General Content Creation, S.E.O. Optimized

Music Royalties and Spotify's Streamshare

Approximately two years ago music streaming service gargantuan, Spotify, released ‘Loud and Clear’. The aim of the website is to discuss how music royalties and Spotify work. In doing so, Spotify explains the mechanics behind payment to distribution companies, and how it effects your payout as a musician. The idea behind 'Loud and Clear' was to provide transparency to the artist. 

spotify logo

Here’s the official announcement from Spotify regarding ‘Loud and Clear’ via their Youtube.

But wait!

Before diving too deep it is important to take a step back and clarify some important terminology prudent to the conversation.

So!

What are music royalties?

Music royalties can be summed up in one word; Payment. It’s not anywhere near that simple in practice, but that is the general idea. The creator must always consider anyone else included on their project who contributed anything. Other recording artists, songwriters, composers, music publishing companies and copyright holders.

There are 4 types of royalties in the music industry you should be aware of 

  • Mechanical royalties

  • Public Performance royalties

  • Synchronization royalties (sync)

  • Print Music royalties

Mechanical royalties mean music income. Income for reproducing and distributing this copyrighted music work. All formats of playback would be acceptable examples of mechanical royalties. Examples include CDs, Vinyl and Streaming Services.

Public performance royalties mean music income for artists as well. When copyrighted works are performed, streamed or played publicly the musician receives royalties from its public use. Publishing Rights Organizations, or P.R.O.’s, will collect and dispense royalties in regard to public performance. Some examples of P.R.O.’s would be music publishers like B.M.I., A.S.C.A.P., or S.O.C.A.N.

Sync royalties mean musicians earn revenue for their copyrighted works through its use, or ’sync’ in visual media. Sync licenses make this possible. A sync license is deployed when the copyright owner lends the music for use in films, ads, TV, video games, etc. It’s worth noting the importance of a master use license here as well. Both are necessary to see a sync license through to completion.

Print music royalties are scarce for the independent artist in the 21st century. This is unless you are working on material which is more traditional and requires sheet music. Since most of us are not distributing sheet music manuscripts with the hope of making a profit, this is why it is seem more infrequently nowadays.

Spotify’s Streamshare and Music Royalties

For an effort aimed at being straight-forward, I find it funny that this page requires no less than three clicks to see worthwhile information. What is also sardonically humorous is one begins their journey on this website via a link labeled ‘What is Spotify’s streamshare?’ Be prepared to hunt a bit for the desired answer.

Finally, There IS Some Clarity

Streamshare is explained by Spotify on 'Loud and Clear' by this statement,

"Every month, in each country we operate in, we calculate streamshare by adding up how many times music owned or controlled by a particular rights holder was streamed and dividing it by the total number of streams in that market. So if an artist received one in every 1,000 streams in Mexico on Spotify, they would receive one of every $1,000 paid to rights holders from the Mexican royalty pool. That total royalty pool for each country is based on the subscription and music advertising revenues in that market.”

Uhm, excuse me - *Raising hand – I’m going to call bogus.

The trouble enters here, "...and dividing is by the total number of streams in that market."

 

This means the top dogs in your market of the music industry define your music royalties. Spotify tries to deny this on the same page, but by using logic, it’s hard to see how this is not the case.

How Do We Reclaim Our Music Royalties?

Unfortunately, major change at Spotify or to music distribution laws needs to occur to change this. I don’t foresee either happening any time soon. What would be nice is if Spotify adopted a more one-to-one, direct monetization system. Similar to what Deezer has done for years. Also similar to what Soundcloud will be making universal shortly.

 

I commend Spotify for coming forth and admitting what streamshare was (finally). It was a known secret for so long I suppose they had to explain themselves. Other than that, this is another slap in the face from Ek and Co. A really unnecessary one that stings.

Wait, How Does This Sting?

Rather than considering a more equitable scenario for artists, Spotify tossed together a shiny website, hoping you wouldn’t understand the concept of streamshare. You’d then continue uploading your material. Feeling happy, thinking they were protecting you by being forthright. However, by bringing this information into real public view we can see the company prefers to pay their web designers and best ‘word-smithers’ much, much more than the musicians vying to receive their fair share. Personally, I’d prefer if Spotify had kept this a known secret. That way, this practice seems to feel less like a slap directly in the face.

What To Do?

While we may not be able to topple this business model any time soon this practice displays why the most important word to the profitable musician in 2022 is DIVERSIFICATION. Spotify remains a necessary evil for any up and coming artist. To not distribute there is to miss out on potential listens and fans. But they are not the only game in town! The only way to chip away at the power the behemoth Spotify has is to divide up their market share. Do you want to topple this giant? Then get your material on as many platforms as possible. Only then will natural business competition run its course, resulting in competitive royalty rates for the artist.