Wow. It seems you are really good with numbers and statistics. And you have a great insight into all the data you have collected. Cool. Because I have a wonderful idea that would stifle any criticism of your payout procedure forever: just show us every month, let's call it "Monthly payout wrapped," which artists every cent went to. Open Pandora's box. Everything else is just marketing.
Another idea: every month, you give us the choice to pay €1 directly to an artist. Without you skimming off any of it or passing it on. How about that?
The streaming business model is kind of silly. If I’m paying $12 a month to Apple Music then that money should go to who I listen to. Let’s say Apple (or Spotify) gets $5 off the top for providing the service. The other $6 would go to what I played. If I played one song that month (which would have to be a pretty damn good song) the $6 would go to that song; however it’s divided - record label, band, writer, etc. Whether I played the song once or 1000 times it wouldn’t matter. If I played 2 songs then the play count would factor in. Let’s assume I played them the same. Then each song owners would get three dollars. If I played 20 songs (or technically 20 plays) The owners would get $0.30 per stream. And so on and so forth. A person can only play so many songs per month. If I play 1000 streams, that would be $0.006 per stream. If Apple/Spotify have millions of subscribers, that royalty check adds up pretty quick. Plus, it would be nice to know that playing a song by some obscure artist, that they are getting a check in the mail. I guess technically the record label will be getting the biggest percentage because that obscure band probably still owes the label a lot. But that’s a whole other story. 😄
Soundcloud has switched to this model -- it is called a user-centric (or artist-centric) royalty model. You're correct that it's generally much more sensible approach, and would be a game-changer for many artists -- especially those who suffer most in streaming world (eg, something like an orchestra, whose production costs are high, make excellent music, but their audience is small, but potentially dedicated).
It also would *entirely eliminate monetary streaming fraud* -- literally over night. Because you can only 'steal' your own money back (less the operating cost the company takes).
So why do all major DSPs avoid it in favor of the pro-rata royalty model? Mostly due to Major Label interest, as user-centric royalty model would mean many users subscription won't be diverted to major label artists whom the user didn't listen to. That's the key reason. There is more scenarios where the obfuscation and hazy math/licensing deals etc also come into play, and even the hidden motives behind keeping streaming fraud alive (while "fighting" it on the public facing side).
But the key reason is that the pro-rata model makes way for a lot more money to flow (in various ways, some more tricky than others) to those with power within the infrastructure, rather than directly to the artists who are being streamed by a given user.
You're right. With UCPS, 1,000 streams would indeed mean $0.006 per stream. But that's less than the $0.008 a premium stream in streamshare generates. Considering that an average Premium user listens to 1,000 songs per month, UCPS isn't the ideal solution. That's why I advocate for Pay Per Stream, where the artist always receives 1 cent per stream. We as users would have to pay more, but the sacrifice is worth it to me.
The pro rata system was more or less introduced by Spotify. Other services have adopted it uncritically. Ultimately, this system has proven to be flawed. It favors major labels and artists. This is especially true in the case of Spotify, which has made things even more unfair by introducing a threshold of 1,000 streams/listeners. Many advocate for the User-Centric Payment System. While this is indeed fairer, it does little to address the low payout problem. Users who stream frequently still generate low payouts per stream.
It's time for a complete overhaul. Away with pro rata. Let's pay per stream. Not attractive for users, but fair enough. If you use more, you pay more. Doesn't that also apply to other necessities like water and electricity? Why should it be any different with music?
I agree with everything you've written except suggesting that user-centric (aka artist-centric) royalty doesn't address the "low-payout problem". It entirely fixes it. Based on a pro-rata type math, I paid FAR LESS than Spotify pays today to listen to my favorite tapes and CDs as a kid, which I paid around $15 each for an album (yes, I played those albums A LOT). Now, sometimes I bought a crap album and didn't get my money's worth (seller still got paid). Streaming has fixed this. Unless I didn't listen to music all month except one terrible album, and my $9 (from my $12 subscription fee) all goes entirely towards one awful album that I skimmed through, playing just 31 seconds from each song.
While maintaining that DSPs (specifically, the pro-rata model) is the issue with fairness in right-holder payouts, it's also important that we are realistic that the artist/right-holder needs to hold up their end of the bargain too: making exceptional music, giving memorable experiences to fans, investing in promotion, etc lead to a successful business. Not blind entitlement. User-centric royalty share would make it possible for nearly any type of artist who is serious about their craft to earn and income that correlates to their gifts and efforts.
I fully agree that artists also have an obligation to deliver quality music. Most will undoubtedly do so, with the annoying exception of ghost artists who distribute musical wallpaper under various aliases.
Just to be clear, you're talking about $9 to be distributed. In reality, there's less to distribute. Taxes are deducted from your subscription fee, and 30% is for Spotify's operating costs. So that leaves about $5.90 for artists and $1.60 for songwriters.
