Spotify was created to counter online music piracy. After watching the Napster documentary, we all know what happens to companies that model themselves around the idea of sharing music for free online. Spotify, coming out only two years after itunes, was one of the first legally allowed music streaming services, that many of us continue to use today.
So how does Spotify make money? Spotify, much like many streaming services has two sources of income. One, through advertisements, and two, through prescription services. Since you can create a free Spotify account, that comes with having to deal with advertisements, but for those people who are willing to pay the $10/ per month subscription fee, can access Spotify's entire library add free.
Now why did Spotify only start making money this past year? Since Spotify is trying to not have copyright infringement lawsuits like Napster did, it has to pay the artists and recording companies royalties to use their music. Now as you can imagine, this adds up very quickly since Spotify has such a large library of music. In the beginning of its lifetimes, Spotify didn't have enough consumers to be turning a profit, but since it has it the 200 million mark and increased its subscriptions by 32% it can finally start turning a profit.
In the past years, Spotify has also gotten backlash for underpaying artists. And since Spotify acts as one of the biggest places that artists can get exposure, they are able to pretty freely control how much they give artists for each play. Artist Jon Hopkins even said on Twitter he "got paid £8 for 90,000 plays. Fuck Spotify." Although this is not too big of problem for huge artists, it can hurt smaller artists who could get a hit on Spotify and barely make any money.
ReplyDeletehttps://www.rollingstone.com/music/music-features/should-spotify-change-the-way-it-pays-artists-763986/