Much have we known about Spotify and the good time that is happening with its success harvested during the last years.
To reinforce the transparency of a point not very well attended by the platform, Spotify presented a new website in which they address frequently asked questions and present figures on how they pay royalties to artists present on the platform.
A new transparency portal for Spotify artists
The new site presented is titled Loud & Clear and was presented with the goal of giving artists greater clarity on the economics of streaming music and increasing transparency by sharing new data on the global economy of streaming and breaking the royalty system, players and process, according to what was commented on the front page of the site.
The text of the portal announces that among the artists who participate in this platform, a number of no less than 13,400 musicians obtained during the past year revenues of 50 thousand dollars or more or more. At a next level, it was 7,800 who generated more than $ 100,000 in the same period. Better luck got the next level of users, which concentrates 1,820 artists who generated more than 500 thousand dollars in one year. And finally, it also stands out that 870 artists managed to generate a million dollars in the period 2020.
An important clarification made by Spotify is about the payment mechanism, which is issued to the rights holders, who transfer to the artists only the part that corresponds to them according to their contractual agreements.
This situation often produces a dissonance between the highly positive figures shared by the platform and an economic reward that reaches numbers well below the general expectations of the artists. This has motivated the institution of organized movements of artists, who seek to negotiate improvements in their pay.
This new Spotify portal comes as a response to the constant transparency requirements about the relationship that the platform maintains with the main record companies. However, this attempt to explain the current system that governs the distribution of royalties to rights holders fell short of the requirements posed by the artists, who collectively announced that they seek to know key information on Spotify’s sources of income, such as figures for premium subscriptions and ad revenue; the purchase of privileged positions in playlists or algorithmic positioning, what is known as payola; and clarification of the terms of their contracts with major record companies.
One of the interesting points touched on in this transparency report is the explanation of its payment system for artists, which consists of a formula that distributes royalties in proportion to the reproductions accumulated in the same territory, known as streamshare. This system has not been free of criticism, paving the way for the proposal of alternatives that seek to be fairer, such as a model centered on the user, which instead of determining profits based on global figures, builds a well based on quotas. monthly of each subscriber who listens to the phonographic material of each artist.
Although Spotify was skeptical about this mechanism change proposal, they stated that they would be willing to switch to a user-centric model if that is what artists, songwriters and rights holders want to do, noting that a change of this magnitude must represent a movement at the industry level.
Beyond the criticism that may fall on this platform from artists who seek better compensation for their work, this report sets a precedent in the operation of the platform and its relationship with those who provide it with its most valuable content.