Spotify has responded to recent criticism by launching a new website for artists, which will explain how its business model works and publish figures on how much musicians can expect to earn as the company grows.
The new Spotify Artists site will explain how the company’s business model works, and aims to answer questions from musicians about how it calculates payments for streams of their music. As The Guardian reports, it hopes to convince musicians that as the company grows, their streaming earnings will make up for any fall in sales of CDs and downloads.
“With any format change in music – CD and iTunes included – there’s a lot of confusion around how these different models work, and quite often some serious scepticism,” Mark Williamson, director of artist services at Spotify, told the newspaper. “We understand that’s out there, so we want to be as clear and transparent as we possibly can explaining how Spotify fits in.”
Spotify pays out nearly 70 per cent of its total revenues to music industry rightsholders such as record labels and publishers. They in turn pay musicians and songwriters their share.
While Spotify argues that looking at how much artists get paid per stream is not an effective way of measuring potential artist revenue, it has revealed that the average payout to rightsholders for a single play of a track is between $0.006 and $0.0084.
The site has also published real but anonymous figures from July 2013 for a month’s streams of five specific albums, ranging from $3,300 for a “niche indie album” to $425,000 for a “global hit album”.
It then goes on to argue predict how much these albums would receive in a single month if the service had it’s planned future 40m paying subscribers, rather than its current total, which is predicted to be anywhere between 6 and 10 million.
“We want to put the figures in context of what these payments will be when we launch in new countries and get to 40m paid subscribers,” said Williamson. “That small indie band whose album made $3k a month in July will now be looking at $17k a month from Spotify alone, and the global pop superstar will be looking at over $2m.”
The site has also announced plans help artists sell merchandise from their profiles in its desktop, web and mobile apps. It follows a similar deal with Songkick to show concert listings in artist profiles, with fans able to click through to buy tickets.