Regarding UCPS, I always thought this was the solution until recently. I saw on Stats.fm that I only listened to 107 songs in November. Then I calculated what this would mean in UCPS terms. With UCPS, that would mean $5.9/107 = $0.0551 per stream. Great, that's much more than the average revenue from a premium stream of $0.0080 under the current streamshare model. But most users stream more, much more, in fact. The average is 1,000 streams per month. If I were to consume 1,000 streams in UCPS, the payout would be $5.9/1,000 = $0.0059. That's less than the $0.0080 at Streamshare.
That's why I advocate for Pay Per Stream with a fixed fee where 1,000 streams always yield $10.
We, as users, would have to pay much more, but all artists and songwriters would receive a fair price. Moreover, it might bring back the feeling that music has value in the world of streaming, where music seems like a free commodity.
Truth and Spotify are an oxymoron, and I take it the report will cover the actual math, including the €600 million the Spotify founder’s firm invested in war tech.
If the per-stream rate is high enough, it's easy to game that system by just signing up for an account and putting your song on repeat for the rest of time.
And if your argument for that is to cap per-stream earnings at some point, well that's arbitrary and anti-capitalist.
There's a rigid pool of monthly money, and those who participate by a larger amount get the lion's share of it. It's pretty simple: if people LIKE what you have made, they buy more of it. If what you make isn't as good (have you written a song as good as "Like A Rolling Stone"?) you will make less because people can get something better for the same buck.
I don't know if capping payouts is the best idea (I know this is what UMAW is lobbying for). But I do believe that payout redistribution is needed in order to ensure a thriving middle class of working musicians. I think a progressive payout rate is the answer. (The more an artist's music is streamed, the less plays start to pay out.)
I don't believe that all plays are equal. Taylor Swift, for instance, has been far & away the most streamed artist in recent years. But there's a point past which those plays no longer reflect her talent or effort. Sports apps, for instance, sent me "breaking news" alerts when she became engaged to Travis Kelce, & that is free marketing that ultimately contributes to her play count. The same can be said for social media drama around Chapel Roan's political views or any other event where the media is selfishly incentivized to boost the profile of or the public awareness of an artist.
Therefore, it makes sense to me for the first 500,000 or so plays to pay out at a much higher rate that decreases as plays accumulate. Similar to how US federal income tax increases the more money you make.
If you think back to the 1990s, bundled music enforced some degree of payout equalization. If you bought a Taylor Swift record you might listen to a thousand times, or some record you might only listen to once or twice, you were paying ~$15 either way. Taylor Swift wasn't compensated for amassing billions of plays. Fans, yes. Plays, no. So the idea that every play has a certain payout value is a very recent innovation, & one that seems to produce a toxic inequality among artists.
Why are streaming royalties different than radio-generated royalties? It would be very easy to calculate per stream royalties for songs/artists and use a specified standardized rate per play. Seems much more fair to artists. Current model seems weighted towards rewarding the highest streamed material which dilutes any royalties paid to artists who get fewer streams. A play is a play and that should be rewarded equally.
If you consider how many people (radio listeners) are generally hearing that song per spin, then radio (which pays well!) actually pays less royalty rate per listener than Spotify. Sorry for the plot-twist (the math checks out, but musicians hate math).
Radio-generated royalties are ultimately paid for by advertisers. And the cost of advertising varies based on the station's listenership size. This varies from station to station & market to market, & can change over time. It's not like advertisers pay a standard subscription price to run ads.
So, likewise, the cost of a Spotify subscription would be tied to your consumption in this model, like a utility bill. If you stream a bunch of Christmas music in December, for instance, you might get a Spotify bill that's double or triple the usual amount. Maybe that's great for artists in the short term, but this is the type of payout model that would push users back toward piracy if widely adopted.
Still, a pay-per-stream model would be fair and square. Moreover, it would solve a lot of problems. Better pay for artists and songwriters, making fraud virtually impossible. No parties you don't listen to, such as major labels and artists, profiting from your subscription. To avoid a high Spotify bill, you could introduce a monthly subscription with 1,000 streams. Once you run out of streams, you can simply buy 100 or more.
Apparently, the average Spotify user listens to 144 minutes of audio per day. (SQ Magazine) That's 992 songs per month @ 3.5 min/ea if it's all music. So if we set that average (we'll round up to 1,000 per month, since you mentioned it) at the current price ($12/mo), someone who, for instance, listens to Spotify while they work an 8 hour job is all of the sudden going to pay ~$30/mo. And if they also listen to music on the weekend or at home, the price goes up even higher.
And I can guarantee you, if you tell the biggest music fans on the platform that their price is increasing from $12/mo to $40/mo ($144 vs $480 per year), they're not going to pay it.
What you're talking about is a recipe to bring back widespread, mainstream piracy.
What's more, imagine running on a treadmill at a gym & all of the sudden Daft Punk cuts off & the app says "You've run out of your allotted monthly plays. Please purchase additional play credits." Again, you're pushing people toward piracy.
