Spotify is an influential service for artists to make their songs reach more people. If a large set of people stream their songs repeatedly, the artist and the record label gets more money.
Last night, the streaming company announced a tool that allows artists to get more ‘reach’ in exchange for lower royalty rates. Spotify says artists or record labels can choose the songs they want to promote:
In this new experiment, artists and labels can identify music that’s a priority for them, and our system will add that signal to the algorithm that determines personalized listening sessions. This allows our algorithms to account for what’s important to the artist—perhaps a song they’re particularly excited about, an album anniversary they’re celebrating, a viral cultural moment they’re experiencing, or other factors they care about.
The streaming company will boost these songs in relevant automatically generated radios. It said that if more people are listening to these songs, it’ll keep boosting them, otherwise they’ll be pulled back from the promotion. At the moment, it’s not clear what Spotify considers as success, and on what basis it’ll keep the promotion running.
Spotify said that while record labels won’t need to provide a budget like a traditional promotion campaign but would rather “agree to be paid a promotional recording royalty rate.” In simpler words, less money per stream.
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In an interview with Music Ally, Spotify’s product marketing lead, Charleton Lamb, said that this doesn’t mean fewer royalties, and labels can get positive returns if a track performs well.
Some artists and industry executives are not happy with this development, and they made it apparent on Twitter.
Spotify doesn’t reveal what it pays per stream but different reports reveal that the payout is between $0.0033 and $0.0047. So, for an artist to earn substantially, their songs have to be streamed thousands of times over.
Now, these promotional rates might be suitable for popular artists who already have money, and want to promote a song for a few days. But for up and coming folks, a lower rate can only be substantiated if they get popular through this mechanism and get more live gigs or other means to earn money.
Last week, a union of independent artists wrote an open letter to the company demanding at least 1% earnings per stream.