Vince Staples Blasts Spotify, Let’s Talk About How Music Streaming Money Works

By | Posted March 16, 2016
Staples accuses Spotify of ripping off artists, but here's the simple truth about how streaming finances work.
2016-03-16-vince-staples-spotify-streaming-money

I won't be at SXSW this year, mostly because I'm not trying to have my wife murder me by sticking her with a newborn and a 5-year-old for a week while I get drunk with rappers, but also because it's turned into a corporate orgy. But that doesn't mean there's still not some moments of realness to be found in Austin. 

Case in point, yesterday Vince Staples played Spotify's showcase and seized the opportunity to blast Spotify for their low streaming rates because Vince Staples very genuinely, very sincerely, gives no fucks

"Shout out to Spotify. Thank you for giving me this check to make up for what you’ve done to me and all my musical friends...listen to your favorite album 1000, 2000 times so everybody can get an album sale.” - via Austin 360

First, let me say that yes, Staples is absolutely right. Spotify currently pays out approximately $.00408 a stream, a number that understandably looks laughably low to artists pouring their lives into making music, particularly when Spotify itself is currently valued at more than $8 billion. That's fucked up. 

But....

...if we're going to have a discussion about how to ensure artists are paid fairly in the streaming age, we have to have some real talks about how streaming finances actually work. I'm going to be very general here for the sake of putting this in layman's terms, advertising and streaming experts are going to shudder at these generalities, but I'm trying to break this down assuming people are starting from ground zero, which is where most people are at. Here's a crash course in internet advertising... 

Spotify is primarily an advertising based service, they get the bulk of their revenue by displaying ads on the same page that people stream songs. The way internet advertising works is by something called CPM, which (confusingly) translates to "rate per thousand pageviews." Again, rates vary, but let's say that Spotify's CPM is about $8, which is likely ballpark. That means that for every thousand times an ad is displayed, they make $8. So even if Spotify gave artist's 100% of the revenue from the ad revenue generated by the page the song is streaming on, that'd still only work out to $.008. 

Music Streaming
via Information is Beautiful

Revenue from subscriptions models tend to be better, which is why newer sites like Apple Music and TIDAL are subscription only, but not that much better. By comparison TIDAL, the streaming service promoted as being "for artists" because it pays so much more, pays out $.0070 a stream. So if you're an artist whose song gets played one-thousand times on TIDAL you'll net a whopping $7, compared to $4.08 on Spotify (although it's harder to get those 1,0000 streams on TIDAL since their user base is so much smaller). BREAK OUT THE GOGGLES, WE'RE GOING SWIMMING IN A MONEY POOL!!! 

And if we're going to point a finger at streaming services, we need to also point a finger at the labels, who vacuum up nearly 50% of the revenue from streaming, more than the streaming services themselves, before it even reaches the artists.

Music Streaming
via TechDirt

Again, I'm being very simplistic here. If we're going to really dig into this we need to talk about negotiated streaming rates, the full scope of internet advertising revenue, a company's valuation versus its actual profit and much more, but that's a 600-page manual I'd need a year to write and you're not about to read. 

The basic truth I'm trying to get across here is that there's just not nearly as much money in streaming as there was in physical albums sales. Period. Streaming companies could pay artists 100% of their revenue and it still wouldn't touch what artists could make when $14 CDs were selling by the millions. Those days are over, and even if every streaming service on the planet shut down, they're not coming back.

That doesn't mean the current streaming rates are "fair" or anything close to it, artists have every right to feel like they've been economically stepped on in the transition to streaming. Call Sway because I certainly don't have the answers, but I do know that if we're going to figure out how to keep artistry alive in the digital marketplace, we need to face some of the hard truths about how much money there is in streaming and how that money's being divided up. 

By Nathan S, the managing editor of DJBooth and a hip-hop writer. His beard is awesome. This is his Twitter. Photo via Instagram.

Like this article? DJBooth is committed to quality music journalism, never clickbait. You can join us by downloading our app or following us on Facebook or Twitter.


Related Articles


By , purveyor of awesomeness.
There are comments

Sample Text - Sample Link
0:00
3:00
Shrink
Hide

Best of DJBooth

Trending Articles

More Hip Hop News