Spotify was originally launched in Sweden back in 2008. Since its launch, Spotify has achieved a noticeable degree of success both in Sweden and internationally. However, recently a large number of artists have expressed their displeasure in the royalty payments received when their songs are played on Spotify.
The agreement between the artists and the record labels are usually constructed so that the artists receive about 10% of the revenue gained from the sales of the albums. Most modern artists signed with their labels before the advent of online streaming services, like Spotify, was even a possibility. Thus the only real royalty payments they were concerned with was those they received through CDs and digital music. After costs, its pretty fair to say that most record labels will make about five to ten pounds revenue for every album sold, and 50-70 pence for every single that is sold digitally. Thus, receiving ten percent royalty payments would have been more than adequate.
Alternatively, through Spotify most record labels receive about .05 pence per stream, which leaves the artists with about .005 pence. As the Guardian notes, this leaves an artist about 500 pounds for every million plays their song receives.Understandably the artists are quite upset about this. A lot of artists are claiming that streaming should be considered as third party licensing, which would entitle them to half of the revenue gained by the music labels.
Its going to be interesting to see how the artists are going to react to this. It should be noted that Sweden isn’t the only country where artists are expressing concern for the royalty payments they receive from Spotify. Artists such as Thom Yorke and David Byrne from the UK have also expressed their concern.
Sources:
http://www.theguardian.com/commentisfree/2013/oct/16/why-david-byrne-wrong-spotify-thom-yorke
http://www.theguardian.com/media/2013/oct/25/spotify-artists-sue-labels-music-streaming
