News for hackers. Stuff that matters.
Re:Why Spotify Pays So Little by pdpi on Wednesday March 18, 2015 @01:46PM (#9227304)
> A subsidy of popular music by indie fans

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:

    9 pop *  100 tracks =  900 tracks streamed
    1 indy * 100 tracks =  100 tracks streamed
    total                 1000 tracks streamed

    total to pop artists  = 900/1000 * 100$ = 90$
    total to indy artists = 100/1000 * 100$ = 10$
Scenario B:

    9 pop *  110 tracks =  990 tracks streamed
    1 indy *  10 tracks =   10 tracks streamed
    total                 1000 tracks streamed

    total to pop artists  = 990/1000 * 100$ = 99$
    total to indy artists =  10/1000 * 100$ =  1$
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.

Re:Why Spotify Pays So Little by tormeh on Wednesday March 18, 2015 @03:40PM (#9228140)
>unless indie fans listen to less music than mainstream music fans

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.

Re:Why Spotify Pays So Little by lclarkmichalek on Wednesday March 18, 2015 @05:31PM (#9228834)
Wouldn't that use be both against Spotify's EULA [0] and be illegal without a PPL [1] (in the UK at least).

[0] https://www.spotify.com/uk/legal/end-user-agreement/#s4 [1] http://www.ppluk.com/

Re:Why Spotify Pays So Little by geoelectric on Wednesday March 18, 2015 @06:07PM (#9228994)
Yes, but at worst bars and venues like this end up paying the flat fee to the recording cartels to basically have unlimited plays of whatever they want and none of that really goes to the artists in any significant way.

And in most cases, it doesn't really come up until they're audited at least once, which might be never.

Re:Why Spotify Pays So Little by jakejake on Wednesday March 18, 2015 @10:33PM (#9229920)
I know that calling them recording cartels is making a certain point, but the licensing companies in the US are ASCAP and BMI and they don't really have anything to do with actually recording music. They collect royalties on behalf of the artists.

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.

Re:Why Spotify Pays So Little by eru on Wednesday March 18, 2015 @11:06PM (#9230005)
In Germany, you'd have to pay the cartel for performing YOUR OWN music.
Re:Why Spotify Pays So Little by gcb0 on Thursday March 19, 2015 @02:37AM (#9230503)
Spotify pays them, they get yet another cut and pays you.

at least that's how it goes for my friends receiving via bmi

Re:Why Spotify Pays So Little by detail3 on Friday March 20, 2015 @01:03PM (#9238855)
Their service isn't free, they charge an administration fee of 3-7% (depending upon the organization we are talking about). It just comes out before you get your check.

They are 'non-profits' but so is the NFL.

Re:Why Spotify Pays So Little by geoelectric on Thursday March 19, 2015 @11:01AM (#9232380)
Fair enough, sorry for being quite so editorial about it. My impression was that only an extremely small percentage goes to actual artists, and probably weighted towards popular ones in much the same way Spotify does.
Re:Why Spotify Pays So Little by nl on Wednesday March 18, 2015 @06:10PM (#9229008)
Yes[1].

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...

Re:Why Spotify Pays So Little by grrowl on Wednesday March 18, 2015 @06:06PM (#9228992)
In terms of small bars, hairdressers, co-working spaces, yoga studios, mik bars, etc... probably, but no one's going to tackle the small fries. Large chains tend to have their own corporate-mandated "radio" playlists for this reason, though (supermarkets and gyms)
Re:Why Spotify Pays So Little by goatforce5 on Wednesday March 18, 2015 @08:48PM (#9229622)
From what I recall, the PPL is pretty aggressive about going after small venues. e.g.:

http://www.luton-dunstable.co.uk/Dunstable-nightclub-Ivory-L...

Re:Why Spotify Pays So Little by jakezorx on Wednesday March 18, 2015 @07:14PM (#9229262)
As a side note, there is infact a "commercial"-version of Spotify[0], even though i'm not sure whether its available outside of Sweden yet.

[0]https://www.soundtrackyourbrand.com/

Re:Why Spotify Pays So Little by CaveTech on Wednesday March 18, 2015 @03:45PM (#9228164)
I have trouble believing that commercial venues make the majority of the plays on Spotify.
Re:Why Spotify Pays So Little by huckyaus on Wednesday March 18, 2015 @05:55PM (#9228944)
Here in Melbourne it's very common for venues to use Spotify - almost ubiquitous, in fact. The bar that I moonlight at used CDs for the longest time but eventually made the switch last year.

Most venues don't want to spend time carefully selecting music when they could instead be focusing on customer service.

