According to a 2014 statement from Spotify’s lawyers, streaming royalties totaled just $1.23 million, with the majority of that amount going to Spotify and none to the streamer’s label or publisher.
Of that $6.6 million in 2013, the majority went toward the $7.15 million settlement for a number of class action cases. Those deals were announced last October.
What happens to the money Spotify pays to its creators?
So-called “performance royalties” pay the artists who make up the company’s “streaming service tier” and provide royalties for the streaming of their music.
There are four tiers of revenue—50% streaming of the artists’ digital catalog, 100% streaming of their music and the rest being distributed between Spotify and each artist under a distribution deal with Universal Music Group.
The distribution deals have been a bone of contention amongst some artists who say they deserve better than a fraction of that money they lose from the companies distributing their music. They’ve also asked for a share of the royalty money the companies are supposed to pay for songs that don’t go to a streaming service.
Why doesn’t Spotify match money back to artists?
Because Spotify pays out more money than any other streaming service to musicians. According to the 2014 statement by Spotify’s lawyers, each of the company’s four streams generates $3.5 million of revenue, but the money that goes to the artists isn’t equal with just $3.5 million.
That’s because Spotify has different ways of paying out the money it recoups.
One way Spotify uses is to pay out the music directly. Spotify has paid some artists’ labels for songs already licensed back to them, while the rest of the money that the company recoups comes from the artists themselves. These are called “payouts.”
The $3.5 million revenue that Spotify pays the artists is just a fraction of how much it pays out to its artists over time. Spotify says that it doesn’t publish any numbers regarding the amount of money that it has paid out to artists. The statement says that artists are allowed to use that amount of money to write royalties checks to Spotify after every stream or song in the company’s catalog. The music industry believes that doesn’t accurately reflect where all that money actually goes.
Why doesn’t Spotify pay artists for sales in the country where the music is performed?
Spotify’s lawyers say that the artists have to sign away their rights
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