Everybody’s wondering what Spotify pays artists, but we already know the figures, based in part on a leaked report: Spotify pays out somewhere between .6 and .9 of a cent every time a song is played. Whether that money actually makes it through middlemen to artists is as tricky a question as it has ever been, but that’s pretty much the figure.
This is a contentious issue, especially if Spotify really becomes “the OS of music.” Spotify CEO Daniel Ek and investor Sean Parker sat down with Wall Street Journal columnist Walt Mossberg at the All Things D conference to talk about it.
We know — video can be annoying, because it’s linear and real-time, whereas text reads much faster. If you want to watch the video, it’s below. The bit about artist payouts starts around 5:45.
If not, here’s a summary of what happened when Mossberg asked Ek and Parker about Spotify’s business model and artist payouts at the All Things D conference:
Initially, Ek argued that iTunes is like a record store, in that people purchased music to own forever, whereas Spotify pays artists every time they get played. As for the holes in Spotify’s catalog, he pointed out that Apple started with even fewer tracks, and that Spotify is the first subscription service to land Red Hot Chili Peppers, Bob Dylan, and Paul McCartney.
Mossberg pressed him, pointing out that artists are complaining about receiving lower payments — not about the difference between subscriptions and purchases.
Ek disagrees, pointing out that Spotify is the second most powerful revenue stream for labels in Europe.
Mossberg said he’s talking about artists, not labels.
Ek pointed out how music mostly works: Services like his pay labels, and then the labels pay artists based on whatever contract has been worked out — and that makes Spotify the second-largest revenue stream in Europe for artists, too.
Parker points out that the key to Spotify’s profitability is portability. Parker also mentioned that even though many Spotify playlists are albums, the single song is [still] replacing the album; that the average number of songs in a Spotify playlist is 22; and that it makes more sense to sell playlists than albums. Neither one provided a solid number on what Spotify pays per play.
Parker mentioned that “there was some indication” that Apple was trying to stop Spotify from launching in the U.S., and that Spotify is “always” in “constant renegotiation” with the labels.” Then he made another point with which I agree: that Apple might have decided to let Spotify happen because even if Apple’s music-selling business went away, Apple would be fine — after all, they would still sell hardware for running Spotify.
Here’s the video: