“Spotify’s generous royalty rate of $0.003 per stream has made some lucky independent artists overnight hundredaires. For every 100,000 times a band’s song is streamed, the band gets $300; split four ways between bandmates, that’s $75 each. Let’s say in a year, the song pulls down 2,000,000…
I definitely don’t think that Spotify’s royalty rates are a good deal for musicians, but this is an annoyingly reductive/exaggerated argument that has two major flaws, both of which have to do with basic economics.
One: streaming and purchasing a song are not the same thing. Those 200,000 listens were almost certainly not done by 200,000 different individuals. Arguing that the royalties per listen should be the same as the royalties per download is exactly the same as arguing that customers should who buy a song should have to pay 99 cents every time they listen to it.
Two: it assumes that Spotify is the only source of income that will replace sales of albums and songs. The fact that this isn’t the case is the reason you’ve never heard anyone suggest the ridiculous contingency at the end of reason 1. If there were no other options besides Spotify, we’d all get gouged for streaming our favorite songs on a per click basis. Also, if you look around, this is so obviously not the case that it feels absurd to even have to type the “words” Rdio, MOG, Rhapsody, Vevo, etc etc etc forever.
Bonus: I never hear people who make this complaint offer the obvious solution, which is that Spotify is too cheap. If we want musicians to make more money every time you stream their songs, at some point we’re going to have to volunteer more cash.