A new data-driven initiative from Spotify called Loud & Clear aims to provide increased transparency around the economics of streaming.
“Questions and concerns about artist income from streaming have been around for over a decade, and in many ways, we feel we’ve been too quiet on the topic,” the streaming site reads. “Our aim with this site is to provide a valuable foundation for a constructive conversation.”
The new initiative tackles both the macro- and micro-economic picture, starting first by broadly informing readers on the impact of streaming to the music industry as a whole, and then breaking down the mechanics and stakeholders within Spotify’s business model.
In many ways, Loud & Clear reads like a direct rebuttal to music rights holder organizations such as the United Musicians and Allied Workers Union, which recently spearheaded a campaign for one-cent streaming payouts on Spotify. The organization has been critical of Spotify, stating that despite Spotify’s increasing valuation, rights holders have not seen an increase in their royalty rates. Spotify operated at a profit for the first time in Q4 of 2018.
In one section, Spotify directly addresses their logic for not focusing on rate per stream. “In the streaming era, fans do not pay per song so we don’t believe a ‘per stream’ rate is a meaningful number to analyze,” the company states. “Our model drives more fan engagement and generates revenue from more places — that means larger total checks from Spotify to rights holders.” They later state that Spotify has generated more income for rights holders compared to its competitors. The company has paid out $23 billion to rights holders in total, including $5 billion in 2020 alone.
United Musicians and Allied Workers Union Co-Founder Damon Krukowski responded to the company’s initiative suggesting their transparency has been insufficient. He reiterated the organization’s desire to gain insight into Spotify’s existing agreements with major record labels and the company’s income generated from channels outside of subscriptions and ad sales.