Re:Why Spotify Pays So Little by dasil003 on Wednesday March 18, 2015 @06:27PM (#9229087)
Sure, but what is the total market size of businesses versus individuals?
Re:Why Spotify Pays So Little by Consultant32452 on Wednesday March 18, 2015 @07:15PM (#9229263)
I agree. Even if 100% of commercial properties that play music was using Spotify behind the scenes 24/7 that's still got to be only a small percentage of total Spotify plays.
Re:Why Spotify Pays So Little by dagw on Thursday March 19, 2015 @04:07AM (#9230737)
Don't businesses also pay a lot more than individuals. I know here in Sweden playing music as part of your business is licensed differently than playing music in your living room. Commercial properties pay about 10 times as much pr. month for Spotify to cover commercial licensing of the music.
Re:Why Spotify Pays So Little by Consultant32452 on Thursday March 19, 2015 @06:45PM (#9235080)
That was a really good question so I looked it up. Apparently commercial use of Spotify is against their TOS. So while some businesses certainly do use Spotify illegally, it's not a piece of business they are trying to get. https://support.spotify.com/us/learn-more/faq/#!/article/pub...
Re:Why Spotify Pays So Little by eric_h on Wednesday March 18, 2015 @10:01PM (#9229821)
Agreed, but a business that plays spotify likely plays it for the entire time said business is open. Very few individual users will listen to spotify for 15 hours a day like a business (bar) that plays spotify would.

[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.

Re:Why Spotify Pays So Little by dasil003 on Thursday March 19, 2015 @12:13AM (#9230162)
The problem is it's all speculation. We don't have any hard numbers to tell us how any given revenue split policy would affect payouts to different artists. My instinct (and I'm the Co-Founder of a streaming service that does revenue share FWIW) is that the reason so little is paid is because there are just a lot of streams period, and changing the algorithm around to try to make it "more fair" might shift the distribution a bit, but it won't really move the needle for anyone. The fact is that when people had to buy music they were spending a lot more on it than they do on Spotify for the same quantity. It's just like Netflix vs cable—you can play shell games all day long, but the minute you go to raise the price from $9.99 to $11.99 the entire customer base flips their lid. So you'll never monetize like you could in the past, and this is a permanent change because there is no limit on supply anymore.
Re:Why Spotify Pays So Little by jschwartzi on Thursday March 19, 2015 @11:25AM (#9232575)
It seems inevitable at this point that if most or all plays are done through streaming services the only thing we will have available to stream are top 40 singles.
Re:Why Spotify Pays So Little by dasil003 on Thursday March 19, 2015 @11:52AM (#9232780)
For most of humanity musicians have earned their living through live performance. The last 70 years have been an extreme outlier as recording and playback technology has matured, but now the novelty and barrier to entries are gone, and the supply is flooded. I don't see any shortage of new artists willing to give their music away to get discovered. I also don't see streaming services succeeding with just Top 40 (diversity of music has never been higher). Sure some artists will pull their catalog or straight up retire out of spite, but I don't see any trends or market forces pointing to this "inevitable" outcome.
Re:Why Spotify Pays So Little by plorg on Thursday March 19, 2015 @03:57AM (#9230711)
This also assumes that the balance of venues playing indie/alternative music versus those playing "mainstream" music tilts further than the balance of individual users doing the same.

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.

Re:Why Spotify Pays So Little by dataminded on Wednesday March 18, 2015 @08:58PM (#9229661)
Isn't that illegal? Does a spotify license include broadcast rights?
Re:Why Spotify Pays So Little by rwissmann on Wednesday March 18, 2015 @03:02PM (#9227911)
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.

Re:Why Spotify Pays So Little by exelius on Wednesday March 18, 2015 @03:55PM (#9228226)
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.

Re:Why Spotify Pays So Little by rwissmann on Wednesday March 18, 2015 @04:26PM (#9228435)
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.)

Re:Why Spotify Pays So Little by exelius on Thursday March 19, 2015 @10:48AM (#9232280)
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.

Re:Why Spotify Pays So Little by Aloisius on Thursday March 19, 2015 @04:04AM (#9230728)
> 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.

Re:Why Spotify Pays So Little by goatforce5 on Wednesday March 18, 2015 @08:51PM (#9229632)
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?

Re:Why Spotify Pays So Little by detail3 on Friday March 20, 2015 @01:10PM (#9238944)
Yes, though what size chunk is not clear. So certainly 'a' chunk.
Re:Why Spotify Pays So Little by basseq on Wednesday March 18, 2015 @03:32PM (#9228104)
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.

Re:Why Spotify Pays So Little by bsder on Wednesday March 18, 2015 @07:11PM (#9229251)
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.

Re:Why Spotify Pays So Little by basseq on Monday March 23, 2015 @09:11AM (#9250649)
> 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.)

Re:Why Spotify Pays So Little by S_A_P on Wednesday March 18, 2015 @08:33PM (#9229576)
That would be an interesting spotify hack. Start recording 2 minute tracks. Would be a similar situation to 50s and 60s radio.

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.

Re:Why Spotify Pays So Little by jmilloy on Wednesday March 18, 2015 @02:22PM (#9227564)
Right, the key numbers that you've implied are that Scenario A pays out the same whether you use the current artist payment scheme or the one suggested in the post.

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?