There were multiple responses questioning how this was different, so I'll respond here:

- 2 users, A and B, each pay $10/month

- User A listens to 20 Taylor Swift songs

- User B listens to 5 Radiohead songs

- Spotify gets a 30% cut

Currently:

- Spotify gets $6

- Taylor Swift gets $11.20

- Radiohead gets $2.80

If each subscriber's bill was split separately:

- Spotify gets $6

- Taylor Swift gets $7

- Radiohead gets $7

So this change would benefit artists that less active Spotify users listen to.

Right now the less active users are paying to support the listening of the most active users.

Personally this would make me feel like my money is more directly supporting the artists I care about.

Why is everyone ignoring the user side? It's not that there are equal users and a Taylor Swift person just listens more, there are millions of more users listening to Taylor Swift. Radiohead could actually do better with the much larger user base Swift brings. Without more data, it's hard to know.

I was going to make an example of what if restaurants used the Spotify model and how people would hate it because they'd be paying for other people's tables but I guess that's buffets and all you can eat sushi places are like. Not exactly shining examples of quality for the end user though.

> - Spotify gets a 30% cut

This is where you're wrong..

1. The article literally says ‘ “Spotify already pays nearly 70% of every dollar it generates from music to the record labels and publishers that own the rights for music, and represent and pay artists and songwriters," it continues.’

2. It’s a simplified example for explanatory purposes

Sure, that's the general narrative of spotify.. But it's false. It's more like half of that 70%.

There's a reason Spotify is ending their service in Uruguay, and it's not because they're enough.

I don’t think that would necessarily favor small artists. That would just favor artists who are listened to by people who don’t use Spotify a lot.

Right now someone who only streams a few songs gets a very small “vote” (assuming pay is per stream). That would make it so that everyone had the same “voting” power. But I doubt there’s much correlation between people who use Spotify less and small artists. In fact that’s probably a negative correlation if anything, and this could end up hurting local artists.

I'm not sure about spotify, but I have seen this problem with Netflix: I'm an adult paying full for my Netflix subscription and for that price I would love to have a few great and expensive movies every month for my age group.

But what I usually see is lots of movies made for teens who are binge watching Netflix even though they are paying the same. Netflix has some public presentations on their algorithm and from the presentations it looks like they are optimizing for watches without weighting by subscription revenue per watch.

Sorry, I’m failing to see the difference between this and what actually happens. They currently take 70% of their revenue and split it across artists by stream, and what I’m reading is that you’re proposing is that we take each subscriber’s revenue (presumably less some profit factor - say, 30%) and split it by the artists they stream. What am I missing?

Fwiw, the actual Spotify math is a bit more complicated than just splitting by streams - I.e., https://www.theverge.com/2023/11/21/23971616/spotify-royalti...

It's different because if you imagine Spotify only had 2 users, Alice and Bob, and Alice listens to Indie Band X 10 times a month, and Bob listens to Megastar Y 10,000 times in a month, Y would receive almost all of the artist revenue in the current model, but in the model that GP is proposing, both artists would make the same.

Essentially A's money is going towards Y, even though she never listed to Y.

(I'm not expressing an opinion on which of these I prefer)

It can be a huge difference. Say this month I only listen to a completely unknown artist. I am the only person listening (to make the calculation easy). I've listened to 10 of his songs and this is everything I've heard this month.

Now if my 7$ are distributed to all artists I've listened to this artist will now receive 7$. If my 7$ is thrown in a global pool and split by global stream counts this artist gets almost nothing.

Of course this is a extreme example but it should illustrate why this can matter.

> If my 7$ is thrown in a global pool and split by global stream counts this artist gets almost nothing.

Not by definition. If you generate more streams this month than the average user, your streams are a larger fraction of the stream counts than your 7$ is of the revenue pool, and this artist will get paid more than if he only got your 7$.

Splitting the revenue per-user instead of per-stream can certainly make a huge difference, but switching to per-user instead of per-stream benefits artists with listeners that generate a below-average amount of streams per month, regardless of their absolute stream numbers.

Their current split favors big artists. 90% of the music I listen to is jazz and classic, and if I was on Spotify (I use Qobuz instead), 90% of my subscription (minus Spotify's share) wouldn't go to these artists, instead most of it would go to the most popular artists on Spotify. That's not fair, I am de facto subsidizing the biggest artists, even if I don't listen to them, while the artists I like receive less.

And there's the fact that the payment per stream is low on Spotify compared to Qobuz or Tidal.

It’s the weighting. If you listen to very little music, but 1 artist, your $10 (in that scenario) would go to them.

Instead, your listening is not weighted in any special way so it goes into the global pot of money and hours listened and gets diluted by the people listening more.

If I'm listening to only Primus for a month basically none of my subscription goes to Primus.

