The whole capitalist system is not fair to anything that isn’t business, all the arts suffer under it. The music industry is not fair, it won’t ever be fair just like any other passion industry is not fair to their workers, people are willing to do it because they have an inner drive pulling them towards it, not because there’s money to be made. The economics of music streaming simply do not work, there’s not enough people willing to pay enough so all artists can earn what we would consider “fair”. These are not the issues to why there’s not more money to pay licences, the pot to pay those have a fixed increase: for each subscriber there’s about US$ 9-10 more of revenue, which ~US$ 7 goes to pay out royalties. That fee is not profit, that fee is used to operate the whole company, it’s not like Spotify is taking 30% out of the revenue as profit, the margin is negative, it’s always been negative until Q3 2023. (I admit I’m deliberately looking for a Kafka-esque slant on my critique).Īnd on the fee they keep (30% as it appears) is beyond the pale. Using my model above that the >1000 plays set have a 100% discount on the cost of the service, but the unpaid ones are “paying” with the fees they would previously have earned… you could now say the <1000 plays musicians are paying for the upkeep of the system that decides they don’t get paid. It’s probably harder to maintain (in terms of developer-hours) their system now, as a result of this change, because they can’t apply the same rule for every musician: they now have to make the calculations more complex. Spotify have decided to regress to the older payout model, despite not needing to from a technical perspective. It was working and the underdogs were getting paid. They have been using that technology for years. Today, Spotify already has the technology to pay accurately. Back when they started, when the plays which triggered payments were on radio and in venues, and accounting was manual, remote and paper-based, this made some sense, despite being unfair on the underdogs. In the past, collection societies managed these kinds of royalty payments, and they had the problem that funds would disproportionately go to the already more successful musicians. It’s actually worse this time around, and worth ranting about, here and elsewhere if you can. Today is Spotify, before it was MTV, before it was radio… I’ve heard this sentiment many times before. Hardcore music nerds have never been the majority. Simply put: there’s no way for Spotify to pay more for royalties if it doesn’t substantially increases revenues, either through a lot more ads revenue or a huge bump to Premium subscription prices (as in 50% of increase from current prices).ħ0% of the current revenue is already tied to be spent just to pay royalties, there’s no more milking that can be done to increase payment per stream. US$ 36 millions is spent to support 9k+ employees who are partially paid with shares. It’s not free but it is not taken from the pile of money paying royalties, it can’t be transferred to pay royalties, it’s not “cash” that the company can use to pay more per stream.Īlso, that expenditure is used to pay all employees in RSUs and options, the executive leadership holds a lot of those but everyone at Spotify is paid with RSUs and options as well, it’s part of salary/staffing expenditures. Not everything here is related to Ek’s shares, of course. But that is not “free”, it shows up unter “Accrued social costs for options and RSUs” in the financial statement, and the associated costs are 36 million per month, if I understand that correctly.
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