What you're fighting against is 1) a user expectation for unlimited streams that dates back to the piracy era, & 2) a cap on how much fans are willing/able to pay. And there's no correlation between how much users stream & how much they're willing/able to pay. And in fact my sense is that there may actually be an inverse correlation there, if you look at how streaming habits compare on more premium services like Tidal. So what you'd end up having is a wave of subscription cancellations & a drastic drop in total plays. So artists may get a higher payout per play, but it's not clear that they would actually make any more money.
What's important when we look at the health of the streaming economy is the number of artists who receive a substantial payout in a given year, & we know this increases when conversions of free users to premium subscribers increases. If you actually think through the pay-per-stream model, it's very hard to imagine it improves anything for most artists.
Thanks for your detailed comment. A different perspective is a good way to better substantiate your own theory.
I understand that higher costs can be a problem for many. But if I look back to the times when we only had vinyl and CDs, easily $50 a month was spent on music. So there must be some room left. Also, look at concert ticket prices. They've risen sharply, but the big venues are still full.
If I do the math, a subscription for 1,000 streams will cost about $20 a month. An additional 100 streams comes to $2. If 750 streams are enough, $15. Those aren't extremely high amounts.
Regarding the average of 1,000 streams per month, it's an average of 281 million paying users. So there are many millions of users who never reach 1,000 streams per month. Those who stream more are often the ones who play a playlist with relaxing music or rain sounds for hours. The money goes to parties that don't really deserve it. Ghost artists make millions from it.
I admit, the risk of increased piracy is clear. But back when piracy was at its peak, Spotify managed to convince us to pay $10 a month. Even with a price increase, the ease of streaming and the vast catalog could keep users on board despite the higher costs. Because of the hassle and the risks, many won't be so quick to switch to illegal downloading.
Regarding the sudden stoppage of playback because the streams are exhausted. It just depends on how that's implemented. I imagine you'd get a notification when the streams are about to run out.
I can't guarantee anything, but I am convinced that artists would benefit from a Pay Per Stream system. Artist organizations are asking for a penny per stream for a reason. As you may know, a bill has been introduced in the US, the "Living Wage for Musicians Act," which would require streaming services to pay a minimum of 1 cent per stream.
There are, of course, artists who earn millions from streaming under the current system, but many more are disadvantaged by the unfair Streamshare system. That's why I'm trying to find a system that is more fair for all artists. Unfortunately, UCPS can't offer that. Pay per stream, perhaps. If anyone has a better solution, I'd be more than happy to hear it.
>> I understand that higher costs can be a problem for many. But if I look
>> back to the times when we only had vinyl and CDs, easily $50 a month was
>> spent on music. So there must be some room left. Also, look at concert
>> ticket prices. They've risen sharply, but the big venues are still full.
This is incredibly wishful thinking. Very few people spent $50/wk in 1999 (the peak of physical media revenue). That's like $1200/yr adjusted for inflation. And those kinds of comparisons don't really work, anyhow... lots of competing entertainment segments that didn't exist then like mobile phones, the explosive growth in video games, internet streaming (twitch, youtube premium, et al), etc.
>> If I do the math, a subscription for 1,000 streams will cost about $20 a
>> month.
$0.02 per stream is completely absurd. You're not living in reality. It doesn't reflect established user behavior, established spending habits, & established economic conditions.
>> Regarding the average of 1,000 streams per month, it's an average of
>> 281 million paying users. So there are many millions of users who never
>> reach 1,000 streams per month.
What you're describing is turning all streaming into a premium product that's out of reach of the most passionate fans. There's all kinds of second order effects to this & they're all bad.
>> Those who stream more are often the ones who play a playlist with
>> relaxing music or rain sounds for hours. The money goes to parties that
>> don't really deserve it. Ghost artists make millions from it.
This isn't true, & even if it was, commissioned songs are session work. Whether you get paid up front or through royalties, it doesn't make a difference. Why does a talented jazz producer who is making commissioned work not deserve to make a living but some suburban kid with an acoustic guitar writing bad breakup songs does? This is a completely arbitrary distinction. Regarding rain recordings, field recordings are also valid recordings. Best Buy & Target sold sleep sound CDs alongside top 40 during the physical media era.
>> But back when piracy was at its peak, Spotify managed to convince us
>> to pay $10 a month.
This is not true at all. Spotify convinced users to adopt ad-supported streaming. Converting those users to premium subscribers has been Spotify's primary marketing effort ever since. If you look at revenue charts, this is how the recorded music industry was brought back from the brink of collapse. And increasing revenue in the future & growing the number of musicians making a living off of streaming depends on continued conversions, not reducing the subscriber base by half or more, as a $0.02 per stream rate would.
>> Because of the hassle and the risks, many won't be so quick to switch to
>> illegal downloading.
Again, you're not living in reality. We have 10 years of well-documented recorded history that contradict this prediction.
