Fair Compensation for Artists: Spotify and Bandcamp
The advent of streaming has drastically changed nearly every industry, including cinema, gaming, sports, television, and of course, music. Subscription services provide people with more content than they could ever consume at a flat rate, meaning customers don’t have to individually purchase content. Anyone can hop on their phone, go to Twitch, and find tens of thousands of streamers to watch. While Netflix pays millions for movies and series and Twitch has integrated methods for viewers to support their favorite streamers directly, Spotify has repeatedly refused to supply any clear statistics about how they pay artists, or even how many artists are on their platform.
Looking at Spotify’s business model, it has become evident that they do not even consider themselves a music-focused platform. They have shelled out millions of dollars for exclusive podcast rights, including $100 million for the Joe Rogan Show, and dropped influential legends Neil Young and Joni Mitchell in the process. It's hard to make the argument that any company that cares about music would have ever even considered that decision, politics aside.
With Spotify forking over an arguably ridiculous amount of money for podcast rights, it would make sense that they pay their artists a similar amount, no? Well, in order to alleviate artist concerns about fairness of the payment system, Spotify launched "Loud&Clear", a small website and FAQ with some statistics about how many artists make above a certain threshold. Clicking through, you can find that around 870 artists made over $1 million dollars, and about 7,800 make above $100,000. Roughly 13,400 artists and acts make above $50,000 a year.
The issue with saying “this many artists were paid this amount” is that “generated recordings and publishing royalties” is far from a direct means of payment. According to the Seattle Times, “Spotify doesn’t pay artists directly, instead paying those who hold the rights to a song or album (normally record labels, distributors, aggregators, and collection societies) who take a cut and give the artists the rest”. Spotify also makes it abundantly clear that they have no responsibility or knowledge of how labels and artists manage their earnings. This confirms that when they say “artists” were paid this much, they actually mean the label was paid this much.
Say your band makes $50,000 a year from Spotify from your streams. First, the $50,000 goes through your label, unless you publish independently. Next, unless you wrote all of your songs entirely on your own, you will also need to pay songwriters. This also means you likely need to pay whoever produced, mixed, and mastered your songs, as few musical artists have all of these skills. After you have paid your producer(s), songwriter(s), and the label has taken their cut, you have a portion of your original royalties to be split among your band members. Let’s say there are three of you: a third goes to your drummer, a third to your bassist, and a third to your guitarist/singer. That fifty thousand has evaporated into less than $10,000, two thirds of the federal minimum wage or less than a third of some state’s minimum wages.
Spotify and the music industry at large has made looking at data from the real world much more difficult as most deals are handled behind closed doors, yet thanks to Kanye sharing photos of his record deal we learned even a superstar such as Kanye earns between 14-25% of royalties and sales. Looking back at our numbers from before, 14% of $50,000 is a measly $7,000, a laughable income and pathetic excuse for a salary. This 14-25% figure has reportedly been confirmed as standard by lawyers in the industry.
On top of that, Spotify’s payment system is inconsistent at best. “[Spotify] doesn’t pay a flat rate per stream, rather, paying rights holders based on ‘streamshare,’ a figure calculated from the number of streams of a rights holder divided by the total number of streams in a particular market.” “Stream share” means for however many streams generated, you are entitled to your cut of your proportion of the revenue in that share. So if your label has 10% of the streams, your label gets 10% of the revenue generated by streaming that month.
As for the consumer, this means your money is not going to the artists you listen to. When you stream your favorite songs, the money will disproportionately go towards Dua Lipa, The Weeknd, Drake, Billie Eilish, etc. I love a lot of these popular artists, but when I am choosing to spend my time listening to smaller artists, I would hope that my money goes towards them, not a super popular artist that I never stream.
Spotify then goes on to say, “once we pay rightsholders according to their streamshare, the labels and distributors pay artists according to their individual agreements. Spotify has no knowledge of the agreements that artists sign with their labels, so we can’t answer why a rightsholder’s payment comes to a particular amount in a particular month.” An artist's salary is heavily dependent on multiple hidden variables that artists will never have access to. Spotify has effectively created a labyrinth artists must traverse through to be compensated for their creativity.
Searching up Spotify payment rates will yield you a variety of figures and countless artists talking to media publications about how their 80,000 streams made them about $90. Just as there is no definitive answer to stream rates, there is no way to track the number of artists on Spotify either. In accordance with an interview in 2018, Spotify claimed to have over three million artists. Using the Loud&Clear website, you can find the number of artists above a certain monthly listener threshold. While they don’t track those with zero listeners (on the website at least), there are 4,467,000 artists with at least one monthly listener.
Just thirteen thousand out of nearly four and a half million are paid $50,000 in royalties, which they will most definitely not receive all of. Thats 0.3% of all artists on their platform receiving an income that we have deemed unlivable, and those are the lucky ones. Spotify claims it wants to help one million artists live off their art, but shouldn’t the goal be to have all artists live off their art? Damon Krukowski of NPR writes “This sounds good, especially if you're one of a million artists, rather than one in a million. But what can it mean, when Spotify's royalty rates are so low that to earn a living wage of $15 an hour, a musician needs 657,895 streams per month?” It’s plain to see that Spotify’s system has failed artists, through and through.
