Why Spotify is destroying music artists despite $2 billion payout

People are getting all excited about Spotify's CEO claiming the platform issued $2 billion in royalty payments to artists, and somehow were all supposed to believe that big numbers mean big rewards. Wrong.

Spotify may have 50 million subscribers, and yes, it may pay 70% royalties out to artists, but when you calculate the money that goes into albums per user, the numbers are tiny and embarrassing.

When people 'used' to buy albums they would retail around $10 or more. An album would typically contain 10 or more songs with some bonuses, and a cover with added info about the music.

Fast-forward to reality: Each artist on Spotify will receive approximately $0.006 to $0.008 per stream, so for 10 songs or 1 album an artist will get $0.08 in total instead of $10. Now of course, tracks will get repeated plays, but in order for a music artist to get $10, their songs will have to be listened to 1250 times, or each album will have to play 125 times to get the same amount of money.

We can argue that people spend more money on music when they sign up to a Spotify account on a yearly basis, but in actual fact Spotify is providing users with unlimited access to millions of songs for pennies, and artists are not making money. In fact, only the major superstars are really getting any traction out of it (albeit with a huge paycut) while indie artists are being financially ruined. The reason for this is that Spotify has downgraded the cost of individual tracks and people now expect to pay virtually nothing for access to everything. Spotify wins. The consumer wins. The artist dies.

What frustrates me is how the PR engine of Spotify tries to sell big numbers to get people excited about choice, and giving money back to artists. It isn't. It's just a very convenient streaming service created to provide massive choice at virtually no cost to the end user. It is a terrible deal for artists and when Taylor Swift and her team decided to pull their library it was a great message to people that it isn't worth it, and look at her album sales. People went elsewhere to get it. Who cares if she's making a lot of money anyway? That isn't the point. A majority of artists work very hard for little reward on this platform when they can be selling their music on other services at a much higher, and yet, still affordable premium. Even if the service doubles its members from 50 million to 100 million, there are still 20 million songs on there. It just doesn't add up and I'm not buying it for a second.

Would you be satisfied with 125x less money for the same work? Would anyone in the film industry for that matter be happy to take a 12500% pay cut on their work just because the CEO of a company has come out all heroic with his good deeds and alleged royalty payments? I'm disgusted at this PR exercise.