Spotify, the biggest of the big streaming music giants, has announced plans to launch a Spotify Artists website that will attempt to assuage any doubts about its business model, The Guardian reports. As part of the site, musicians will have access to free analytics (including listener demographics) and individualized financial projections that account for the site’s future growth, and will be able to sell merchandise from their profile page.
The move comes on the heels of some serious criticism from musical titans like David Byrne and Thom Yorke (who called Spotify a “desperate fart of a dying corpse”), and director of artist services Mark Williamson admitted that the site faces widespread skepticism from the musical community. Part of trying to combat that negative image is changing the way artists calculate their potential earnings. According to Williamson, the per-stream mode of thinking (artists make about three-quarters of a penny per stream) is inaccurate, because it doesn’t take into account the international expansion Spotify plans.
Spotify currently has somewhere in the neighborhood of 10 million paid subscribers, and released financial figures for five anonymous albums in July. In one month, a “niche Indie album” made $3,300, a “breakthrough indie” made $76,000, and a global icon made $425,000. Projecting for a subscriber base of 40 million, those numbers increase to $17,000, $380,000, and $2.1 million, respectively.
This year alone, Spotify has paid more than $500 million to rights holders, who are then responsible for paying artists. The site estimates that each user generates $41 of revenue per year, and that the artist payout is more than double what they can expect from services like YouTube and Pandora. Additionally, while Spotify takes a 30 percent cut of the music it streams, 100 percent of merchandise sales on the artists site will go directly to the musicians.
The obvious criticism here is that the numbers and projections are totally speculative, and though Spotify has been in business for five years already, growth has been accompanied by financial losses, and it’s impossible to know whether the model is sustainable long enough for such a huge international expansion. Nevertheless, it’s a bold PR move for a company who recently received $250 million in funding and is valued at over $4 billion, and who clearly intends to be the foremost name in worldwide streaming.