Spotify’s Business Model

There’s no denying that Spotify has fundamentally transformed the way we as a society think about music. It has also changed the way artists can (or can’t) make a living off their music when they only “earn a fraction of a penny, about $0.0030 to $0.0038” for every stream.

@coreyweb sent me this really interesting article (featuring an anecdote from his clever friends from Vulfpeck) that breaks down Spotify’s business model and impact on how we consume and produce music.

Some cool facts:

• The co-founders Daniel Ek and Martin Lorentzon were already multimillionaires before they started Spotify, each having sold an ad tech company.
• Researchers ran a SpotiBot experiment that “trained about 300 bots to repeatedly play their weird songs in Spotify [and] found that the platform didn’t really scrutinize their bot traffic.” Total royalties earned during the experiment? $6.28
• Music files aren’t uploaded directly to Spotify, they have third parties doing the “dirty work of rights management, uploading and categorizing music, and collecting and paying royalties.” On top of minuscule payouts from the platform, in many cases musicians must pay these third party services “an upfront fee or sign over a percentage of their future royalties.”

I’ll leave you with a passage that really struck me as someone who is all-in on Spotify (for better or for worse):

Ultimately, Spotify is nothing more than a cultural landlord. It owns a space, for which some of us pay rent to access our music and artists pay to have their music heard. It can raise the rent and evict occupants on its whims. Music regularly disappears from the platform because of licensing disputes, making small bits of culture and history suddenly inaccessible.

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