Spotify, the on-demand music streaming service, has launched a new Spotify Artists page which explains its business model and how royalties are distributed in extreme detail. Spotify has paid out $500 million in royalties to rights holders so far in 2013 and $1 billion total since 2009, about 70 percent of its total revenue. These rights holders, typically music labels and publishers, then pay artists a portion of the royalties, an amount that varies depending on individual record contracts.
Spotify doesn’t pay on a “per song stream” basis, exactly: the total royalty pie is split among all rights holders based on the percentage of total Spotify streams their songs garner. But the company estimates that the average song generates between $0.006 and $0.0084 per stream in royalties. Spotify says a band with a “niche indie album” generated $3,300 in royalty payments in July, while a classic rock album earned $17,000. The company’s data shows that the numbers add up, at least for big artists. The company says the biggest album on the service each month typically generates more than $400,000 in royalties. A “current global star,” who Spotify chose not to disclose, generated more than $3 million in royalty payments between August 2012 and July 2013. Spotify expects these figures to increase dramatically as its revenue increases but the number of artists splitting the money remains more or less the same.
Here are the top 3 most popular songs on Spotify the week before Thanksgiving, with an estimate of how much money they’ve generated in royalties since they were released:
Find the full article here: Spotify Reveals Royalty Rates Paid to Artists | TIME.com