Spotify has launched Loud & Clear, an interactive website that explains income from music streaming by “breaking down the royalty system, the players and the process”.
The company explains in a Q&A on the website that it created Loud & Clear in response to “questions and concerns” and admits it’s been “too quiet on the topic”.
“Artists deserve clarity about the economics of music streaming”Loud & Clear’s website introduction
The initiative came days after the Justice at Spotify Day of Action organised by the Union of Musicians and Allied Workers (UMAW) on Monday 15 March.
UMAW protested outside Spotify offices worldwide to deliver the demands of its petition, which has collected over 27,000 signatures since last October. It calls for the company to raise the average streaming royalty from $.0038 to a cent per stream, end legal battles against artists and be more transparent.
In response, a video on Loud & Clear entitled ‘How the Money Flows’ explains that Spotify pays the money it makes from music streaming to rights holders, such as record labels and distributors.
The streaming giant washes its hands of the money once it’s handed over to the rights holders. They are then responsible for dividing the money between the artists and any other contributors.
According to the website, Spotify has paid over $23 billion in royalties to rights holders so far, including over $5 billion in 2020 alone. Statistics reveal how many artists globally generated certain amounts for each of the last four years on Spotify, ranging from at least $1K (£722) to at least $1M (£722K).
Last year, only 870 artists reached the top end of the scale. Loud & Clear ascribes this low number to the fact the value of a million streams has changed over the years due to the growth of streaming.
Spotify says that because users do not pay per stream, it does not believe a “per stream rate” is meaningful to analyse. It explains that its comparatively low rate is due to its high number of streams per listener, bigger global audience and free ad-supported tier. It focuses on maximising payments to rights holders, generating more money for them than any other streaming service.
But Loud & Clear disappointed several artists and industry professionals. Damon Krukowski, former member of alternative rock band Galaxie 500 who co-founded UMAW, tweeted that it still fails to answer several questions such as “the sources of Spotify’s income in addition to subscriptions and ads”.
Words by Reem Ahmed