That point is explicitly addressed in the post. Mainstream users listen more because mainstream users are gyms etc. that just let the top 40 run in shuffle 24/7.
[0] https://www.spotify.com/uk/legal/end-user-agreement/#s4 [1] http://www.ppluk.com/
And in most cases, it doesn't really come up until they're audited at least once, which might be never.
I happen to know because I was once in a band and the only money I really ever received for our recordings after the label advance was from ASCAP. Even years later I get a check every few months for a few bucks, whereas I get nothing from spotify or any other music service (even though my music is on there).
So at least for me, I appreciate ASCAP and BMI, even though it is not a lot of money, they are the only ones who have ever paid me royalties as an artist - and their service is free to all artists no matter how small.
at least that's how it goes for my friends receiving via bmi
They are 'non-profits' but so is the NFL.
It still happens though. I can't find any instances any stories being written about this condition being enforced.
[1] https://support.spotify.com/au/learn-more/faq/#!/article/pub...
http://www.luton-dunstable.co.uk/Dunstable-nightclub-Ivory-L...
Most venues don't want to spend time carefully selecting music when they could instead be focusing on customer service.
[Edit] just read the earlier sibling comment. I'm informing my theory based on my own very occasional usage of spotify. I suspect I'm in the long tail of their business, and I would imagine that the aggregate of businesses that play spotify all day matches up with a good portion of that long tail.
I have a limited set of datapoints, but most if not all of the venues in which I encounter Spotify playlists are playing indie/alternative/etc. music, rather than "mainstream" music - places like my local coffeeshop and game shop, for example.
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.
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.
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.)
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.
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.
Also, isn't a big chunk of Spotify owned by the major labels anyway?
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.
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.
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.)
About your point with indie artists vs top 40- it seems to me to be a problem with fragmentation. Top 40 has much more overlap between listeners and casual music fans vs a much more curated play list for the indie music lover. So out of 100 casual music/top 40 fans the playlist is more or less the same. However two indie rock fans have a higher probability of having fewer tracks overlap in their playlist.
It becomes clear that the scheme suggested in the post doesn't make sense either... so I accidentally left "Everything is Awesome" on repeat all night and now this month indie band X gets 1c from me instead of $5, even though I still listened to their album 20 times like usual?
That's an interesting problem — this is only true if indie fans listen to less music than pop fans.
Imagine there are 10 users, 9 of whom only listen to pop, one only listens to indy, all of whom pay 10$. Now consider two scenarios: A. everybody listens to 100 tracks per month, or B. pop listeners stream 110 tracks per month, and the indy listener streams 10 track per month
Scenario A:
Scenario B: The argument remains that you'd expect your money to go to the artists you listen to, but the payment arrangements don't necessarily benefit mainstream artists over indies, unless indie fans listen to less music than mainstream music fans.EDIT: Now that I think of it, it probably benefits pop music over metal and progressive rock (or, worse still, classical music), because pop tends towards short songs, so more tracks played over the same period of time.