Spotify hurts profits of artists, labels

The music-streaming app Spotify is keeping music sales to a minimum, forcing artists to find other revenue opportunities. Musicians have been increased the amount of songs on their albums, sold more tour dates and put out more merchandise to compensate for lack of music sales (courtesy of Creative Commons).

While Spotify has become all the rage to anyone who has ears and a smartphone, the service has carved a deep wound into the music industry. 

Spotify’s single-fee-for-unlimited-songs service has surpassed the standard methods of music distribution that preceded it. The app only gives a small percentage of profits from premium subscribers to artists and their record companies. 

Spotify’s streaming feature makes it extremely difficult for artists to make any profit. The music holder receives about $.006 to $.0084 for each streamed song, according to CNBC. It would take thousands or even millions of streams for an artist to receive a reasonable amount of money compared to Spotify’s profits. 

With a tremendous number of listeners, Spotify has cut out the need for music consumers to buy an artist’s album. Consumers prefer to listen to music for free or have an endless supply of music for a small monthly fee rather than purchase individual tracks.

Instead of recieving revenue from album purchases, the artist must rely on the number of streams that each of their songs obtain. This fact forces most artists to change the usual album format to one more suitable for streaming platforms. 

Albums have become longer in recent years. Traditional albums have 10 to 14 tracks, but artists like Drake have began to produce albums with over 20 tracks. This is a similar length to a playlist on a streaming app. 

Travis Scott similarly exemplifies the trend. His album Astroworld has 17 tracks with three songs over four minutes long. Artists have resorted to changing the established album length to conform to the new streaming culture, according to USA Today

Spotify has been criticized for offering direct licensing deals to certain independent artists. The artist gets to keep the whole cut of Spotify’s profits if they are licensed directly. These deals with independent artists and labels can lead to advance payments of several thousand dollars, according to The New York Times

This system leaves little room for other labels and publishers, cutting off their stream of revenue. Warner, Universal and Sony control around 80 percent of the industry according to The New York Times, Since Spotify has started artists directly, these big names are being cut out of the equation. 

Labels receive around 52 percent of the revenue from the amount of time a song is played, according to The New York Times. When the money filters through the label to the artist, the artist only receives between 15 and 50 percent of those profits.

Spotify features many music videos alongside its wide selection of music. These videos have reportedly provided an enormous profit to Spotify, according to Yet Spotify is not paying its fair share for the videos, according to

Marc Cimino, a Universal Music Publishing Group executive, has voiced his opinion on the subject as his company deals with Spotify’s business. 

“We want to allow our digital partners to experiment, and at the same time make sure our songwriters are paid properly,” Cimino said.

Streaming has pushed artists to depend on tours instead of album profits because they don’t earn as much money from their songs. Without these song and album profits, artists are left to sell physical representations of their music through merchandise and performance. 

Spotify must consider its actions in the industry. Artists are pushing out more and more albums, tours and merchandise to stay afloat in the music community. Label companies are getting cut out of their share of revenue by Spotify’s streaming capabilities. While money plays an important role in the music industry, the current distribution of it is inequitable.