The platform does not pay according to a per-stream rate, but rather puts all the revenue from subscribers and ads into a giant pot, and divides that share according to their respective “streamshare.” Under this model, artists are estimated to receive between $0.003 to $0.005 per play.
That’s about to change. Beginning early next year, Spotify will only pay royalties to artists whose tracks have been streamed 1,000 times in the past 12 months, effectively locking out the smallest artists from the “streamshare” pot. The money that would have been paid out to these small artists — which Spotify said amounts to $40 million a year — will instead go to “those most dependent on streaming revenue.”
According to Spotify, artists generally don’t pocket the earnings from tracks that have under 1,000 streams anyway, because they don’t meet the labels and distributors’ minimum withdrawal amount. The company also says it does not make any additional money under the new model. But musicians have said they feel the model is “putting a number on art," and industry experts said that this change essentially makes Spotify the arbiter of which artist is deserving of payment.
There has to be a way for multibillion-dollar companies to both keep music accessible and appropriately compensate musicians — especially fledgling, independent ones.
Spotify will stop paying anything at all for roughly two-thirds of tracks on the platform. That is any track receiving fewer than 1,000 streams over the period of a year. Tracks falling under this arbitrary minimum will continue to accrue royalties – but those royalties will now be redirected upwards, often to bigger artists, rather than to their own rights holders.
This sounds incredible, but there’s nothing to stop it. And their primary business partners – the three major labels – are cheering the change on because it will mean more money in their pockets.
Honestly €56 million in profit seems small for an operation as massive as Spotify that has so throughly saturated the market. That does not make it excusable at all. I’m just surprised to see that number.
I mean I understand there are a lot of caveats to that statement. Like I said, just kind of a surprising number. A company as massive as Spotify can have its revenue shift 10 of millions easily within a year, which means with a little nudge they could easily become unprofitable.
It would be like, I don’t know, realizing after you’ve paid all of your bills and groceries everything you have $300 at the end of the month. Not a lot of wiggle room. This isn’t sympathy and the stakes aren’t the same lol, I’m just saying their margins are not as high as I would have suspected.
A cursory search shows me competing figures - 7000+ and 15000+ employees. Both are very, very large numbers. Id have guessed they make hundreds of millions a year, not mid-8 figures. That’s probably what their payroll runs for 3-6mo.
Edit: for perspective, they have over 200mill paying subscribers. If ~800,000 left they’d be break even. That’s like .4% of their MAU’s.
It would be like, I don’t know, realizing after you’ve paid all of your bills and groceries everything you have $300 at the end of the month. Not a lot of wiggle room
Well that depends… if I have only $300 at the end of the month but I have already paid every bill and allocated $1,000,000 for entertainment, another $1,000,000 for personal expenses, another $1,000,000 for pet services, etc etc etc… the $300 left mean nothing… why do I need “wiggle room” when I can not just wiggle but literally run in every direction until I get tired and still not hit any limits?
The relatively small profit margin is a PR strategy… one that is working well on you giving you the false impression the company is “tight” when in reality, they are milking every bit of it before you get to that figure.
You may need to realign your usage of phrases. Their 2024 Q1 financial statement has a line for “gross profit” and “net income/(loss) attributable to the owners of the parent.”
I dunno, my QuickBooks shows me gross and net profit. Gross profit is your income after you remove cost of goods sols (COGS). Net profit is what the org nets after everything else like payroll and other expenses.
I’m sure there’s tons they’ve made that their accountants have managed to classify as something other than “profit,” so they don’t have to pay taxes on it
Related:
Honestly €56 million in profit seems small for an operation as massive as Spotify that has so throughly saturated the market. That does not make it excusable at all. I’m just surprised to see that number.
Who cares what the “company” does when, as CEO, you rake almost $400 MILLION a year
https://mywage.ca/salary/celebrity-salary/daniel-ek
PS: and this is while receiving “no salary” (which they sell as if they were running a charity and meager $1.4 million in “other” compensation
I mean I understand there are a lot of caveats to that statement. Like I said, just kind of a surprising number. A company as massive as Spotify can have its revenue shift 10 of millions easily within a year, which means with a little nudge they could easily become unprofitable.
It would be like, I don’t know, realizing after you’ve paid all of your bills and groceries everything you have $300 at the end of the month. Not a lot of wiggle room. This isn’t sympathy and the stakes aren’t the same lol, I’m just saying their margins are not as high as I would have suspected.
A cursory search shows me competing figures - 7000+ and 15000+ employees. Both are very, very large numbers. Id have guessed they make hundreds of millions a year, not mid-8 figures. That’s probably what their payroll runs for 3-6mo.
Edit: for perspective, they have over 200mill paying subscribers. If ~800,000 left they’d be break even. That’s like .4% of their MAU’s.
Well that depends… if I have only $300 at the end of the month but I have already paid every bill and allocated $1,000,000 for entertainment, another $1,000,000 for personal expenses, another $1,000,000 for pet services, etc etc etc… the $300 left mean nothing… why do I need “wiggle room” when I can not just wiggle but literally run in every direction until I get tired and still not hit any limits?
The relatively small profit margin is a PR strategy… one that is working well on you giving you the false impression the company is “tight” when in reality, they are milking every bit of it before you get to that figure.
It’s not good PR because it makes me think they’re poorly structured and poorly allocating their money lol
if it makes you not buy into their subscription, then it’s poor PR… if it makes you think they are not greedy fucks, then it’s good PR
None of this impacts whether or not I pay them. It makes me think they are wasteful and greedy. Those are not mutually exclusive
if it makes you change your opinion of them but not enough to either pay them or stop paying them, then it means nothing to them
They are usually losing money
https://www.statista.com/chart/26773/profitability-development-of-spotify/
But is that net or gross?
If it’s profit it’s net by definition. Gross can’t be profit. You’re thinking of revenue. Gross is total revenue before any costs deducted.
You may need to realign your usage of phrases. Their 2024 Q1 financial statement has a line for “gross profit” and “net income/(loss) attributable to the owners of the parent.”
I’m going off the number from the article that your dude linked. The guy said “€58 million in profit.” Totally possible he’s wrong though.
I’m just saying there is a difference between “gross profit” and “net profit” because their official financial statement differentiates between it.
I dunno, my QuickBooks shows me gross and net profit. Gross profit is your income after you remove cost of goods sols (COGS). Net profit is what the org nets after everything else like payroll and other expenses.
Profit is AFTER they pay their CEO and other suit’s
Yes I am aware.
I’m sure there’s tons they’ve made that their accountants have managed to classify as something other than “profit,” so they don’t have to pay taxes on it
First reasonable response I’ve gotten lol
That’s insane… 1000 plays per track?