>> I can't guarantee anything, but I am convinced that artists would benefit
>> from a Pay Per Stream system. Artist organizations are asking for a
>> penny per stream for a reason. As you may know, a bill has been
>> introduced in the US, the "Living Wage for Musicians Act," which would
>> require streaming services to pay a minimum of 1 cent per stream.
I appreciate where the UMAW is coming from but the bill is terrible. The idea of a SoundExchange-type non-profit to distribute revenue is a good idea & would prevent major artists from negotiating sweetheart deals with streaming services at the expense of independent artists. But the per-stream rate is a horrible idea. We need a progressive payout model, instead.
You need to replace your bias against volume (the idea that "I deserve $0.x per stream") with an interest in maximizing revenue & fair distribution.
It's possible that back in the vinyl and CD era, not everyone spent $50 a month on music. That's partly my own experience from that period.
Regarding ticket prices, I live in the Netherlands, and there the big venues are full despite the exorbitant prices, especially for top artists. It might be different in the US; I don't have any insight into that. However, I maintain that there's generally plenty of room to pay $20 a month for music. It's never a good thing to just look at yourself, but personally, I wouldn't mind paying $20. Due to price hikes the current monthly costs are getting closer and closer. Knowing that artists are being paid better and fairly is worth it to me. Come to think of it. Spotify did not lose many users because of the recent increase of subscription rates.
I didn't calculate the monthly subscription fee at 2 cents per stream. It's 1 cent for the artist and 2.2 cents for the songwriter. So, for 1,000 streams, that's a total of $12.20, plus taxes and Spotify's own fees. That's how the total of $20 is calculated.
I don't live in the Matrix, we both live in the real world. You and I just have a different perspective. That’s all in the game.
Some things are hard to predict. You think half the users will leave, I think not. Neither of us can prove that our prediction is right.
No concrete figures are available regarding the percentage of streams involving relaxation music. Estimates range from 5% to 10%. Fraudulent streams also account for an estimated 5% to 10%. This means both groups benefit from Streamshare, taking a significant share of the revenue and reducing payments per stream.
A personal example. I have a dog, and when I'm away from home for a long time, I put on a playlist for him with relaxing music. For example, by the artist SleepyDogs https://open.spotify.com/artist/1Cj9j44XMhQeNHAwWJRCKd. I'm certainly not the only one; just look at the number of streams: millions And there are a lot more of these clever guys rigging the system sometimes even with short 31 seconds. It's easy: you cut up your field recording of nature sounds in 31 second pieces and try to have them streamed for hours in a row. If pay-per-stream were implemented, I wouldn't let such a playlist run for four hours. I'd just buy a CD and keep it on repeat. I expect more users will react that way.
Everyone can listen to whatever they want and stream as much as they need I agree. But isn't it fairer if heavy users also pay more?
If you think about it, there are many complaints that Spotify pays too little per stream, but in fact it is the users who negatively influence the amounts through their listening behavior. We all are the ones to blame for the low rates.
You may, of course, find pay-per-stream appalling, but in theory, I think it could work well. I also like the simplicity of this system. Everyone will immediately understand how it works. That's different with the current Streamshare. Fortunately, we agree that the current system isn't fair. I hadn't seen your idea of a progressive payout before. I think it is very clever and I agree with most of your ideas. I envy your writing and design skills and the calculator is just brilliant. Funny thing : I have been working on a calculator for pay-per-stream to bring in the Spotify percentage as a variable. But after giving it some thought I decided to use a fixed amount for Spotify. Their costs remain the same in pay-per-stream. But there are a few things I did miss. You don’t mention songwriters at all. They are in the same boat and should be compensated equally better. Unlike pay-per-stream or UCPS the progressive payout does not impact things such as fraud and gaming the system. They can even use progressive payout to increase their revenues by releasing new tracks constantly and pump streams till they hit the threshold. But maybe you can think of a way to combine UCPS and progressive payout.
One other thing we both did not address. The $0,004 rate is a global rate, the average of all markets and tiers worldwide. If you take the US average it would probably be higher. For instance Spotify has 55 million active users in India a Premium account in India costs $1.5 dollar. Streams from this market will never bring $0.008506 or $0.01
In any case, we can philosophize and discuss this endlessly. It is great fun. The chances of Pay Per Stream or Progressive Payout ever becoming the standard are negligible. Labels, in particular, will be reluctant to relinquish their privileged position. Like you say it will take legislation. But maybe a miracle occurs, like the Living Wage for Musicians Act becoming reality. Who kows.
Let’s not make this thread any longer. It will scare off most readers.
I’m sure we will meet again in some other forum discussion. If you are interested in my writings just add .nl to my name.
Wow. It seems you are really good with numbers and statistics. And you have a great insight into all the data you have collected. Cool. Because I have a wonderful idea that would stifle any criticism of your payout procedure forever: just show us every month, let's call it "Monthly payout wrapped," which artists every cent went to. Open Pandora's box. Everything else is just marketing.
Another idea: every month, you give us the choice to pay €1 directly to an artist. Without you skimming off any of it or passing it on. How about that?
