Critics of Spotify’s compensation have homed in on the 0.6-to-0.84 cent the streaming service said is a reasonable estimate of what it pays per play. (The company actually has a formula that relies on ever-changing variables for getting at that figure.) But Spotify has released another number worth noting: $2 billion. That’s the amount the company late last year said it had sent to rights holders globally since its inception in 2008.
Cooking Vinyl co-founder Martin Goldschmidt says those focusing on the tiny payments artists receive are missing the bigger picture:
“The more interesting thing is the fact that I’m earning more money,” he says. “[Spotify] is earning artists and the industry more money.”
And there’s a not-insignificant bonus: Streaming services that offer easy, paid access to music have proven an effective way to draw in listeners who might otherwise choose illegal downloads, Mr. Goldschmidt said. He calls Spotify “the best thing the industry has ever done to fight piracy.”
“Music is consumed now more than it ever has been on the planet, but most people don’t pay for it” or pay “very, very little,” he says. “What Spotify is doing is getting people to pay for it.”
Sachin Doshi, Spotify’s vice president of content and distribution, said he thinks the company has found a formula for growth that “will help bring the industry to its peak and beyond.”
It has a way to go: U.S. recording-industry revenue topped out at $14.6 billion in 1999. In 2014, it was $7 billion. Complaints about Spotify’s payouts might just as well be directed at that dropoff, in an industry battered by piracy and myriad new players competing for music fans’ eyes, ears and dollars. It’s hard to pay musicians with money that isn’t there.
“A lot of artists think the world owes them a living,” says Mr. Goldschmidt. “And it doesn’t.” [Digital Music News]