With its new website Loud&Clear, Spotify has entered the debate about the economics of streaming.
Spotify says: “Artists deserve clarity about the economics of music streaming. This site aims to increase transparency by sharing new data on the global streaming economy and breaking down the royalty system, the players, and the process.”
The statistics on the website make it very clear how much money Spotify generates for the music industry. Their explainer videos also make it clear how they don't pay each artist directly, and instead only pay the rights-holders, i.e.labels, distributors, publishers and societies. What happens to the money once it's been handed over to the music industry is another story that Spotify has no active role in.
Performers are left out of the equation
The record labels have negotiated 50% - 55% of the 70% payout for themselves and the performers. For record companies, streaming is now the largest source of revenue but Spotify does not know how much of that is actually paid to the performers.
The #PayPerformers campaign has surveyed performers across Europe and we have found that most performers receive less than €1k a year from streaming, even when their tracks are played more than 100k times.
We are working to fix the system to ensure that performers receive fair and proportionate remuneration from streaming services via a new right granted by Article 18 of the 2019 EU Copyright Directive.
A Collectively Managed Remuneration Right Will Solve Performer Remuneration Issues Without Harming Streaming Services.
MP Damian Green asked Horacio Gutierrez (Head of Global Affairs and Chief Legal Officer at Spotify) how the remuneration right performers have in Spain affected how Spotify operates in that market. The answer stated that it hasn't affected the way Spotify operates in Spain, thus making it clear that a remuneration right will solve performer remuneration issues without harming streaming services. You can see his full response below:
Read more about the Spanish model here.