Spotify will pay artists similar annual royalties to artist once it has gained around 20 million subscribers.
That’s according to the streaming service’s ‘artist in residence’ D.A Wallach, who reiterated in an interview with Hypebot that Spotify’s royalty rates should grow as the company does.
He looked to the world of streaming film and television to set a target, saying, “The larger Spotify gets, the larger the royalty rates should be.
“The royalty rates we’ve paid out have been growing at an exponential rate, and we expect this to continue. If we can get to the scale of Netflix – which has 20 million subscribers – we estimate we’d be paying out to artists what iTunes is paying out on a year-to-year basis.
“This is a simple calculation based on the average download consumer spending $60 a year with iTunes, and the average premium subscriber paying $120 a year with Spotify,” he said.
Wallach was responding after being asked where there was still confusion and concern about artist revenue from Spotify.
“First, we’re not a big company,” he pointed out. “We have four million subscribers, and 15 million active users at the moment. These are satisfying numbers but they are not staggering numbers. We’ve paid out a good amount in royalties so far, close to $200 million dollars.
“I think that people are comparing what we are doing to iTunes, which is not a legitimate comparison,” he said. “iTunes is orders of magnitude larger than we are. People are expecting to see iTunes numbers, but we’re not there yet.”
Wallach also said that people move away from “unit-based thinking” saying that Spotify is trying to create a system where artists can earn royalties forever, suggesting a download sale can be throught of “as a down payment on al future listening that a fan will do.
“If you took the effective per play rate that I’ve paid for every time I’ve listened to my Dark Side Of The Moon CD, it would be trivial compared to what I’d generated if I’d done all that listening on Spotify,” he explained.