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

The Irritating Confidante

John Dickerson on Ben Bradlee’s fascinating relationship with John F. Kennedy.

My Father Invented Social Networking at a Girls’ Reform School in the 1930s

Renée Zellweger’s New Face Is Too Real

Sleater-Kinney Was Once America’s Best Rock Band

Can it be again?

The All The President’s Men Scene That Captured Ben Bradlee

Medical Examiner

Is It Better to Be a Hero Like Batman?

Or an altruist like Bruce Wayne?

Technology

Driving in Circles

The autonomous Google car may never actually happen.

The World’s Human Rights Violators Are Signatories on the World’s Human Rights Treaties

How Punctual Are Germans?

  News & Politics
The World
Oct. 21 2014 11:40 AM The U.S. Has Spent $7 Billion Fighting the War on Drugs in Afghanistan. It Hasn’t Worked. 
  Business
Moneybox
Oct. 21 2014 5:57 PM Soda and Fries Have Lost Their Charm for Both Consumers and Investors
  Life
The Vault
Oct. 21 2014 2:23 PM A Data-Packed Map of American Immigration in 1903
  Double X
The XX Factor
Oct. 21 2014 1:12 PM George Tiller’s Murderer Threatens Another Abortion Provider, Claims Right of Free Speech
  Slate Plus
Behind the Scenes
Oct. 21 2014 1:02 PM Where Are Slate Plus Members From? This Weird Cartogram Explains. A weird-looking cartogram of Slate Plus memberships by state.
  Arts
Behold
Oct. 21 2014 12:05 PM Same-Sex Couples at Home With Themselves in 1980s America
  Technology
Future Tense
Oct. 21 2014 4:14 PM Planet Money Uncovers One Surprising Reason the Internet Is Sexist
  Health & Science
Climate Desk
Oct. 21 2014 11:53 AM Taking Research for Granted Texas Republican Lamar Smith continues his crusade against independence in science.
  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.