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Inhaling the info-bong
Spotify have just announced that they are going to give artists direct access to their data, including how much their work has earned, in the hope of bringing some transparency to the heated debate over royalty rates on the streaming service. They've just put up a website which explains how artists royalties are calculated and, most importantly, how they are distributed.
The key to understanding why some artists feel that Spotify do not pay enough for their music can be found in the section labeled 'Royalties: in detail'. Here you can see that Spotify pays 70% of the money it receives to rights holders - aka record labels and publishers.
This year, by their own estimates, they've paid over US $350 million to rights holders. The labels and publishers must be really pleased. So why are artists not sharing in this bonanza? The problem is right there in detail no4:
"Once Spotify has paid a rights owner the total royalties due for their accumulated streams, that label or publisher pays each artist according to that artist’s contractual royalty rates."
By making the raw data available directly to artists, Spotify is shining a light onto years of shady practices by major record labels, who are relying on low royalty rates set in the old days of vinyl to protect their bottom line in the digital age.
Spotify is a business just like any and wants to make as much money as possible, but with this unprecedented move, it has shown that it is willing to work with artists to help them secure proper remuneration for their work.