I know a couple of relatively obscure bands personally, and they do get something from Spotify. It's not much, but they do get a little bit. They consider streaming more as advertising that gets their name out there and their music easily accessible, but they make most of the actual money from shows and merch.
E: Artists can see their playcount stats and payouts here: https://artists.spotify.com and as far as I know, even niche artists are paid the $0.006 per song, not just the biggest players.
E2: I am a huge fan of the Bandcamp model, though. Most of the time I find music there that isn't on Spotify, and I've also bought albums on there even though they're on Spotify as well, because I want to support the artists directly. I have completely stopped buying physical albums.
There used to be a FAQ entry on spotifyartists.com about royalties and the complex formulae by which they are divided amongst the various parties entitled to slices of those precious fractions of a cent, but I can't find it now.
(That's right: on a promotional site directed towards artists, aimed to encourage people to make their work available on Spotify, there is nothing anywhere about how they intend to pay you. Because honestly, they don't.)
You also need to sell a hell of a lot of albums every month, to make minimum wage.
I do agree that they should pay artists more, but I consider it an issue with the record labels, rather than with Spotify.
Made up example: $100000000 * 0.0000001 of all listening activity = $10
Or $10 * 1 of all my listening activity = $10
Or are you saying that Spotify cuts off at a certain point and doesn't pay anything out, or that they take a fixed cut after allocation?
With the current model, if I do that, Artist X gets paid near zero. So you can see how the models are indeed different.
Getting 100% of your subscription is the same thing as getting 1% from everyone out of 100 customers, where only one person (you) listen to that artist (and exclusively).
That 99% of "your" money went to an artist you dislike doesn't matter if 1% of everyone else's money went to the artist you do like. The money doesn't know where it came from, and the artist doesn't care. Only the aggregate distribution matters.
Now I don't know how they do their reward distribution, I'm merely pointing out the flaw in your reasoning.
Which is exactly the current situation, by the way. Anyway, what I was doing was just demonstrating that the system is not the same.
Although I am admittedly bad at maths and statistics, it seems to me that the system I am proposing would be more likely to pay out at least coffee change to small-time artists. I might be wrong, though.
Basically I think it's unfair and unintuitive how everything I pay goes to artists I don't listen to. There has to be a better system.
No. Your monthly $10, after Spotify and the labels get their majority cut, goes by percentage to the most popular artists on the service, with absolutely no regard to which artists you have personally listened to, so if you have even remotely obscure taste you are effectively not supporting the artists at all.
Bandcamp, on the other hand, takes a 15% cut of digital downloads and 10% for physical releases/merch. If you buy an album for $10 on Bandcamp, the artist gets $8.50. If you play an album by an indie artist on Spotify 100 times, they might get $0.0002 or thereabouts¤.
¤ Not actual numbers, but the point is it is effectively zero.