Their pro-rata model is a joke. It's designed to favor big labels who btw are also shareholders of Spotify.
For those who don't know, the money of subscriptions goes into a big pot and then it's distributed based on the total number of plays. Which means the subscription I'm paying, for the most part, doesn't go to the artists I listen to but instead goes to the big labels who represent popular artists.
It's as if, back when people bought physical records, Madonna got money when you bought a record from some indie band.
That's why they were bitching about nature sounds and white noise eating into their money. A lot of people listen to an hour of music during the day then listen to 8 hours of rain while they sleep.
Which she likely did, as from my understanding owning the inventory is standard for music stores, so due to the higher demand it’s more likely the bulk of your money would go to buying Madonna records than buying The Smiths.
We both pay $10 a month. This month, I listen to 99 songs from a single artist, and you listen to one song total. $9.90 of my money goes to my artist, and $0.10 goes to your artist. $9.90 of your money goes to my artist, and $0.10 goes to your artist
$10 of my money goes to Spotify, and $10 of your money goes to Spotify. Then Spotify pays artists based (somehow) on how many times their songs played.
$19.80 goes to one artist, and $0.20 to the other. 99:1.
edit: Maybe what you're getting at is that the person who listened to only one song should pay 99x less. Then it really would be pay-per-play. But Spotify is a subscription service. What else should they do with my extra $9.90? Send it all to the one artist? That would be interesting... but then what if I don't listen to any songs in the month? Bank it and send it to the spread for the following month?
I think the more important point here is that the popular artists supported by big labels become black holes, sucking in all the money. It doesn't matter that you, and all your friends, and all your friends' friends, all listen to the same 3 niche artists day in, day out - approximately all of yours and theirs money will go to some pop artists none of you ever listen to, simply because that's what a much larger general population listens to.
So, it's like 99:1 ratio, but 99 side is Lady Gaga and friends, and 1 is all the indies and niche artist around the world together.
Before streaming with pro-rata royalties, when you bought a record, some money went to the artist of the record (after distribution cuts etc).
Of course Spotify doesn't care. They have to give up 70% of their revenue anyway. But the distribution of this money is the important part and of course pro-rata benefits big labels who have control over the catalog on Spotify and are shareholders.
Tidal is in a downwards spiral because they are running out of money, Apple subsidisies Apple Music with profits from other parts of the company.
The pot splitting model Spotify uses is definitely not good but the major labels are the ones with all the power, without pot splitting they wouldn't accept licencing to Spotify because they would make less money.
At every filthy corner of the music industry you'll find a very sore spot: the big 4 labels control this industry. From fucking with artists where contracts requiring artists to pay back all "marketing and fees" before any royalties are distributed, royalties split usually 80:20 or 70:30 for label:artist, forcing artists to make their songs viral before they can be released (without much marketing support from the labels, the only reason they exist).
It's a passion industry, and just like any other passion industry it's fraught with exploitation. Just look at game development, underpaid, overworked, because there's always someone else with passion to make a game.
They subsidise that from other parts of the business though.
Also they don't technically pay artists aside from the self-released ones, most artists with bigger payouts aren't self-released so Apple Music just like Spotify is filling major labels coffers more than the artists' pockets
That's all relevant on the comparison of why Apple Music can pay more than Spotify, unsure what you didn't get but willing to clarify.
> No evidence of this and it doesn't even make sense.
How doesn't it make sense? Apple Music has fewer paying subscribers than Spotify, Apple Music prices just like Spotify's prices vary per market, Spotify pays out 70% of revenue to royalties but Apple Music is able to pay much more per stream even though it has fewer subscribers.
Now think: where does the money to cover Apple Music paying royalties comes from? If they pay double what Spotify pay and Spotify is spending 70% of revenue on royalties, how can Apple Music pay double without costing double? Something has to cover, Apple Music is a loss leader product.
> EU would have a field day with it and Apple likes making money wherever it can find it.
Apple is making money through its aggregated services (iCloud + TV+ + Apple Music), if Apple Music is a loss leader but makes people contract the bundle which is a money maker for Apple, they will lose money on Music.
> How doesn't it make sense? Apple Music has fewer paying subscribers than Spotify, Apple Music prices just like Spotify's prices vary per market, Spotify pays out 70% of revenue to royalties but Apple Music is able to pay much more per stream even though it has fewer subscribers.
Because streaming platform do not pay per stream making pay per stream a meaningless metric.
Spotify has ~half of its users using the free tier (with ads) and the other half are subscribers. On average a subscriber generates waaaaay more revenue than free users ( this is visible in Spotify's financial results). Apple does not have a "free" version.
If Spotify were to simply abandon their free version and became paying subscribers only like Apple, pay per stream would almost double but at the end of the month, artists (and Spotify) would get less money. Which is preferable ? More money at the end of the month or higher pay-per-stream ?
On top of that music streaming is very seasonal (total music consumption varies by month) so pay-per-stream is not even a stable metric.
