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Digital Audio Insider is David Harrell's blog about the economics of music and other digital content. I write from the perspective of a musican who has self-released four albums with the indie rock band the Layaways.

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July 07, 2011

Spot the Spotify Payment
by David Harrell
Spotify Banner
Please see this update for more recent Spotify payout numbers.

The U.S. launch of Spotify is imminent. And while I haven't had the same success as this musician (thanks to Glenn for the tip), two of my band's albums have been in the Spotify catalog since August of 2009.

Without any promotion in the regions where Spotify is currently available, our total number of plays is relatively small, though our Spotify activity seems to be increasing each month. The per-spin payouts we receive via CD Baby are quite variable, ranging from around two hundredths of cent to more than one cent for each stream. (We also had a few spins that rounded out to "$0.00000000" after CD Baby's commission.) I'm assuming the payout amount depends on free vs. premium listens, as well the subscription prices in each region and currency exchange rates.

Here's what we've seen so far:
Spotify Per-Stream Payouts August 2009 to March 2011

Smallest: 0.02056 cents
Largest: 1.1456 cents
Average: 0.2865 cents
These numbers are all before CD Baby's 9% commission. It's also possible that the major labels have been able to negotiate different rates for their content, and the label/artist payout doesn't include any payments for songwriters and publishers that Spotify makes to performance rights organizations such as BMI and ASCAP. Update II -- Spotify makes direct payments to PROs in Europe, but I think PRO payments are made by labels for music streaming in the U.S. More here. (This post from earlier in the year reports a per-stream rate of 0.22 Euro cents for independent artists.)

Still, the average streaming rate is small enough that it'd take 244 Spotify spins to equal the label cut of a 99-cent iTunes download. But the real question here, in terms of artist/label compensation, is what Spotify activity actually represents. That is, is it simply a new revenue stream, providing income from listeners who don't normally purchase music, or is there also a cannibalization factor, where some listeners opt for streaming over actual purchase? (There's also the "exposure" argument that hearing something via Spotify or another streaming service will entice some listeners to purchase the download.) My best guess is that, given the relatively small percentage of consumers who regularly purchase music, any additional income streams are a net positive.

Please see this update for more recent Spotify payout numbers.

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    THE LAYAWAYS

    Out Now -- "Maybe Next Year" -- The New Holiday Album:

    <a href="http://thelayaways.bandcamp.com/album/maybe-next-year">Joy To The World by The Layaways</a>

    "This is a sweet treat, deliciously musical without being overbaked for mass media consumption." -- Hyperbolium

    "Perfect listening to accompany whatever holiday preparations you may be making today." -- Bag of Songs


    O Christmas Tree - free mp3 lyrics and song details
    Away In A Manger - free mp3

    Download from eMusic, iTunes, Amazon MP3, or Bandcamp. Listen to free streams at Last.fm.



    album cover art from The Space Between

    <a href="http://thelayaways.bandcamp.com/album/the-space-between">Keep It To Yourself by The Layaways</a>

    "...about as melodic and hooky as indie pop can get." -- Absolute Powerpop

    "Their laid-back, '60s era sounds are absolutely delightening." -- 3hive

    "...melodic, garage-influenced shoegaze." -- RCRD LBL

    Where The Conversation Ends - free mp3
    January - free mp3
    Keep It To Yourself - free mp3

    Download from eMusic, iTunes, Amazon MP3, or CD Baby, stream it at Last.fm or Napster.



    album cover art from We've Been Lost

    <a href="http://thelayaways.bandcamp.com/album/weve-been-lost">Silence by The Layaways</a>

    "The Layaways make fine indie pop. Hushed vocals interweave with understated buzzing guitars. The whole LP is a revelation from the start." -- Lost Music

    "Catchy Guided by Voices-like rockers who lay it on sweetly and sincerely, just like Lionel Richie." -- WRUV Radio

    Silence - free mp3 lyrics and song details
    The Long Night - free mp3

    Download from eMusic, Amazon MP3, or iTunes, stream it at Last.fm, Napster, or Rhapsody.



    album cover art from More Than Happy

    "These are songs that you want to take home with you, curl up with, hold them close -- and pray that they are still with you when you wake up." -- The Big Takeover

    Let Me In - free mp3
    Ocean Blue - free mp3

    Download from eMusic, Amazon MP3, or iTunes, stream it at Last.fm, Napster, or Rhapsody.

    More Layaways downloads:

    download the Layaways at eMusic download the Layaways at iTunes

    the layaways website