All right, artists — have you bought your first sandwich yet with your Spotify royalties? We first examined streaming royalties in August, and are taking a fresh look at them now.
Until the successful U.S. launch of Spotify last summer (before which the popular streaming service was Europe-only), Wampus recordings had generated an average Spotify royalty of $.004 per streaming play during 2011. As paltry as that sounds, it appears the service is beginning to support artists in proportion to its growth. In the short time since its U.S. launch, Spotify has quietly upped its average royalty per play to $.0053 — an increase of more than 32 percent.
Might be a blip, might be a trend.
To be successful in the marketplace, Spotify obviously needs to pay its own light bill. It also needs to keep its prices low enough for subscribers (and advertisers) to participate in droves. Finally, it needs to compensate artists at a competitive level — i.e., at the level at which the competition does.
That’s how iTunes became the leader — by supplanting the status quo.
If Spotify — along with Rhapsody, Pandora, Napster, and others — can grow margins enough to step up their royalty rates (to the range of, say, $.04 or more per play), they could challenge iTunes. And not just as the preferred access system for consumers, but as the preferred delivery platform for artists. A strong relationship with artists is key to market dominance, as streaming services will lose their access to content if they fail to pay enough for it.
Spotify, are you listening? What is your compensation plan for independents?