The Real Reason Spotify Payouts Are So Low
Todd Simpson
Jan 7 2021, 02:34 AM
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You have probably heard how low artist payouts are on spotify. What you may not know is why. All of the major record labels have acquired an "equity interest" in Spotify. Meaning that the labels have cut deals with Spotify to allow the label to have a massive amount of shares of stock in the company that were granted before spotify went public. So the labels are in on the ground floor of a rapidly growing business. As the stock price goes up, the labels make lots of money. While the exact numbers are not public, it's estimated that it’s approximately 6.35% of Spotify Shares are label owned – divided between Universal (3.5%) and Sony Music Entertainment (2.85%). In order to get the equity interest, the record labels had to work out very low payouts for their artists. This works great for spotify as it means they have very low payouts to make for each stream played. It works great for the label as the equity interest didn't cost them a penny, it was granted in consideration for the low payout deal. It screws the artists.

Now you know.


References
https://www.musicbusinessworldwide.com/one-...n-a-knife-edge/

https://www.law.georgetown.edu/public-polic...-the-Equity.pdf

Here, Billy from Smashing Pumpkins talks about it with Joe.

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Todd Simpson
Jan 8 2021, 03:41 AM
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Posts: 21.796
Joined: 23-December 09
From: Atlanta, Georgia, USA
In simple terms, spotify gave stock options to record labels in exchange for getting cheap artist payout rates. It's diabolical.

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