New data. The rate per stream is still about $0.005. My statements show $0.005 in April, $0.0049 in May and $0.0053 in June. The band Little Things That Kill agreed to publish their part of my statement. Here is the Google spreadsheet with their streaming data.
The developments over the last two years:
Spotify grows, still the rate per stream stays the same
The total number of active users grew from 10M in January to 15M in July. Paying subscribers grew from 2.6M to 4M over the same period. Still we don’t get higher rates. How come? It’s really simple: more users also means more streams and every stream needs to be paid for.
How Spotify calculates the payout per stream
About 70% of Spotify’s revenues (advertising + subscriptions) gets paid to the rights holders of the music. This is before Spotify covers their own operational costs (which are still higher than the remaining 30% ) Each month the pay out is calculated based on the revenue and the number of streams.
How many songs will the average user stream during a month? Let’s say between 20 and 25 a day so 700 per month. A Premium user pays $10 a month. 70% is for royalties so that leaves $7 to be paid out. Now all we have to do is divide the $7 by the 700 streams and there you have your rate per stream: $0.01. Nice, but not everybody pays for Spotify. The vast majority uses the Free version and all their streams need to be paid for as well. Still Spotify manages to pay $0.005 for every stream. That’s not that bad if you ask me. We can beg for higher rates but doesn’t that seems pointless? There is just not enough revenue per user to make this happen.
The effect of the growing number of users
I guess the graphs below tell the real story.
In 2011 Spotify accounted for 24.4% of the revenues of my label.
During Q1 2012 the Spotify revenues grew to 43% en look what has happened in Q2:
Spotify has overtaken iTunes and now accounts for 57.7% of my revenues.