Alice pays 10$ per month and play (only) a thousand times a song of Madonna each month Bob pays 10$ per month and play (only) a hundred times a song of Queen each month

Currently Madonna will get 1000/1100 of artist's share => 10/11 x 70% x 20 = 12,73$ While Queen will get 100/1100 => 1/11 x 70% x 20 = 1.27$

With a per subscriber split => Queen and Madonna will get 7$

Right now there is an incentive for artists to create shorter songs so they get more stream = more revenue

Not sure how this favors small/local artists. Most people I know who listen to small/local artists listen to much more music than those who listen to big pop artists. That means the current system actually favors the local artists since their listeners have an outsize “vote” when all streams are bundled together.

Is there any reason to believe big artist listeners on average stream more songs per month?

A better way would be for streams to interoperate with a copyright clearance mechanism where, when an artist opts out of the regular stream users still can validate they own a copy and get access through the stream. I have a library of saved songs I never hear on Pandora, and often my favorite artists and songs get dropped leaving a rather bland experience over the long haul.

But in terms of unit economics, the bigger artists/labels (or the artists that bring more users) are responsible for funding the entire platform, no?

In other words: A small artist can _bring_ users to the platform, fair enough, but the platform that gives access to other artists and enables that needs to take the bigger share.

>are responsible for funding the entire platform, no?

No, they all are. I wouldn't be a subscriber and I doubt many others would be if they only had the "top" artists that "are responsible for funding the entire platform".

Go through your playlist for a minute and find how many artists aren't "the big ones" and ask yourself if you'd use the platform if the small artists weren't included. The whole point of spotify is ALL music, so ALL music is important, surely?

Articulating a bit more in depth: Spotify it’s a multi sided marketplace where on the artist side will have a very big power law where the big labels (that has a catalog power) brings most of the users.

What sustain the economics on the Spotify is its catalog that is a composition of the labels catalog + long tail artists and their podcasts also.

When users goes to the Spotify, they are paying not to support their favourite artist but to be able to access the platform, that occasionally will have their long tail artists.

> The whole point of spotify is ALL music, so ALL music is important, surely?

Not necessarily. Catalog + Network effects + Marketplace is important.

What you’re describing in your argument is that “since you’re in the platform due to the artist, it’s fair that this artist receives the 70% of your money”. The flaw here is that this artist is benefiting of a marketplace and all its infrastructure and distribution without paying and the whole point of the platform is to give access to its catalog.

Think on the Spotify price as some kind of “optionality fee”.

No, users are funding the platform not artists. If someone doesn’t listen to major artists then revenue from them shouldn’t go to said creators.

Spotify however wants to maximize its cut and so has incentives to shift money from less popular artists if it can entice major labels to its platform. This has absolutely nothing to do with what’s fair, it’s simply about profit maximization and reducing the risks of competing platforms.

> If someone doesn’t listen to major artists then revenue from them shouldn’t go to said creators.

Well I do not have the numbers here, but I would argue that this is definitely not the case in reality.

> Spotify however wants to maximize its cut and so has incentives to shift money from less popular artists if it can entice major labels to its platform

It’s the other way around, because the platform has competing interests: Spotify wants to have the labels to sell an “optionality” to the users (I.e. get the money from subs) but in terms of reproduction/execution Spotify wants to reproduce the maximum of podcasts and/or long tail artists because in those 2 cases Spotify does not spend a single penny.

The labels has a very high bargaining power over Spotify due to its catalog, so as expected this is the biggest expenditure.

That’s one of the reasons why Spotify is desperately pushing podcasts like crazy.

> this is definitely not the case in reality.

Agreed.

Major labels have leverage which they use to get a larger slice of that 70% than they would otherwise make in a ‘fair’ split.

This is what happens already, isn't it?

No. If you listen to only a single artist for a month, your payment is still split the same way everyone else’s payment is, by total streamed numbers.

It sounds better if they artist got your entire monthly payment (after payment processors and Spotify’s fee), but probably a nightmare for accountants.

I don't see how that would be different.

Do artists have a contract with Spotify or with their labels? If it's with the labels, Spotify pays the labels and they give to the artists what they agreed upon, possibly an unfairly low amount of money but contracts are contracts.

The Uruguay parliament should regulate the contracts between their local artists and the labels. Some of them will ban Uruguay artists but some of them, maybe local ones, will intercept the money no matter what.

Or Spotify makes deals with individual artists, but there is a long and thin tail of them.

Small indie artists will have contracts with Spotify. Larger artists with labels will have contracts with their labels, who will have contracts with Spotify. As you suspected, the labels typically take a ridiculous cut of streaming revenue.

> Small indie artists will have contracts with Spotify.

They won't. They will have contracts with distributors: https://artists.spotify.com/providers