The streaming business model is kind of silly. If I’m paying $12 a month to Apple Music then that money should go to who I listen to. Let’s say Apple (or Spotify) gets $5 off the top for providing the service. The other $6 would go to what I played. If I played one song that month (which would have to be a pretty damn good song) the $6 would go to that song; however it’s divided - record label, band, writer, etc. Whether I played the song once or 1000 times it wouldn’t matter. If I played 2 songs then the play count would factor in. Let’s assume I played them the same. Then each song owners would get three dollars. If I played 20 songs (or technically 20 plays) The owners would get $0.30 per stream. And so on and so forth. A person can only play so many songs per month. If I play 1000 streams, that would be $0.006 per stream. If Apple/Spotify have millions of subscribers, that royalty check adds up pretty quick. Plus, it would be nice to know that playing a song by some obscure artist, that they are getting a check in the mail. I guess technically the record label will be getting the biggest percentage because that obscure band probably still owes the label a lot. But that’s a whole other story. 😄
Soundcloud has switched to this model -- it is called a user-centric (or artist-centric) royalty model. You're correct that it's generally much more sensible approach, and would be a game-changer for many artists -- especially those who suffer most in streaming world (eg, something like an orchestra, whose production costs are high, make excellent music, but their audience is small, but potentially dedicated).
It also would *entirely eliminate monetary streaming fraud* -- literally over night. Because you can only 'steal' your own money back (less the operating cost the company takes).
So why do all major DSPs avoid it in favor of the pro-rata royalty model? Mostly due to Major Label interest, as user-centric royalty model would mean many users subscription won't be diverted to major label artists whom the user didn't listen to. That's the key reason. There is more scenarios where the obfuscation and hazy math/licensing deals etc also come into play, and even the hidden motives behind keeping streaming fraud alive (while "fighting" it on the public facing side).
But the key reason is that the pro-rata model makes way for a lot more money to flow (in various ways, some more tricky than others) to those with power within the infrastructure, rather than directly to the artists who are being streamed by a given user.
You're right. With UCPS, 1,000 streams would indeed mean $0.006 per stream. But that's less than the $0.008 a premium stream in streamshare generates. Considering that an average Premium user listens to 1,000 songs per month, UCPS isn't the ideal solution. That's why I advocate for Pay Per Stream, where the artist always receives 1 cent per stream. We as users would have to pay more, but the sacrifice is worth it to me.
The pro rata system was more or less introduced by Spotify. Other services have adopted it uncritically. Ultimately, this system has proven to be flawed. It favors major labels and artists. This is especially true in the case of Spotify, which has made things even more unfair by introducing a threshold of 1,000 streams/listeners. Many advocate for the User-Centric Payment System. While this is indeed fairer, it does little to address the low payout problem. Users who stream frequently still generate low payouts per stream.
It's time for a complete overhaul. Away with pro rata. Let's pay per stream. Not attractive for users, but fair enough. If you use more, you pay more. Doesn't that also apply to other necessities like water and electricity? Why should it be any different with music?
I agree with everything you've written except suggesting that user-centric (aka artist-centric) royalty doesn't address the "low-payout problem". It entirely fixes it. Based on a pro-rata type math, I paid FAR LESS than Spotify pays today to listen to my favorite tapes and CDs as a kid, which I paid around $15 each for an album (yes, I played those albums A LOT). Now, sometimes I bought a crap album and didn't get my money's worth (seller still got paid). Streaming has fixed this. Unless I didn't listen to music all month except one terrible album, and my $9 (from my $12 subscription fee) all goes entirely towards one awful album that I skimmed through, playing just 31 seconds from each song.
While maintaining that DSPs (specifically, the pro-rata model) is the issue with fairness in right-holder payouts, it's also important that we are realistic that the artist/right-holder needs to hold up their end of the bargain too: making exceptional music, giving memorable experiences to fans, investing in promotion, etc lead to a successful business. Not blind entitlement. User-centric royalty share would make it possible for nearly any type of artist who is serious about their craft to earn and income that correlates to their gifts and efforts.
I fully agree that artists also have an obligation to deliver quality music. Most will undoubtedly do so, with the annoying exception of ghost artists who distribute musical wallpaper under various aliases.
Just to be clear, you're talking about $9 to be distributed. In reality, there's less to distribute. Taxes are deducted from your subscription fee, and 30% is for Spotify's operating costs. So that leaves about $5.90 for artists and $1.60 for songwriters.
Regarding UCPS, I always thought this was the solution until recently. I saw on Stats.fm that I only listened to 107 songs in November. Then I calculated what this would mean in UCPS terms. With UCPS, that would mean $5.9/107 = $0.0551 per stream. Great, that's much more than the average revenue from a premium stream of $0.0080 under the current streamshare model. But most users stream more, much more, in fact. The average is 1,000 streams per month. If I were to consume 1,000 streams in UCPS, the payout would be $5.9/1,000 = $0.0059. That's less than the $0.0080 at Streamshare.
