After years of speculations about how much each artist gets paid from the streams, Spotify has finally decided to dedicate a portal to help you get a clearer understanding of the economy of music streaming.
The platform, which is home to 345 million users, has been working on dropping a web directory called “Loud & Clear.”
Following the new feature’s announcement, the 38-year-old entrepreneur who is the CEO and the founder of Spotify has claimed that 57K artists make up the 90% of the streams on the platform. Thus, the company intends to help musicians who want to climb up the ladder by looking at the A-list stars’ analytics.
“Loud & Clear” is not just another feature just to feed fans’ curiosity about how much Demi Lovato or Justin Biebers makes; it has further marketing goals than what it appears on the surface. With the data, rising artists can follow the stars’ trends which are already on the top, to execute a similar successful plan.
Wait a minute! Before going into the stuffy content and examining the latest feature, let us understand the streaming services’ economy.
It is not an under-the-table business nor a rocket since the dynamics of the business are crystal clear. As you probably know, most if not all music streaming services let you enjoy music either by paying a monthly subscription fee or with ad interruptions (in this case, you do not pay a single penny). Either way, the company is making money, which is divided as profit which goes to the company. The rest is divided as expenses in which the company pays to right holders, and then they in turn pay the artists who chose your library to display their artwork.
Right holders can be record labels, distributors, collecting societies, and distributors that artists choose based on their preference. Royalties is the technical term describing the net revenue derived from these platforms straight to the pockets of those involved in the process mainly, artists and distributors. Without a doubt, the number of streams is taken into account as well.
Check out the below video for a quick recap:
“That is really what we are trying to do here: Share a bit more and acknowledge that artists deserve more clarity around how this music streaming economy is working,” Charlie Hellman, the head of the marketplace and the vice president of the company, added in a statement.
We have cleared the air regarding the confusion surrounding the topic. “Loud & Clear” also provides graphs to showcase how A-list artists meet the revenue threshold. 870 artists, where each was able to generate over $1million only in 2020 alone, only from royalties.
Despite debates about whether or not the streaming services are paying a fair share to artists, Spotify remains the leading streaming service, ahead of Pandora, Apple Music, and Amazon Music, not only with the number of users but with its facet features and jaw-dropping updates.