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As more and more artists have learned in the nearly 15 years since Spotify first launched, the way that it pays out streaming royalties is very, very complex, based on a dizzying number of factors ...
Spotify, a music streaming company, has attracted significant criticism since its 2008 launch, [1] mainly over artist compensation. Unlike physical sales or downloads, which pay artists a fixed price per song or album sold, Spotify pays royalties based on the artist's "market share"—the number of streams for their songs as a proportion of total songs streamed on the service.
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Nashville-based Mechanical Licensing Collective has sued Spotify alleging the streaming giant created a bundled subscription to surreptitiously reduce songwriter royalty payments.
Cost of revenue - which mainly consists of royalty paid to music record labels and music publishers - rose 49 percent in 2016, but just 27 percent last year, the company's documents showed.
The Financial Times reported in March 2017 that, as part of its efforts to renegotiate new licensing deals with music labels, Spotify and major record labels had agreed that Spotify would restrict some newly released albums to its Premium tier, with Spotify receiving a reduction in royalty fees to do so. Select albums would be available only on ...
A 4% royalty on sales value for a 5-year period of the license, together with a lump-sum payment of $32000 (risk-free income) on execution of the license is then the 'asking price' in the example. The TTF of this projection is 2.6, implying that for every dollar of royalty paid, the OP to the licensee enterprise is multiplied by this factor.
Paying artists for streams isn't just Spotify's problem -- the whole industry is stuck with a royalty model that's better suited for physical sales than streaming. Spotify is the one that's ...