That's why I advocate for Pay Per Stream with a fixed fee where 1,000 streams always yield $10.
We, as users, would have to pay much more, but all artists and songwriters would receive a fair price. Moreover, it might bring back the feeling that music has value in the world of streaming, where music seems like a free commodity.
Truth and Spotify are an oxymoron, and I take it the report will cover the actual math, including the €600 million the Spotify founder’s firm invested in war tech.
Ahh yes--Spotify, the Karl Marx of music streaming.
If the per-stream rate is high enough, it's easy to game that system by just signing up for an account and putting your song on repeat for the rest of time.
And if your argument for that is to cap per-stream earnings at some point, well that's arbitrary and anti-capitalist.
There's a rigid pool of monthly money, and those who participate by a larger amount get the lion's share of it. It's pretty simple: if people LIKE what you have made, they buy more of it. If what you make isn't as good (have you written a song as good as "Like A Rolling Stone"?) you will make less because people can get something better for the same buck.
I don't know if capping payouts is the best idea (I know this is what UMAW is lobbying for). But I do believe that payout redistribution is needed in order to ensure a thriving middle class of working musicians. I think a progressive payout rate is the answer. (The more an artist's music is streamed, the less plays start to pay out.)
I don't believe that all plays are equal. Taylor Swift, for instance, has been far & away the most streamed artist in recent years. But there's a point past which those plays no longer reflect her talent or effort. Sports apps, for instance, sent me "breaking news" alerts when she became engaged to Travis Kelce, & that is free marketing that ultimately contributes to her play count. The same can be said for social media drama around Chapel Roan's political views or any other event where the media is selfishly incentivized to boost the profile of or the public awareness of an artist.
Therefore, it makes sense to me for the first 500,000 or so plays to pay out at a much higher rate that decreases as plays accumulate. Similar to how US federal income tax increases the more money you make.
If you think back to the 1990s, bundled music enforced some degree of payout equalization. If you bought a Taylor Swift record you might listen to a thousand times, or some record you might only listen to once or twice, you were paying ~$15 either way. Taylor Swift wasn't compensated for amassing billions of plays. Fans, yes. Plays, no. So the idea that every play has a certain payout value is a very recent innovation, & one that seems to produce a toxic inequality among artists.
Why are streaming royalties different than radio-generated royalties? It would be very easy to calculate per stream royalties for songs/artists and use a specified standardized rate per play. Seems much more fair to artists. Current model seems weighted towards rewarding the highest streamed material which dilutes any royalties paid to artists who get fewer streams. A play is a play and that should be rewarded equally.
If you consider how many people (radio listeners) are generally hearing that song per spin, then radio (which pays well!) actually pays less royalty rate per listener than Spotify. Sorry for the plot-twist (the math checks out, but musicians hate math).
Radio-generated royalties are ultimately paid for by advertisers. And the cost of advertising varies based on the station's listenership size. This varies from station to station & market to market, & can change over time. It's not like advertisers pay a standard subscription price to run ads.
So, likewise, the cost of a Spotify subscription would be tied to your consumption in this model, like a utility bill. If you stream a bunch of Christmas music in December, for instance, you might get a Spotify bill that's double or triple the usual amount. Maybe that's great for artists in the short term, but this is the type of payout model that would push users back toward piracy if widely adopted.
Still, a pay-per-stream model would be fair and square. Moreover, it would solve a lot of problems. Better pay for artists and songwriters, making fraud virtually impossible. No parties you don't listen to, such as major labels and artists, profiting from your subscription. To avoid a high Spotify bill, you could introduce a monthly subscription with 1,000 streams. Once you run out of streams, you can simply buy 100 or more.
Apparently, the average Spotify user listens to 144 minutes of audio per day. (SQ Magazine) That's 992 songs per month @ 3.5 min/ea if it's all music. So if we set that average (we'll round up to 1,000 per month, since you mentioned it) at the current price ($12/mo), someone who, for instance, listens to Spotify while they work an 8 hour job is all of the sudden going to pay ~$30/mo. And if they also listen to music on the weekend or at home, the price goes up even higher.
And I can guarantee you, if you tell the biggest music fans on the platform that their price is increasing from $12/mo to $40/mo ($144 vs $480 per year), they're not going to pay it.
What you're talking about is a recipe to bring back widespread, mainstream piracy.
What's more, imagine running on a treadmill at a gym & all of the sudden Daft Punk cuts off & the app says "You've run out of your allotted monthly plays. Please purchase additional play credits." Again, you're pushing people toward piracy.
What you're fighting against is 1) a user expectation for unlimited streams that dates back to the piracy era, & 2) a cap on how much fans are willing/able to pay. And there's no correlation between how much users stream & how much they're willing/able to pay. And in fact my sense is that there may actually be an inverse correlation there, if you look at how streaming habits compare on more premium services like Tidal. So what you'd end up having is a wave of subscription cancellations & a drastic drop in total plays. So artists may get a higher payout per play, but it's not clear that they would actually make any more money.
