SPOTIFY: FROM PENNS TO MILLIONS

SPOTIFY : FROM PENNS TO MILLIONS

Spotify's announcement (*) not to pay the few cents owed to rights holders totaling less than 1,000 annal streams represents 40 million dollars over the year with a goal of doubling this sum by 2027 (2023 : figure business first trimester 3.4 billion euros / 515 million annual users including 210 million paying, growth + 100 million users per year and 2027 objective : 1 billion users). Their current plan is to use that $40 million to increase payments for eligible securities.

But where do these cents come from?
The question that has come up since the birth of music streaming is the very disparate and disproportionate remuneration of artists, producers and composers.
The revenue generated by streaming is now distributed to rights holders in proportion to their market share, defined by relating the number of streams generated in the rights holder's catalog to all streams generated on the service, according to the so-called Market Centric Payment System (MCPS) model.
This system does not distribute the amount of each user subscription to the artists, producers and composers of the music they listen to but to the rights holders of the most listened to titles: for example the amount of the subscription of a user who does not listen that classical music, jazz, folk is distributed to other rights holders: a few cents annually for the least publicized music, several million dollars for the top 10 (rap, hip hop, etc.). And unsurprisingly, the platforms are careful not to communicate to users the destination of their subscription.

A distribution system that has become obsolete
A study by the CNM in partnership with the audit and consulting firm Deloitte carried out in 2020 and published in January 2021, relating to the impact of online music services that a change in distribution keys would have: passage of MCPS model currently applied to the UCPS model (User Centric Payment System, the user paying through his subscription the artists listened to over the period). The income of rights holders shows that by changing the system, the less publicized classical, jazz, metal, hard rock, folk would be valued, unlike the top 10 and top 100 (rap, hip-hop, rock, etc.).
Previously, several studies have been carried out resulting in very contrasting positions and different, even contradictory, conclusions (using different methodologies).
Most wish to continue using the MCPS system - not to change - Nevertheless, all adopt an ethical vision of the UCPS, a model which would seem fairer and beneficial for the music industry in the long term but which would cause an increase in operation costs from 2% to 3% which they do not want to take charge and which would be invoiced to aggregators/distributors and producers…
But the various communications which were made on the conclusions of this report highlighted that the average annual gain of the least publicized music would only be 10%: a few cents in the end, while in reality one cent received today would become around ten euros by changing the system : that it was not worth changing…
In reality, several tables in this study show that 10% of users with the lowest consumption would see the amount of royalties they redistribute increase by more than 3,000% with the UCPS, while 10% of users with the highest music consumption would lose on average 72% of the royalties they currently redistribute under the MCPS model.
In another table, “low users” would see their royalties increase by 7,300%: in this case 10 euros received from streaming today by artists, producers, composers of less publicized music (known as “niche”) would become 730 euros , which would allow them to be a basis for continuing to produce, while boosting diversity and musical creation.

For which project?
SPOTIFY's current project is to use this sum of 40 million dollars annually (collected from unpaid,streams below 1000) to increase payments for eligible titles : but it will always be the same people who will benefit, increasing inequalities .
We propose to SPOTIFY to review the allocation of these cents by using this amount to help/highlight titles which total less than 1000 streams so that they exceed the threshold of 1000 and access remuneration: change the distribution system and use these 40 million dollars annually to finance the transition to the UCPS and develop algorithms that highlight all these forgotten digital people. To communicate on the destination of user subscriptions distributed to the artists, producers, composers they listen to.
This awareness that everything becomes possible, by fairly remunerating content creators while increasing the profitability and financial independence of streaming platforms, should potentially change their image and promote a real diversity of music offered to users. 

(*) Bruno Crolot, general manager of Spotify France “We have announced changes in our method of distributing royalties. All the analyzes we have been able to do show that music titles that have less than 1,000 streams per year generate a few cents per month. However, these cents, which represent significant sums at the global level, are not returned to artists, due to costs linked to distributors and labels. We have therefore decided to no longer pay royalties to titles that have fewer than 1,000 streams per year” Le Monde, January 27, 2023 interview from Midem.

The digital distribution commisson of "Les allumés du jazz"