The Fantastically Tiny Amount Spotify Pays Artists Per Song (CHARTS)

Business Insider
Analyzing the top news stories across the web
Dec. 5 2013 3:23 PM

The Fantastically Small Amount Spotify Pays Artists Per Song

186756379
Brandy Clark probably made a lot more money from this performance than when her songs are streamed on Spotify.

Photo by Rick Diamond/Getty Images for Spotify

This post originally appeared in Business Insider.

Advertisement

Each time Spotify plays a song, your favorite singer or band gets as little as 0.6 cents, the company said.

At that rate, a song would need to be played 166 times for the artist to earn $1 in royalties (100 cents divided by 0.6 = 166).

The info comes from a fascinating—and hugely welcome—article Spotify published on its revenue model. In a single post, Spotify has done more to demystify artist royalties in streaming music than Pandora and Apple have ever done, combined.

But before you get angry at the fantastically tiny amount of cash that bands get for each song, remember that those fractions of pennies add up.

This is Spotify's revenue picture (below). The company says it has 6 million users paying $9.99 (or £9.99 or €9.99) in 2013: That would imply its gross revenues from users are somewhere north of $720 million annually:

131205_bi_spotify1

Spotify

The company also said it will pay out $500 million in royalties this year:

131205_bi_spotify2

Spotify

Spotify says it pays 70 percent of its gross revenue in royalties to artists. Again, that would put Spotify's annual revenue from users at around $720 million. (Spotify didn't talk about advertising revenue, which it generates on top of that.)

In terms of per-song fees, Spotify said: "Recently, these variables have led to an average 'per stream' payout to rights holders of between $0.006 and $0.0084."

Here is how that breaks down for artists over time (below). Spotify has also projected future revenue for artists if the service grows to 40 million paid subscribers:

131205_bi_spotify3

Spotify

Jim Edwards is a deputy editor at Business Insider. Follow him on Twitter.

TODAY IN SLATE

Politics

Smash and Grab

Will competitive Senate contests in Kansas and South Dakota lead to more late-breaking races in future elections?

I Am 25. I Don’t Work at Facebook. My Doctors Want Me to Freeze My Eggs.

The XX Factor
Oct. 20 2014 6:17 PM I Am 25. I Don’t Work at Facebook. My Doctors Want Me to Freeze My Eggs.

Republicans Want the Government to Listen to the American Public on Ebola. That’s a Horrible Idea.

The Most Ingenious Teaching Device Ever Invented

Tom Hanks Has a Short Story in the New Yorker. It’s Not Good.

Brow Beat

Marvel’s Civil War Is a Far-Right Paranoid Fantasy

It’s also a mess. Can the movies do better?

Watching Netflix in Bed. Hanging Bananas. Is There Anything These Hooks Can’t Solve?

The Procedural Rule That Could Prevent Gay Marriage From Reaching SCOTUS Again

  News & Politics
Politics
Oct. 20 2014 8:14 PM You Should Be Optimistic About Ebola Don’t panic. Here are all the signs that the U.S. is containing the disease.
  Business
Moneybox
Oct. 20 2014 7:23 PM Chipotle’s Magical Burrito Empire Keeps Growing, Might Be Slowing
  Life
Outward
Oct. 20 2014 3:16 PM The Catholic Church Is Changing, and Celibate Gays Are Leading the Way
  Double X
The XX Factor
Oct. 20 2014 6:17 PM I Am 25. I Don't Work at Facebook. My Doctors Want Me to Freeze My Eggs.
  Slate Plus
Tv Club
Oct. 20 2014 7:15 AM The Slate Doctor Who Podcast: Episode 9 A spoiler-filled discussion of "Flatline."
  Arts
Brow Beat
Oct. 20 2014 9:13 PM The Smart, Talented, and Utterly Hilarious Leslie Jones Is SNL’s Newest Cast Member
  Technology
Future Tense
Oct. 20 2014 4:59 PM Canadian Town Cancels Outdoor Halloween Because Polar Bears
  Health & Science
Medical Examiner
Oct. 20 2014 11:46 AM Is Anybody Watching My Do-Gooding? The difference between being a hero and being an altruist.
  Sports
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.