The data Spotify provided were anonymized so the researchers could not identify trends in which types of artists did better. Though smaller artists ended up better off in aggregate, not all smaller artists gained-in fact, some were worse off. The research found that in the current system the top 0.4% of artists get around 10% of all revenue, but they would only get about 5.6% of revenue under a user-centric system. If everybody spent the same amount of time listening to music, pro-rata and user-centric systems would result in exactly the same outcome.Ī 2017 study conducted the Finnish Music Publishers Association used data from Spotify premium subscribers in Finland to examine the impact of a change to a user-centric system. Even if two subscribers pay the same amount, the user who spends 100 hours a week on Spotify generate more revenues for their favorite artists than the one who only spend 10 hours. The main difference between a pro-rata and user-centric system is that the preferences of super users are far more important under pro-rata. In this case, all of Anna’s money would have gone to The Expressionists. If half of a user’s streams are Rolling Stones songs and half are Beyoncé, then those two artists are the only ones who earn money from that user. Many people in the music industry would prefer a payment system that was “user-centric.” Under this system, each user’s payment would be distributed based on what they streamed. (About 70% of Spotify and Apple Music’s revenues go to music labels and artists.)
Essentially, 1% of Anna’s money is going to Drake. So, if Apple Music gave $100 million of their revenues to artists in a month, and Drake songs accounted 1% of all streams that month, then Drake (and the writers of Drake’s songs) would receive $1 million. They then divide that pot by the total share of streams each artist received. They take all of the money generated from users, whether by advertisements or subscriptions, and put in a big pot. The way Spotify and Apple Music pay artists is simple.
Anna might reasonably assume that of the money that went to artists from her $10 monthly subscription, nearly all of it went to The Expressionists. The Expressionist’s new album accounted for 100% of her time listening to music last month on Spotify. She recently fell in love with a jazz trio called The Expressionists (also fictional). Anna, a fictional Spotify subscriber, is a big jazz fan.
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