Distribute the royalties based on the amount of revenue you get from an individual user

Based on this http://www.spotifyartists.com/spotify-explained/ the current distribution method is basically:

 

1: Divide the total revenue by the total number of streams to get X.

2: Pay X * the number of total streams of an individual rights holder to that rights holder.

 

This has several flaws out of which 1 seems really unfair to the artists:

 

"The method assumes that the people who stream much bring much revenue to Spotify."

 
The problem is easily explained through a real example. I'm a subsrciber and so is my mother. I easily listen to music 5+ times as much as she does but I don't generate any more revenue for Spotify. But still the artists I listen to get 5+ times as much as royalties from Spotify based on my listening compared to what the artists she is listening get based on her listening. I really feel this is not fair in any way.

 

My suggestion is to change the royalty distribution method into:

 

1: Keep track of the revenues by user / account.

2: Keep track of streams by user / account.

3: Divide the revenue by a user by the number of streams by that user to get X.

4: Pay X * the number of total streams of an individual rights holder by that user to that rights holder.

 

This should fix the problem completely.

 

PS. This is not a dublicate idea with https://community.spotify.com/t5/Spotify-Ideas/Artist-Payment-Pay-by-listener-and-not-by-amount-of-p... since both the problem and the way to fix it are different.

Updated: 2016-02-02

Hello!

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mewtaylor
Newbie

Hello!

 

I just had a thought about how payment is distributed to artists that I wanted to see if anyone might have some thoughts on. Spotify still does come under criticism on occasion for artist payment distribution - I've seen a couple of instances of people citing iTunes as providing more monetary compensation to artists since it is per download, rather than per play, among other things. This seems to be especially true for independent artists, and artists who are generally less well-known.

 

I was wondering if Spotify has ever considered doing payment distributions using the

 

     sum[ (total artist streams per user) / (total streams per user) ] across all users

 

ratio for payment calculation, rather than the currently used

 

     (total artist streams across Spotify) / (total streams across Spotify)

 

approach, i.e. calculating the artists' play ratio by user, rather than in one giant pool. If you have considered this, I would love to hear why the current payment implementation was chosen rather than a per user method, such as the one listed above. But... 

 

If a per user method has not been considered by Spotify previously, I think it would be nice - while I'm not an analyst myself, I imagine that it could lead to more revenue for independent artists, and maybe even less famous artists that are still beholden to rights owners for distribution of payment. I think it would do this because it could account for differences in number of plays per user - rather than users who tend to play more music over the course of a month contributing more all artists' payout, each user has an equal voice in how money gets distributed to artists.

 

I understand that such a switch would be difficult, and possibly insurmountable in the instance of free users - so, I am positing this as an idea not for all users, but for Premium users only. With Premium, it is a feasible goal, since you have a finite number of plays, and a finite amount of money coming directly from that user, and do not have to worry about trying to calculate differences in advertisement impact for different users. Doing that ratio calculation would be relatively straightforward of a switch computationally (though quite a large change in the system nonetheless, of course). 

 

I think this type of change would empower both users and artists to use Spotify more. Firstly, it would empower artists to allow Spotify to play their music because the metrics they would get per month would be more reflective of the size of their fan base, and how much importance that fan base puts on the artists' music than current metrics.

 

Secondly, it would empower users more, which I think is especially important for users between 18-32 years of age. While I am not an expert on the subject, I often find that users in this age group (my age group) care a great deal about having control over where their money ends up, which in this case means knowing which rights holders and/or artists are getting the money they are spending. I know I do. Switching to this system, while still not addressing the injustices that are felt within the relationship between rights holders and artists by many, would still allow users to have more of a say in who gets their money than the current system. On top of that, it might be helpfult for Spotify itself - if using Premium is the only way for users to feel empowered by knowing how their money is distributed, it may encourage people in the free tier to upgrade to Premium in order to feel empowered.

 

Just a thought. I'd love to hear what you and others have to say about this idea.