The Best Way to Make Money on Spotify

Screen Shot 2014-03-21 at 3.37.28 PMFor better or worse, Spotify looks like the future of commercial music streaming. Since launching in Sweden in 2008 (it came to the U.S. three years later), the service has added about five million users annually. Spotify counts more than 24 million active users, about a quarter of whom are paid subscribers, streaming music in 55 countries, from Andorra to Taiwan. But it’s a raw deal for artists.

Despite the growing user base, a microscopic proportion of bands with songs on Spotify (or Pandora and Rdio, for that matter) see any financial benefits whatsoever. In November 2012, Dean Wareham, of the bands Galaxie 500 and Damon & Naomi, outlined the economics in an article for Pitchfork: for the 5,960 times “Tugboat,” Galaxie 500’s most popular song, was streamed on Spotify in the first quarter of 2012, the band collectively made $1.05. The going “indie” rate is $0.005 per play. (Last year, Spotify revealed that it pays rights-holders, i.e. artists, $0.007 per play, on average).

This minuscule rate has prompted several popular bands to not license their songs on Spotify, including Radiohead, AC/DC, and Garth Brooks, the best-selling album artist in the U.S. in the SoundScan era (since 1991). But, as Wareham points out in his Pitchfork article, the crux of the problem is that streaming services like Spotify don’t represent markets, where goods are sold at a price above what they cost to manufacture. What they’re selling is “access, a piece of the action.” The proliferation of free culture online has exerted an incredible downward pressure on the monetary value of non-utilitarian goods, a category into which basically all art can be placed, in strict financial terms. This makes the gatekeepers of access kings. It’s not that music industry’s pre-Internet value went poof; Apple took it. Same with Google and the print industry.

The rapid decline of the recorded music industry is not due to a decline in music consumption, but rather to a shift in music listening behavior. Spotify’s stated aim is to “regenerate this lost value by converting music fans from these poorly monetized formats to our paid streaming format.” The upshot is that unlike purchasing physical media, streaming is not a one-off payment. Hundreds of millions of streams happen  every day, provided a long-term source of revenue for artists. Even if it is a pittance, it’s better than absolute nothing.

As the Daily Dot reported, there’s (at least) one band taking advantage of this (limited) opportunity: a Michigan funk trio called Vulfpeck. Vulfpeck recently placed a 10-track album on Spotify called Sleepify. It’s ten 30-second tracks of silence, which they’re asking fans to stream on repeat overnight. In this delightful video posted on YouTube (hah), Vulfpeck member TK explains that listening to Sleepify all night on repeat (which works out to 800 listens over eight hours) generates $4 for the band, which they plan to use to make all the shows on their upcoming tour free. This is an awesome idea*, because not only is it a creative solution to a problem plaguing literally 99.9% of bands who want to make any kind of money for their art, but it’s not another Kickstarter. Check it out here.

*I listened to Sleepify a half-dozen times while writing this post.

Follow Phillip Pantuso on Twitter @phillippantuso


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