Spotify opened the floodgates last week with a commitment to allow all artists to upload music to the streamer with no fees or commissions. But a look inside the offering shows that artists are being paid a bit less than the streamer pays both major and larger independent labels
Spotify has confirmed that it will pay artists using its new direct upload system a royalty of 50% of net revenue generated. Not a bad deal considering that Spotify is not taking any fees or commissions.
50% also matches the royalty rate that Spotify is paying out in its controversial direct artist deals that include a cash advance.
But it is about 4% less than the 52% that Spotify pays all three major label groups and the thousands of independent labels represented by Merlin. Of course, none of these sources pay out100% to artists.. Even Merlin takes a small percentage for administration.
So, in addition to building good will with independent artists, Spotify's 4% savings offers an insight into why the streamer is really being so generous.
Artists Are On Their Own On Spotify
Here's how Marc Hogan of Pitchfork aptly described what Spotify's free uploads really means for artists:
"Traditionally, the record deal, even on a small scale, inoculated artists from some of the ups and downs of a fickle industry. By cutting out the middleman, an initiative like could put more money in the pockets of artists like Noname who are already popular on their own. For artists further out on the margins, it could be a bit like putting music up on Bandcamp, albeit with the far smaller payouts of streaming compared with actual sales. In either case, the assumed risks fall entirely on the artist. On Spotify, if a song is a success, the return may be big. If not, it will be up to the artist to fund the next one."