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How much money do artists really make from Spotify? According to Swedish paper Expressen, 2009’s standout breakthrough artist Lady Gaga and…

Lady Gaga

How much money do artists really make from Spotify? According to Swedish paper Expressen, 2009’s standout breakthrough artist Lady Gaga and her songwriter Redone made just SEK1150 (£100.76; $166.56) in songwriting royalties from one million Spotify plays of her hit Poker Face in Sweden in the first five months after Spotify’s launch in October 2008, according to figures from the Swedish Performing Rights Society (STIM).

STIM told paidContent:UK that Universal Music-signed Gaga actually generated SEK 2,300 (£201.53) through plays of Poker Face — she keeps half while the other half goes to STIM, which handles songwriters’ copyright payments in Spotify’s native Sweden. STIM points out to us that Gaga has her own separate deal with her label when it comes to streaming — I asked Universal to tell us what that relationship is, but have yet to receive an answer. Spotify has also yet to answer our questions.

Update: Spotify told us in a statement that any STIM payment “would only represent a fraction” of the money that goes to rights holders from the service. The company stresses that it pays “not only collecting societies, but also publishers and the record company to play their music.” It also argues that the $167 is from “way before we’d established ourselves as a music service and built up a large user base”. Actual payment amounts for individual artists remain confidential but Spotify calls this one “certainly wide of the mark”.

So that’s royalties, but by how much are artists reimbursed in total for plays on streaming sites? As with much of the murky world of on-demand music rights, it all depends…

Mark Mulligan, VP and research director at Forrester, says digital platforms should give artists the same ratio of rights revenue they get for CD sales — for most indie labels it’s a 50/50 split between artist and label, for the majors it’s skewed more towards the company than the performer.

But there’s another problem: “When you start getting into situations where record label has taken a stake in the service — as is the case with MySpace Music and is heavily rumoured to be the case with Spotify (N.B. Spotify categorically denies this) — once you’re in a JV scenario, the label can take another revenue stream.” So the label gets paid twice: once through its revenue share of the JV and once for its rights payments, while the artist gets a reduced share of the overall pie.

Mulligan also doubts that US music chiefs’ reluctance towards Spotify’s freemium model is down to a mistrust of free music and more to do with an industry-wide fear that streaming sites have failed to convert enough users to paid accounts and haven’t yet had a meaningful effect on still-rampant P2P piracy.

But it’s not all bad news for established artists online: Gaga’s Poker Face was earlier this year declared the UK’s most downloaded song ever is now on some 800,000 PCs and mp3 players (her Let’s Just Dance is number three), while Universal says she sells far more digital tracks than physical CDs.

However, for emerging acts waiting for their breakthrough, who have to pay back their recording costs before their contracts allow them to start making any decent money, could find themselves out of pocket for a long time if the audience’s primary mode of listening is services like Spotify.

  1. wait… how much would a million of illegal downloads make her?
    right or wrong, in real life, that is the alternative.

    emerging acts. yeh, apparently some time ago they used to make their money by playing gigs. which i have seen people pay for…if they were any good.

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    1. The problem with the model is that there is no incentive to be a singer or musician if one can’t earn money off of it. If i siad that computers should be free you’d call me crazy, simply because no one would produce computers if there was no money in computer manufacturing. The same concept applies for music, people won’t make music anymore!! 

      You have the audacity to speak of illegal downloads as if they are justifiable, they are inevitable when laws are not strict enough, granted, but that does not justify them as the alternative to sites like spotify. 

      We need to create another business model in which the artists can be paid, and perhaps the record labels are no longer in existence. 

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  2. It's Just Dance. NOT Lets Dance

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  3. It’s really not fair… She is great talent and she deserves to earn money on her own work…It’s not fair to people steal music from artists… getting music for free, that’s stealing, because it’s someone’s work

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  4. How do you figure, Milos? Stealing is typically defined as depriving someone of his rightful property. An .mp3 has no physical existence–it’s a set of complicated instructions to a program capable of decoding them. If you or I send someone a copy of an .mp3, we’re merely having our computer send their computer instructions to reproduce the music. It’s an intellectual construct and has no physical existence, unlike a CD or an LP (or a hard drive.) If Lady Gaga ever downloaded “Poker Face”, my downloading it (legally or otherwise) is unlikely to deprive her of its use. To paraphrase the Wife of Bath, is the light from a candle any less dim when it is shared?
    Moreover, should what Lady Gaga does really be considered “work”? Should our society reward her with millions of dollars for a few hours in a recording studio? Is her material so irreproducable? Performing is real work for musicians, and unlike an .mp3 or CD (or whatever), the experience of seeing live music cannot be duplicated or “stolen”. That’s the service a musician performs, and should be that musician’s primary moneymaker. Really, it’s the only model that makes any sense.

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    1. If what Lady GaGa does is trivial, why isn’t everyone else doing it? Why aren’t you doing it? Put another way, who else could have the million+ download reach? As with any product of labor, the compensation the creator receives is a function of supply and demand. Supply of vocal talent and music composing creativity is low, so a high return for those who can is very much deserved. To argue that we are “rewarding her with millions of dollars for a few hours in a recording studio” is nothing more than a failure to understand the most basic of economic principles.

      The main issue is not whether Lady Gaga is deprived of her use of a song that you download. It’s you  infringing on her rights to exploit her property and her work as she sees fit, whether that be by charging for each download, charging for unlimited play during a certain time period, charging for certain performances but not others, or not charging anything at all. Who do you think you are to make that decision for her, by copying music without pay?

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  5. I wonder how Grooveshark reimburses? I don’t listen to Spotify since they love to throw in those ads in the middle of my music. At least at icloud you can have a Grooveshark audio adfree account.

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  6. Artist make like 10 cents per a dowload, the rest goes to site and the studio

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