Spotify is the
largest growing music streaming application used today. It is the first of its
kind, allowing Facebook users to download the app and stream on-demand free
music. Think of it as an iTunes with no rules to social media users. People
often question how this is legal and what are the artists getting paid. Well
this is the biggest controversy of it. Spotify is not directly paying the
artists. In fact, Spotify pays the major labels that sign the bands a pretty
large sum of money. You would think this would be fine but actually it stirs up
much more problems than solutions, with the application. The major labels can
pay whatever they want to the artist. There is no set minimum price, which
makes the artists hate the major labels even more.
The service was
available to the US back in May of 2012 and partnered with Facebook to help
spread the word. It quickly became popular and is currently streaming to 15
million Facebook users. It is incredible how Spotify was able to tap into
social media sites as quickly as they did and create one of the largest music
sharing applications in just 5 months. They took an incredible amount of
business away from iTunes and is now offering a $7.99 monthly service that
allows you to download the songs off of Spotify and place them into an mp3
player.
In an interview
with D.A. Wallach who is the ‘artist in residence’ at Spotify claims,
“Anyone who doesn’t
think we’re paying a fair cut hasn’t seen the numbers we pay out. By far the
vast majority of the money we’re making goes back to the owners of the music –
about 70%. When compared to iTunes, the average listener spends $60 dollars a
year into the creative community, whereas Spotify Premium users spend $120 per
year. As “the pie gets bigger” so to speak, so do the royalty payments. The
growth of the platform is proportional to the royalty pay out and since
inception we’ve already doubled the effective per play rate.”
But what he does
not say is that the ‘70% of revenue’ actually goes to the record labels which
they can distribute the money however they want to the actual artists.
To
read more about Spotify, click on the link attached below:
- Clay Grubman
