another reason - companies like to be able to forecast revenue and that's hard if revenue has only a tenuous link to the other KPIs you use to run your business (which is the point you made).

Honestly, the current payout scheme makes more sense. Is it totally fair to the labels? Maybe not; but the labels it's most unfair to aren't making enough under either scenario for it to matter much. Would it really matter to an indie label if their monthly payout was $20 instead of $5? Once you get bigger than a few hundred listeners, the law of large numbers kicks in.

[Aloisius]

> The business overhead of distributing payment this way is enormous. Right now, Spotify just runs a report that takes some top level numbers, splits them out by copyright owner and divides a single pool of money.

Unless they are doing something special, they are actually just taking a bucket of money and sending it to SoundExchange or ASCAP/BMI (for the US at least) and letting the do the actual distribution. ASCAP/BMI are very used to distributing payments based on plays (they do it for radio, concerts, etc.).

It would really just be a matter of including the play counts for each song every month.

[goatforce5]

I imagine Spotify cares more about not being sued by the majors than distributing money to smaller artists (without legal teams behind them).

Also, isn't a big chunk of Spotify owned by the major labels anyway?

[detail3]

Yes, though what size chunk is not clear. So certainly 'a' chunk.

[basseq]

If Spotify wants to send me a representative, scrubbed dump of their streams table (id, userid, trackid, artistid), we could run some interesting what-if scenarios rather than guessing.

It's an interesting trade-off: "punishing" artists with fans who only listen to a small amount of music, but who are dedicated to that artist vs. artists with fans who listen to a LOT of music.

My gut is that very few artists are getting "screwed", and those who are represent artists with very few streams (at which point the net revenues are very small and who cares about the difference between 2 cents and .7 cents). For most "edge cases" like the one in the article, there's a user on the opposite end of the spectrum who would balance them out.

That's my hypothesis, anyway.

[bsder]

The real issue is simply that anything other than Top 40 isn't relevant to the public at large (power law). I don't really know how you correct that.

Even if the indie artists created their own service, several orders of magnitude less people would listen to it.

> My gut is that very few artists are getting "screwed"

Huh? How does that follow?

My gut is that a LOT of artists are getting screwed for exactly the reasons mentioned in the article.

This payment scheme isn't an accident. It favors the big, popular copyright holders to keep them off of Spotfy's back.

Of course, those big copyrights are also who bring in the majority of revenue for Spotify.

[basseq]

> My gut is that a LOT of artists are getting screwed for exactly the reasons mentioned in the article.

The article makes the hypothesis that people who listen to "indie" music also listen to less music. I don't think that's true.

(I don't have hard evidence to back up the counter-factual, but neither does the author in proving the hypothesis. He just sets up a straw man example, then bashes yoga studios, Daft Punk, and the idea of a subscription model as a whole.)