Spotify's "Unreliable" Royalty Payment System Has Artists Scrambling for Income

The internet giveth and the internet taketh away.
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It would be the understatement of a lifetime to write that technology has dynamically changed the way people are able to make money, but that is exactly what on-demand connectivity has afforded society. Whether it’s expediting the job application process through tailored sites or services like Lyft or Postmates, the digital era has provided a multitude of alternative revenue streams for the average person.

The same can be said for independent artists.

No longer do aspiring rappers, singers and producers need to hang out in parking lots and outside of concerts, hawking burned CDs in hopes of amassing a following. But while on-demand streaming services have made it possible for anyone with a laptop and an internet connection to upload their music onto any of the major streaming outlets—such as Spotify, YouTube, Apple Music, TIDAL, etc...—the price to be paid is often a loss of transparency regarding royalty generation.

Since its inception, streaming behemoth Spotify has been criticized publicly by artists and labels alike for their payment structure, which the company has clambered to ratify under intense scrutiny in a rapidly changing streaming ecosystem. With physical sales all but obsolete and digital downloads headed down that same path, streaming is expected to make a real dent in lost revenue, but even as the pay scale becomes more enticing, independent artists are still bearing the brunt of a system that hasn’t yet figured out how to steady the flow of money during this time of transition.

While Spotify has been criticized for declining royalty payments in the face of rising revenue, and more recently a potential plot to avoid paying royalties altogether, the issue is now less about the amount being paid and more about those payments being received on time.

In a series of now-deleted tweets, a popular independent artist-slash-producer—who I’ll refer to as Artist X as per his request to remain unnamed—recently exposed a two-month delay in his reception of royalty payments from Spotify, a source of income the artist is literally dependent upon for his livelihood.

Following Artist X's address of Spotify’s unreliable payment system, countless artists have come out against the system, which seems to lack clarity and has independent artists scrambling for outside income in the face of uncertainty.

In an effort to gain further clarity, we reached out to Artist X to learn more about his experience with the streaming service and how it’s affected his ability to live off his music. “Everything was literally fine until about two months ago when Spotify stopped reporting their royalty statements,” X explained. “I used TuneCore to distribute an EP I released last year, and have been relying on Spotify and the other major digital streaming services to pay my cheap rent for the past five-six months.”

X’s story is a common one among independent artists, many of whom need to keep day jobs in order to support their dreams of pursuing music full-time. Most artists who manage to get their music onto Spotify and are able to build a following on the streaming service often rely on the regularity of their royalty payments—not unlike we count on the regularity of a bi-monthly paycheck—to cover their monthly bills.

Until recently, Spotify reported their royalty statements to artists on a monthly basis, lulling several artists into a false sense of security concerning their payment schedule. “Payments were happening on a monthly basis, usually by the third week of every month,” said Artist X, but added that just over two months ago, they stopped altogether.

Like many independent artists, X originally took on a menial restaurant job to supplement his pursuit of a music career, but the regularity of Spotify’s payments had recently allowed him to ditch the 9-to-5 and work on music full-time—every independent artist’s dream, right? After months of regular payments, however, Spotify ceased their royalty statement reporting, and payments to X and legions of other independent artists began to fall behind by two months, forcing X to once again seek additional employment “because the royalty system with Spotify has proven to be unreliable!”

As other artists begin to speak out against Spotify’s unreliable and nontransparent payment system, Artist X maintains that he will continue to support the service and is grateful that it allows him to build a following. “Being so fond of the service almost makes it worse that it won’t pay me,” said X. and he has some suggestions on how Spotify can make it up to him and the other independent artists this delay has affected.

So, how can Spotify turn things around for X and others like him? Simple: “Actually follow through with payments, and also make the process more transparent with its independent artists.”

X also suggests that Spotify let artists know when payments are to be expected, and to provide an explanation along with the updated payment date in the event of a delay. “This way,” explains X, “if people are going to rely solely on streaming income to pay bills, they’ll be able to actually plan and won’t be blindsided or given empty promises.”

Only time will tell if Spotify has a true commitment to the well-being of the artists that look to their service as a springboard for a full-time career in music, but something has to give. With a corporation as large as Spotify, and regardless of whether or not they are profitable despite 50 million active users, a two-month payment delay for the artists that contribute music is unfortunate at best and absolutely unacceptable if the service intends on remaining the standard for on-demand digital music consumption.

Though a sobering reality for independent artists across the world trying to sustain a career in music in 2017, it shouldn't detract anyone from passionately continuing their pursuit. I can only hope Spotify takes this problem as seriously as it’s being taken by the artists who no longer have a reliable stream of revenue to back their artistic pursuits.

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