Spotify. Can someone explain this to me?

Ok. So Spotify seems to be pretty cool and very easy to use with access to a ton of music without being limited to auto playlists or limited song skipping etc… I can’t find a description of how it’s supposed to make money though and where/how the artists are compensated. I know you can pay to use it on your iPhone and what not but what’s in it for them for people who use it at home? What are the restrictions? I just don’t get it. I’m using it though.


Users can register either for free accounts supported by visual and radio-style advertising or for paid subscriptions without ads and with a range of extra features such as higher bitrate streams and offline access to music. A paid “Premium” subscription is required to use Spotify on mobile devices.

You get ads every 3 or 4 songs on the desktop version…although most of the ads I hear are for Spotify itself!

If you listen to it enough I suspect you would get sick of the ads and also would justify the cost of subscribing for the free music. The ads can be jarring if you’ve made a specific mood playlist.

I believe the artist gets paid a (presumably very small) royalty every time a song is played. As Sage Rat says, they hope to get enough money from ads, click through buys and subscriptions to cover their costs. In the UK, with a free account you can now only listen to a track 5 times, which is meant to encourage you to either buy the track or get a paid subscription. I don’t know if they actually make any money at the moment.

The Spotify client is a very nice piece of software, which makes it easy to browse artists and setup playlists. I use it to check out new stuff before I buy.

Exactly. I cracked a year or so ago after having a foppy album by The Field Mice interrupted by an advert for a hard and happy dance anthems compilation.

It struggles when two (or more) artists share a name though. As an example, search for “Blueboy” and look at the artist page it comes up with. It mixes in the complete works of Blueboy, the British jangly indie band that used to be on Sarah Records, with some R’n’B guy.

I just started using it this morning at work. So far I haven’t heard any ads…wonder why???

Also, I used my Facebook account to log in but I unclicked the permission it wanted. I think it was to post something every time I listened to a song…seems like I’ve seen that from others on my feed. I’m getting ready to install it on my laptop… is it better to use the Facebook option or not?

Smallz? Ha! bienville gets hizass nearly three quarters of a penny every time you stream hiz fat beats, Sucka!

That’s right y’all! Whenever 41 people stream themselvez some bienville tunes, bienville buys hizself a pack of Wrigley’s muthafucka!

Artists make extremely little from Spotify. A member of Galaxie 500 wrote an article recently about this. I can’t attach a link but google will bring it up quickly. It is practically nothing.
The ads are few and far between.
I don’t think Spotify will last as is for very long. I am sure that pay will eventually become mandatory.

It’s becoming a crowded market, too. With Pandora, Apple, Microsoft, I Heart Radio and Rdio all getting involved.

In terms of how much artists are being paid, Internet radio rakes it in the neck compared to traditional radio. There’s a decent sized fight brewing over that in Congress. And while I don’t have numbers for Spotify Pandora released it’s numbers a while back. I wrote a piece about it six weeks or so ago. Pandora pays Drake and Lil Wayne $3 million each. And more than 2000 artists more than $10K per year.

It’s an interesting time.

I saw that on Pitchfork:

It’s sad and I don’t know how to fix it, but the market for new bands and indie bands just doesn’t seem at all tenable in the digital era.

I just listeded to a Planet Money podcast that touched on this but from the perspective of the larger artist. They talked about how Taylor Swift decided not to release her latest album on any of the streaming sites becuase, in her view, they were for building a fan base rather than actually selling albums. She didn’t make any money off the streaming sites and they cut into her album sales, and because she already had a large fan base there was essentially no incentive for her to release her material there. This seems to have upped her album sales by roughly 10-15%.

It will be interesting to see who follows her lead and how the whole situation evolves. For the consumer these are great products, but for both the very new and the very established artists they are terrible. Only the mid range artists who already have a small following that they are trying to grow really seem to benefit.

I think in 5 years or so the market is going to start to self correct. Either these sites will start paying artists more or sucessful artists will start leaving them en mase.