What's important when we look at the health of the streaming economy is the number of artists who receive a substantial payout in a given year, & we know this increases when conversions of free users to premium subscribers increases. If you actually think through the pay-per-stream model, it's very hard to imagine it improves anything for most artists.
Thanks for your detailed comment. A different perspective is a good way to better substantiate your own theory.
I understand that higher costs can be a problem for many. But if I look back to the times when we only had vinyl and CDs, easily $50 a month was spent on music. So there must be some room left. Also, look at concert ticket prices. They've risen sharply, but the big venues are still full.
If I do the math, a subscription for 1,000 streams will cost about $20 a month. An additional 100 streams comes to $2. If 750 streams are enough, $15. Those aren't extremely high amounts.
Regarding the average of 1,000 streams per month, it's an average of 281 million paying users. So there are many millions of users who never reach 1,000 streams per month. Those who stream more are often the ones who play a playlist with relaxing music or rain sounds for hours. The money goes to parties that don't really deserve it. Ghost artists make millions from it.
I admit, the risk of increased piracy is clear. But back when piracy was at its peak, Spotify managed to convince us to pay $10 a month. Even with a price increase, the ease of streaming and the vast catalog could keep users on board despite the higher costs. Because of the hassle and the risks, many won't be so quick to switch to illegal downloading.
Regarding the sudden stoppage of playback because the streams are exhausted. It just depends on how that's implemented. I imagine you'd get a notification when the streams are about to run out.
I can't guarantee anything, but I am convinced that artists would benefit from a Pay Per Stream system. Artist organizations are asking for a penny per stream for a reason. As you may know, a bill has been introduced in the US, the "Living Wage for Musicians Act," which would require streaming services to pay a minimum of 1 cent per stream.
There are, of course, artists who earn millions from streaming under the current system, but many more are disadvantaged by the unfair Streamshare system. That's why I'm trying to find a system that is more fair for all artists. Unfortunately, UCPS can't offer that. Pay per stream, perhaps. If anyone has a better solution, I'd be more than happy to hear it.
>> I understand that higher costs can be a problem for many. But if I look
>> back to the times when we only had vinyl and CDs, easily $50 a month was
>> spent on music. So there must be some room left. Also, look at concert
>> ticket prices. They've risen sharply, but the big venues are still full.
This is incredibly wishful thinking. Very few people spent $50/wk in 1999 (the peak of physical media revenue). That's like $1200/yr adjusted for inflation. And those kinds of comparisons don't really work, anyhow... lots of competing entertainment segments that didn't exist then like mobile phones, the explosive growth in video games, internet streaming (twitch, youtube premium, et al), etc.
Also, wouldn't be so sure about concert attendance. https://defector.com/why-are-so-many-concert-tours-getting-canceled
>> If I do the math, a subscription for 1,000 streams will cost about $20 a
>> month.
$0.02 per stream is completely absurd. You're not living in reality. It doesn't reflect established user behavior, established spending habits, & established economic conditions.
>> Regarding the average of 1,000 streams per month, it's an average of
>> 281 million paying users. So there are many millions of users who never
>> reach 1,000 streams per month.
What you're describing is turning all streaming into a premium product that's out of reach of the most passionate fans. There's all kinds of second order effects to this & they're all bad.
>> Those who stream more are often the ones who play a playlist with
>> relaxing music or rain sounds for hours. The money goes to parties that
>> don't really deserve it. Ghost artists make millions from it.
This isn't true, & even if it was, commissioned songs are session work. Whether you get paid up front or through royalties, it doesn't make a difference. Why does a talented jazz producer who is making commissioned work not deserve to make a living but some suburban kid with an acoustic guitar writing bad breakup songs does? This is a completely arbitrary distinction. Regarding rain recordings, field recordings are also valid recordings. Best Buy & Target sold sleep sound CDs alongside top 40 during the physical media era.
>> But back when piracy was at its peak, Spotify managed to convince us
>> to pay $10 a month.
This is not true at all. Spotify convinced users to adopt ad-supported streaming. Converting those users to premium subscribers has been Spotify's primary marketing effort ever since. If you look at revenue charts, this is how the recorded music industry was brought back from the brink of collapse. And increasing revenue in the future & growing the number of musicians making a living off of streaming depends on continued conversions, not reducing the subscriber base by half or more, as a $0.02 per stream rate would.
>> Because of the hassle and the risks, many won't be so quick to switch to
>> illegal downloading.
Again, you're not living in reality. We have 10 years of well-documented recorded history that contradict this prediction.
>> I can't guarantee anything, but I am convinced that artists would benefit
>> from a Pay Per Stream system. Artist organizations are asking for a
>> penny per stream for a reason. As you may know, a bill has been
>> introduced in the US, the "Living Wage for Musicians Act," which would
>> require streaming services to pay a minimum of 1 cent per stream.
