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How Your Listening Behavior Pays Artists On Spotify

Precisely measuring demand As the New York Times’ Ben Sisario reports, subscription music services like Spotify and Rdio are growing.

How Your Listening Behavior Pays Artists On Spotify


Precisely measuring demand

As the New York Times’ Ben Sisario reports, subscription music services like Spotify and Rdio are growing. The unlimited subscription model pays artists based on the number of listens each track receives. This marketplace model is compelling because it bases artist compensation on an efficient and precise measurement of demand.

The pay-per-album model often over-represents demand by translating demand for a single track into demand for a full album, sometimes more than quintupling revenue.

The pay-per-track model popularized by iTunes is a more efficient and accurate way to measure demand, but it still makes demand binary and equalizes the value of all tracks: either you demand a track or you don’t.
The unlimited subscription model measures the listener’s level of demand precisely and bases compensation off of it.
This model empowers every one of us to impact the volumeand durabilityof artists’ compensation.

Assumptions

Several artist reports from Parks and Gardens, Grizzly Bear and the Layaways allow us to assume average artist compensation on Spotify is $0.0045 (just under half a cent) per stream.

A recent study from Michael Twardos of The Information Diet blog allows us to assume songs we listen to average 4 minutes in length.

How does your behavior impact musician compensation?

If you’re a music fan and listen to Spotify two hours each day:

• Each day you listen to about 30 songs
• Each day you distribute over $0.13 to artists
• Each year you listen to about 10,950 songs
• Each year you distribute over $49 to artists

If you played music on Spotify 24/7 for the whole year, you’d play about 131,400 songs, giving you over $591 to distribute to artists.

By these estimates, it takes 156 listens to equal per-track-purchase artist compensation of $0.70.

For tracks you listen to 156 or more times, artists receive more money than they would if you bought the track on iTunes.

What does it all mean for you?

The jury is out on whether measuring demand this precisely — and thereby lowering total compensation — is actually good for the macro-economy. But we can be sure this model is empowering for all of us who know buying “Who Let The Dogs Out” is not equal to buying “Signed, Sealed, Delivered.”
Unlimited subscription services enable durable compensation for artists that create music with lasting interest. They enable us to compensate Stevie Wonder more for music we consume consistently over decades than The Baha Men for music we consume for several weeks.
Whether quantity of listens is the right way to measure music or art’s value — and whether the value of art is possible to quantify at all — we as consumers are more empowered than ever impact artists’ economic viability. You have up to $591 to distribute to musicians each year.
A huge part of consumer empowerment is consumer knowledge. These numbers can help you consider what music services you use and how you use them, based on what you believe about artist compensation.
NOTE: The artists reports linked above reported receiving as much as $0.01 per stream and as little as $0.001 per stream from Spotify. This piece is based on an estimate right in the middle of those two figures, which matches data from the third report, which is based on longer-term data.