If you’re a Spotify subscriber, you’ll likely have an email this week telling you how many minutes you’ve spent streaming music over the past year.
Given that I spend many working days with Spotify playing in the background and my kids are constantly streaming via Alexa (hence the Olly Murs pic, honest), I suspect my annual tally of almost 40,000 minutes – that’s 1 hour 48 mins per day – is on the heavy side. Several friends have tweeted figures in the 5,000 to 15,000-minute range, and I’ve not yet seen anyone top my tally.
So, given I’m probably in the middle to top end of Spotify’s listenership, I wondered how much of my £10 per month subscription fee was being passed onto the artists. Was my streaming habit costing Spotify a fortune or is it still making a tidy profit?
How much does Spotify pay to artists?
Spotify doesn’t publicly disclose how much it pays in streaming royalties, and I strongly suspect it has different rates for different labels/artists, but most calculations gravitate towards the same figure. The Trichordist bases its figures on an indie label that had around 115m streams in 2016, and it claimed the average royalty payout was $0.00437 in 2016. It’s not clear where Information is Beautiful got its figures from, but it reports Spotify’s average rate per stream is $0.0038. So for the sake of convenience, I’m going to assume a Spotify stream is worth $0.004 in royalties.
How much did they earn from me?
According to this fascinating piece on Wired, the average track length has grown from around three to four minutes over the past couple of decades. So by dividing my listening time by four minutes, I listened to somewhere in the region of 9,778 tracks over the course of the year.
That would result in a total royalties payout of $39.11 to the labels, or £29.24 at the current exchange rate.
Given that I’ve paid Spotify £120 over the course of the year, that doesn’t seem an awful lot. Only a quarter of the sum I’ve paid Spotify has reached the labels, and all the anecdotal indications are that I’m a heavy user. Many users will have generated much less revenue for the labels.
I’ve never been hugely sympathetic to musicians moaning about paltry streaming rates. But when you see the figures broken down like this, you can’t help feeling they have a point.
Update – 11th December 2017
The best (and often the worst) thing about publishing online is that you get a chance to read comments about your articles, and there are a few comments on Reddit about this piece that I think are worth responding to.
First, TheBrainSlug makes the excellent point that half of Spotify’s users are on the free tier, not paying subscribers. Spotify still has to compensate the labels for those people too, so it’s a little unfair to judge Spotify’s royalty rates purely through the prism of a paying subscriber and how little of my money is returned to the artists. While I’m self-flagellating, I also neglected to consider VAT, which means Spotify only gets to keep £8.33 of my £10 monthly fee.
Linuxwes also points out that I’m confusing labels for artists, and that the labels will of course take a cut from the royalties first, meaning even less ends up in the pockets of the people writing and performing the songs.
Thanks all for the feedback.