I appreciate where the UMAW is coming from but the bill is terrible. The idea of a SoundExchange-type non-profit to distribute revenue is a good idea & would prevent major artists from negotiating sweetheart deals with streaming services at the expense of independent artists. But the per-stream rate is a horrible idea. We need a progressive payout model, instead.
You need to replace your bias against volume (the idea that "I deserve $0.x per stream") with an interest in maximizing revenue & fair distribution.
I wrote about it here if you're interested.
https://www.whattodoaboutspotify.com/essays/fixing-the-streaming-economy
It's possible that back in the vinyl and CD era, not everyone spent $50 a month on music. That's partly my own experience from that period.
Regarding ticket prices, I live in the Netherlands, and there the big venues are full despite the exorbitant prices, especially for top artists. It might be different in the US; I don't have any insight into that. However, I maintain that there's generally plenty of room to pay $20 a month for music. It's never a good thing to just look at yourself, but personally, I wouldn't mind paying $20. Due to price hikes the current monthly costs are getting closer and closer. Knowing that artists are being paid better and fairly is worth it to me. Come to think of it. Spotify did not lose many users because of the recent increase of subscription rates.
I didn't calculate the monthly subscription fee at 2 cents per stream. It's 1 cent for the artist and 2.2 cents for the songwriter. So, for 1,000 streams, that's a total of $12.20, plus taxes and Spotify's own fees. That's how the total of $20 is calculated.
I don't live in the Matrix, we both live in the real world. You and I just have a different perspective. That’s all in the game.
Some things are hard to predict. You think half the users will leave, I think not. Neither of us can prove that our prediction is right.
Millions are indeed being made from streams that more or less abuse the system. Think of Fruits Music https://www.musicbusinessworldwide.com/podcast/strange-fruits-has-tens-of-billions-of-streams-but-its-not-without-controversy/, or Johan Röhr https://www.theguardian.com/uk-news/2024/mar/19/swedish-composer-johan-rohr-becomes-spotifys-most-famous-musician-youve-never-heard-of, and many more. Not to mention the blatant fraud, which also takes a hefty bite out of the revenue. Pay Per Stream will shatter that revenue model.
No concrete figures are available regarding the percentage of streams involving relaxation music. Estimates range from 5% to 10%. Fraudulent streams also account for an estimated 5% to 10%. This means both groups benefit from Streamshare, taking a significant share of the revenue and reducing payments per stream.
A personal example. I have a dog, and when I'm away from home for a long time, I put on a playlist for him with relaxing music. For example, by the artist SleepyDogs https://open.spotify.com/artist/1Cj9j44XMhQeNHAwWJRCKd. I'm certainly not the only one; just look at the number of streams: millions And there are a lot more of these clever guys rigging the system sometimes even with short 31 seconds. It's easy: you cut up your field recording of nature sounds in 31 second pieces and try to have them streamed for hours in a row. If pay-per-stream were implemented, I wouldn't let such a playlist run for four hours. I'd just buy a CD and keep it on repeat. I expect more users will react that way.
Everyone can listen to whatever they want and stream as much as they need I agree. But isn't it fairer if heavy users also pay more?
If you think about it, there are many complaints that Spotify pays too little per stream, but in fact it is the users who negatively influence the amounts through their listening behavior. We all are the ones to blame for the low rates.
You may, of course, find pay-per-stream appalling, but in theory, I think it could work well. I also like the simplicity of this system. Everyone will immediately understand how it works. That's different with the current Streamshare. Fortunately, we agree that the current system isn't fair. I hadn't seen your idea of a progressive payout before. I think it is very clever and I agree with most of your ideas. I envy your writing and design skills and the calculator is just brilliant. Funny thing : I have been working on a calculator for pay-per-stream to bring in the Spotify percentage as a variable. But after giving it some thought I decided to use a fixed amount for Spotify. Their costs remain the same in pay-per-stream. But there are a few things I did miss. You don’t mention songwriters at all. They are in the same boat and should be compensated equally better. Unlike pay-per-stream or UCPS the progressive payout does not impact things such as fraud and gaming the system. They can even use progressive payout to increase their revenues by releasing new tracks constantly and pump streams till they hit the threshold. But maybe you can think of a way to combine UCPS and progressive payout.
One other thing we both did not address. The $0,004 rate is a global rate, the average of all markets and tiers worldwide. If you take the US average it would probably be higher. For instance Spotify has 55 million active users in India a Premium account in India costs $1.5 dollar. Streams from this market will never bring $0.008506 or $0.01
In any case, we can philosophize and discuss this endlessly. It is great fun. The chances of Pay Per Stream or Progressive Payout ever becoming the standard are negligible. Labels, in particular, will be reluctant to relinquish their privileged position. Like you say it will take legislation. But maybe a miracle occurs, like the Living Wage for Musicians Act becoming reality. Who kows.
Let’s not make this thread any longer. It will scare off most readers.
I’m sure we will meet again in some other forum discussion. If you are interested in my writings just add .nl to my name.