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!

Your idea has been submitted a while ago but unfortunately hasn't gathered enough kudos (50 per year). In order to keep an overview of the active & recent ideas in this forum, we will close this idea for now. However this does not mean that your idea has been declined by Spotify.

If you still feel strongly about your request, we encourage you to post your idea in a little different form again! Maybe now is the right time to receive the support of our community for your suggestion! ;)

Do you have any further questions on how the idea exchange is managed? Just click here!



Related Ideas

Comments
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. 

Merik
Community Legend

Hey there @mewtaylor, welcome to the community!

 

I think the following pretty much sums up their stance on paying per stream : "Again, we personally view “per stream” metrics as a highly flawed indication of our value to artists for several reasons. For one, our growing user population might listen to more music in a given month than the month before (resulting in a lower effective “per stream”), while generating far more aggregate royalties for artists. As with any subscription service, our primary goal is to attract and retain as many paying subscribers as we possibly can, and to pass along greater and greater royalties to the creators of the music in our service. Theoretically, another service could generate higher effective “per stream” payouts simply by having users who listen to far less music. We believe, however, that our service and the lives of artists will both be best if the World’s music fans enjoy more music than ever before in a legal, paid manner". Take a look here.

mewtaylor
Newbie

@Merik thanks for the warm welcome, and for the quick, informative response!

 

I had the chance to take a look at that page you linked to before my original post, and saw that paragraph you quoted, as well as the bullet point about paid users having a higher "per stream" rate. I guess what I was more interested in (and perhaps this is not the right place to ask this question?) was if there was more of an in-depth "why" behind their decision (and thanks again for linking to it!) documented anywhere that I might be able to read more about. Maybe I was missing something on that page (and please let me know if so!), but the only "why" that I could find was a sentence in the paragraph you quote above:

 

"We believe, however, that our service and the lives of artists will both be best if the World’s music fans enjoy more music than ever before in a legal, paid manner".

 

While it's great to see their opinion, I was more curious about the line of reasoning behind that position is all. Because I do wonder whether empowering premium users to have more fine-grained control over how their money is allocated, such as by doing pay "per user", might lead to both more paid users and more revenue for independent and/or lesser-known artists - and if that's something that Spotify has researched already, I would love to hear more about the pros and cons behind such an approach!

 

Thanks!

Fred
Community Legend

Hello and welcome to the community. 

As this is more of a question and discussion about the pros and cons of different payment options for artists, and those are not likely to change significantly in the near future, I'm going to mark this as "Unspecified" for now. Feel free however to continue the discussion in this thread. 

Maetco
Roadie

I also feel that Spotify should distribute the about 70 % of their revenues to rights holders per user / account. I created an idea about the matter here https://community.spotify.com/t5/Spotify-Ideas/Distribute-the-royalties-based-on-the-amount-of-reven...

Maetco
Roadie

This idea has been talked about earlier here https://community.spotify.com/t5/Spotify-Ideas/Payment-Distribution-to-Artists-by-per-user-plays-rat... but it was considered to be more of a question rather than an idea so its not "active" and you can't give it kudos. I feel this idea is a valid one.

 

Eg. right now in theory an artist could have a "song" which is 30 sec long and I could play that on repeat for 24/7 thus ending up creating more revenue to the rights holder than I ever payed Spotify and obviously it works the otherway around too. Artist that are the reason I pay for Spotify might end up gettin very low compensation from my streams if I just happen to listen music very little / rarely.

Rock Star 21
Rock Star 21
Status changed to: New Idea

Marked as new idea, although any idea about changing the royalty structure is difficult to become implemented, due to nature of the international licensing agreements. As @Maetco mentioned, a similar discussion has been posted here.

srjohnson1986
Casual Listener

What about additional account tiers?

 

Obvsiously the first $7 of our $10 per month is mostly going to big labels that signed contracts so that regardless of the amount of plays they still get a tidy sum. That's fine. They may lose their bargaining power over time, they may not. I don't think that should be messed with for now as there's a lot of legal kerfuffle with it.

 

The idea of a donation button gets pushed around a lot but I don't think it's likely to get used.

 

What if you could set a higher amount per month to pay out to artists that you stream from. That first $7 goes to whatever current contracts are in place, the $3 is spotify's take, and then each user can opt to pay $5,10+ extra per month to dole out to artists/labels/whoever gets the cash based on their number of listens out of the total.

 

So if I pay $20 a month and only listen to The Arrivals, the first $7 goes towards the current spotify model, the next $3 goes to Spotify, and the next $10 goes to the Arrivals. Essentially you donate based on number of listens per rights holder on top of your base $10 per month.

dfrost
Newbie

I for one, as a paying customer, would really like to see the artists I listen to get more money out of it. This would help the smaller, not so very well known artist to get funds and to continue developing their music.

rom2vlad
Newbie

Hey gprocess, thanks for your answers.

Is it possible to know a bit more about the nature of the international licensing agreements?

It could be very easy at indie artists' level to change things. I have the feeling that  creating another royalty calculation type would not be so difficult. The user could choose between classic calculation and per user calculation. Price could be adapted. Licensing agreements could easily be adapted for the indies. If for any reason mainstream music should not be available any more for this second profile type, I bet that would work even better.

Personaly I could pay up to $20 a month for that.