Spotify Details Its Payment System For Musicians, And It’s Kind Of Awful

It’s no secret Internet radio is the new frontier when it comes bilking the musicians you love. Pandora has already tried to argue that musicians should enjoy the valuable exposure of randomly popping up on a station in exchange for a pay cut. And now Spotify has clarified their payment policy, which essentially boils down to the more popular Spotify gets, the less artists are actually paid.

Here’s the breakdown, as revealed by Ars Technica:

Royalties for, say, one song are paid out based on the proportion of plays it gets out of all of the plays Spotify doles out in a given time period. How much revenue Spotify earns in a month determines the total amount of royalty money available on a country-by-country basis. After that, Spotify does the math on how much traffic a given artist constituted for the month. For instance, if Spotify has $100 in royalty money from one country and an artist represented 0.01 percent of that month’s streams, the payout for that country would be 0.01 cents.

There are a few other factors involved; for example, Spotify shaves 30% of the top of all revenues, leaving the remaining 70% to be doled out by the label to the artist. As you might guess, being at the back of the line cuts into what you actually see for the music you wrote and recorded in the first place.

To be fair to Spotify, it’s not their fault if a musician is getting screwed by their label. That’s a problem they really don’t have any control over, and it’s not like they’re the ones with the power in that particular discussion. And honestly, as bad as Spotify may be, it’s still a better deal than terrestrial radio, which essentially doesn’t pay musicians at all, when it bothers to play anything beyond the same five songs in the first place.

Still, it’s a bit disingenuous to construe Spotify’s system as anything resembling fair. As more musicians are added and more users join the service, if your streams don’t grow in proportion to those additions, your royalties are going to drop. That’s a system that doesn’t benefit anybody, but it seems that niche musicians in particular will really take it on the chin.

In addition, Spotify’s claims are a bit disingenuous. For example, they state that the “average” music consumer only spends about $25 a year, which seems a bit low considering that’s maybe five albums from an Amazon sale. Similarly, they insist a “niche indie album” made $3,300 a month off the service, which is likely true, but definitely not the average experience for an indie album on Spotify.

How streaming music will come together is a work in progress. But it’s going to involve a bit more transparency than Spotify seems willing to offer, right now.