Spotify reveals artists earn $0.007 per stream
- 4 December 2013
- From the section Entertainment & Arts
Spotify has responded to critics by revealing how much acts can expect to earn from the music streaming site.
The company said it pays an average of $0.007 per play, according to figures on its new website Spotify Artists, aimed specifically at musicians.
Explaining its business model, Spotify said it had paid more than $1bn (£612m) in royalties since its 2008 launch.
Earlier this year Radiohead singer Thom Yorke pulled material from the site in protest at how much it pays artists.
Removing his solo album The Eraser and Atoms for Peace, a side project with Radiohead producer Nigel Godrich, Yorke tweeted that he was "standing up for our fellow musicians".
"Make no mistake new artists you discover on #Spotify will no[t] get paid," he continued on Twitter. "Meanwhile shareholders will shortly being rolling in it. Simples."
However the new website, which said $500m (£306m) of the $1bn it has paid out in royalties was during 2013 alone, has urged musicians to consider accumulative earnings from a successful album, rather than focusing on plays per song.
Spotify said it has kept just 30% of the money from subscriptions to its premium service and advertising.
"Our belief has always been that if we can offer fans a listening experience superior to piracy, then they will be happy to pay for it, and in turn we are happy to pay out nearly 70% of all the money we earn in royalties," said Spotify on the site.
"We believe that this is the fair approach to take, and that as we grow we will become an increasingly significant contributor to artists' financial lives."
This 70% is usually paid direct to record labels, who take their cut before it reaches managers and artists.
Music Week editor Tim Ingham told the BBC: "The most important thing is that Spotify is finally being fully transparent with its numbers for the first time; great news for artists in an era when performers need data every bit as much as they need popularity."
Using a series of charts, the Spotify website has illustrated how much a niche indie album could earn per month ($3,300) compared to a breakthrough indie album ($76,000), a Spotify top 10 album ($145,000) and what it calls a global hit album ($425,000 a month in royalties).
Currently with 6 million subscribers worldwide, Spotify said several artists were paid more than $3m (£1.8m) in 2013.
A set of ambitious predictions based on the site hitting 40 million subscribers estimated that a band with an album in the Spotify top ten could expect to get paid $734,000 a month in royalties, compared with the $145,000 it would get now.
Mr Ingham said that while the per-stream figure of between $0.006 and $0.0084 (an average of £0.004) might "initially seem alarming", it is actually "more positive than it first appears".
"Unlike buying a CD or download, streaming is not a one-off payment," he said.
"Hundreds of millions of streams of tracks are happening each and every day, which quickly multiplies the potential revenues on offer - and is a constant long-term source of income for artists."
He added that if Spotify increases its reach to tens of millions of subscribers as planned, it would increase the per-stream rate "dramatically".
"This should be achievable when you consider that YouTube draws in a billion unique users each month - it's a tiny fraction of that number," said Ingham.
Spotify's new site also made the point that it pays out more than double that of a video streaming site such as YouTube.