On top of it all, Spotify heavily curates what music is shown to its users. Artists can take cuts to their royalties in favor of more promotion on radios and it’s common to see the same artists get featured over and over on Spotify’s playlists. On Spotify’s “for artists” page, they describe the process in which artists will have to pitch their songs to Spotify for a chance for it to be promoted. From Spotify’s "For Artist" page, they write “Got a new release coming up? Pitch a song to us before it drops. We’ll include it in a list our editorial team picks from for their playlists. We’ll also add it to your followers’ Release Radar playlist.” Not only do artists have to create their product, they’re also expected to sell it. While larger artists like the ones you see constantly on Spotify’s curated playlists have corporate teams that can help them manage the promotion and marketing, most artists do not have this type of support. The chokehold Spotify has on the industry forces smaller artists to be songwriters, producers, multi-instrumentalists, singers, composers, and marketing agents for them to have a fair chance at earning a decent wage.
This is where Bandcamp comes in. In the streaming age where we have reached oligopolistic control in the music industry, with monstrously large companies creating legal mazes for artists to wander through, Bandcamp is about as far from Spotify or its competitors as you could get.
The way Bandcamp works is simple. An artist has an account, they post a song or album and can put some merch with it if they want, and set a price minimum, so customers can choose their own price above a certain amount. A customer can browse Bandcamp, listen to music from artists around the world for free with some limitations, then decide to support the artists and projects they love. Around 82% of this payment then goes straight to the artist or label. Bandcamp also has Bandcamp Fridays, an initiative in which one Friday each month, Bandcamp waives its fees so artists can get their whole share. In fact, during the early months of the pandemic, Bandcamp had waived this fee permanently while artists were finding ways to support themselves without tours.
Where Spotify has heavily curated playlists, Bandcamp has an open flowing channel of albums to discover. Where Spotify has streamshares and “generated recordings and publishing royalties”, Bandcamp has “Bandcamp Fridays”. As Bandcamp’s "About Page" states, “Bandcamp’s mission is to help spread the healing power of music by building a community where artists thrive through the direct support of their fans, and where fans gather to explore the amazing musical universe that their direct support helps create.” As we’ve seen with Spotify, it’s easy to make bold, grand claims, but hard to follow up on them. However, Bandcamp truly does follow through with their claims, especially in transparency. Just opening Bandcamp’s page, you can see every purchase being made in real time by users. Under any project, you can see exactly how many people have supported projects, and Bandcamp constantly updates how much money they have gotten into artists hands. On their about page, you can find a pie chart that dissects how money is distributed. Clear and simple.
Graphic sourced from https://bandcamp.com/about.
Just to compare the astronomical difference between purchasing an album on Bandcamp and streaming it, let’s do a little bit of math. Assume that you want to listen to a 30 minute album that has ten songs. Let’s also assume that Spotify will pay the artist of said song a generous $0.003 each time you stream the song. To generate the (generously estimated) streaming revenue equivalent to buying that album for $5 on Bandcamp, you would need to listen to that album 167 times, just for $5. In practice, rarely, if ever, has around 1,000 streams turned into $5 on Spotify, but it goes to show one click of a button can buy 5,000+ minutes of streaming. Needless to say, Bandcamp has proven that they work directly with artists to help them make money and pursue their creative goals.
As for Bandcamp as a platform, there is a lot to love, and some room for improvement. On the discovery side, Bandcamp is perfect for finding great music. Whether you want to filter by best selling, most recent, location, artist recommended, new arrivals, genres, or format, there’s a ridiculous amount of options to help you find something that you’re looking for. The Bandcamp staff also includes writers who help curate pieces to help spread and promote new music, including interviews with artists globally and editorial pieces on favorite albums. It’s important to make the distinction that all of this promotion is entirely unrelated to how the platform functions and how the payment system works. Every piece written is out of appreciation for the creative work of artists and a hope to help others find a similar love or appreciation for the work.
Now, Bandcamp is at a critical turning point. Having recently been acquired by Epic Games, the studio that brought the world Fortnite, it is clear to see why many indie musicians and fans are skeptical of the purchase, at best. While Ethan Diamond, CEO of Bandcamp, has made statements saying that Epic is going to help develop and improve Bandcamp’s app and services, and that Bandcamp’s core principles won’t undergo any change, many are fearful of what the gaming giant might have in store for one of the only reliable source of income for many artists. What’s not in question is the remarkable impact that Bandcamp has had on the lives of artists, and the artist-first model of business is not detrimental to companies growth or success.
At the end of the day, Spotify is a remarkable platform that helps spread music and podcasts all over the world with unparalleled efficiency and an arguably better design than most other streaming platforms. It dominates the streaming industry by a massive margin, and is inescapable. I still use Spotify to listen to many of my favorite artists, but consider throwing $10 to them through Bandcamp from time to time, and remember you are supporting a company that would rather invest $113 million into military AI than pay their artists.
Sign up and make a free Bandcamp account right here.