Mythbusting: “Spotify doesn’t give any money to artists”

Kalle Magnusson runs the music label Hybris that released the debut albums of artists such as Jonathan Johansson, Familjen, El Perro del Mar, Vapnet and Korallreven. The text is taken from our publication “Access over ownership”, about the trend of wanting access to things instead of owning them. Collaborative consumption is one of the topics featured at Media Evolution The Conference in August.

”Spotify doesn’t give money to artists!” I do not know how many times I’ve heard it. And yes, running record labels or music companies in the 2000s has its problems. But if people only knew what Spotify’s latest six months has meant for Swedish musicians and music companies they’d be surprised.

Hybris was founded in 2004. Music file sharing was really popular by then. The CD grave had already been dug. We had no money and no contacts. What we did have however was good music and great ideas about how to spread things on the Internet. Our idea is to work as hard as we can to get as many people as possible to like our music.

We quickly became an established pop label, but it took until the autumn of 2011 before there was a revenue model that suited the way we work with music.

Music out 2005, money in 2012

Vapnet’s 2005 debut single ”Kalla mig” is a prime example of the fantastic development in the music industry in recent years.

When we released the single we printed 1,000 CDs and encouraged fans to spread the music. A few months later, ”Kalla mig” became a summer hit. When people summed up 2005 ”Kalla mig” was one of the top ten most played songs on the popular Swedish radio programme P3 that year – and the band has tens of thousands of fans. But not surprisingly, sales did not materialize.

As of spring 2012, Vapnet has not released an album for 4 years. ”Kalla mig” hasn’t received a big boost, hasn’t been part of an ad campaign or used in an awesome TV show. But it’s still a good song, and people have continued to listen to it and it’s attracted new listeners.

If it weren’t for Spotify starting to flourish, we would not have noticed anything. Nowadays, 4 out of 5 people using Spotify in Sweden pay to use the service, which means that payment to artists and companies is higher than if they only listened to the advertising-based service. Revenue per play has nearly tripled for us in the last 12 months.

For ”Kalla mig” it means that we get more revenue per quarter from Spotify today than the single sold in its entire first successful year.

Many loyal fans make a difference

Today, a huge fan base and lots of attention mean lots of plays on Spotify. And lots of plays on Spotify means a good income. These are exciting times for Hybris and our artists. We will soon have 500 songs in our catalogue, and Spotify has become by far the most profitable stream for us – almost 80% of our revenue comes from Spotify. And payments are increasing all the time.

We’re not back in the 90s yet, but if you hear someone complaining that streaming services don’t work, that they don’t replace the artists or companies, that accessibility is not the model – ask them to contact us. We can show them that the trend is very positive, and that we mainly have Spotify to thank for it.

27 comments
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  • http://twitter.com/spotidj spotidj ♫

    Great post.

    As far as I know Sweden has about 3 million Spotify users. 4 out of 5  would mean 2.5 million paid subscriptions in Sweden.  Worldwide Spotify has 3 million paying subscribers.

    Is this why all success stories come from Sweden or did I miss new data ?

  • Frederic

    Nah. The total worldwide is around 3 million paying customers.

  • James

    We have yet to experience anything near what you’ve described here in the US via Spotify, which is still only a single digit percentage earner and when I look at the volume of activity versus the relatively tiny income amount, Spotify stinks.

  • http://twitter.com/spotidj spotidj ♫

    Kalle, of course it doesn’t really matter if Sweden has that many paying subscribers. 80% is still a fabulous result.

    I noticed Jonathan Johanson is also on your label. He is that guy who made more than $20,000 from streaming services alone in the first month of his album being available right? http://www.dailyrindblog.com/indie-artist-makes-killing-from-streaming/

    Maybe you can give us some info with dollars? That’s probably more convincing than percentages. Or a nice graph that shows the developments maybe?

  • James

    The economics of what is
    required to make a living haven’t changed. One must still provide a
    service that is both less expensive to develop, operate and
    simultaneously provide better income benefit to producers in order to
    replace the older paradigm. That hasn’t
    been achieved. Spotify has not come anywhere near. Spotify has yet only
    been successful at providing a service consumers love. Spotify is less
    than 1% of digital income for us and the volume of activity is
    remarkably high. It’s clear Spotify is not yet showing as a sustainable
    business for anyone, Spotify included. They build this unsustainable
    model on our backs without adequate compensation. So, we’re all s’posta
    wait until they increase their market share in order to see real money,
    right? I don’t see it.

  • http://evolver.fm/2012/06/28/more-evidence-that-streaming-can-pay-label-earns-80-percent-of-revenue-from-spotify/ More Evidence That Streaming Can Pay: Label Earns 80 Percent of Revenue from Spotify | Evolver.fm

    [...] a blog post excerpted from a longer Media Evolution report called “Access Over Ownership,” Hybris [...]

  • http://musicbizinfo.com/more-evidence-that-streaming-can-pay-label-earns-nearly-80-percent-of-revenue-from-spotify.html More Evidence That Streaming Can Pay: Label Earns Nearly 80 Percent of Revenue from Spotify

    [...] a blog post excerpted from Media Evolution’s “Access Over Ownership” report, Hybris head Kalle [...]

  • Doris

    very interesting post.  But as commenters have noted, Sweden must be treated as a special case – if there really are over 2 million paying subscribers then this is a huge base from which royalties can be generated. 

    I’ll go by ‘spotidj’s figures, but 4 out of 5 payers in Sweden gives 2.25 million premium accounts.  That leaves 750,000 premium accounts spread across the other 14 countries – an average of 55,000 premium accounts per country!

    That’s a huge, huge difference in take-up.  More pertinently, it suggests that at least 25% of the Swedish population actually pays for a music subscription service.  Which is incredible.

    So I’m glad to see that Spotify is beginning to work out in Sweden and I hope we can make some more progress elsewhere.  As a professional musician in Britain, whose income from Spotify is about £10/year, I think we’re a long way away yet.  But I’ll live in hope…

  • Doris

    god, my maths is poor.  4 out of 5 payers, from 3 million actually gives 2.4 million premium accounts.  Which would leave about 42,000 premium accounts in each other country – an even bigger difference.

  • http://freemusicvideos.eu/this-label-earns-almost-80-of-revenue-from-spotify.html This Label Earns Almost 80% Of Revenue From Spotify | Free Latest Music Videos

    [...] a blog post excerpted from Media Evolution’s “Access Over Ownership” report, Hybris head Kalle Magnusson [...]

  • http://musicbizinfo.com/this-label-earns-almost-80-of-revenue-from-spotify.html This Label Earns Almost 80% Of Revenue From Spotify

    [...] a blog post excerpted from Media Evolution’s “Access Over Ownership” report, Hybris head Kalle Magnusson [...]

  • http://www.havingalaughpromotions.com/wordpress/1315/spotify-money-after-all/ Spotify – There is Money After All | With the DJ

    [...] just announced they are making shed loads of cash from the service. The full details can be read here but the key points are that Spotify revenue has tripled in the last year so that now 80% of their [...]

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    [...] det samme plateselskapet hevder også at de har nesten 80 prosent av sine inntekter fra Spotify. I et blogginnlegg skryter han av tjenesten som gir dem stadig større [...]

  • http://www.quora.com/What-is-it-like-to-work-at-Spotify#ans1346718 Quora

    What is it like to work at Spotify?…

    I plan to write a LONG thing on this when I start in September, but I spent a lot of time at the offices and events before deciding to start at Spotify, and I can write about the reasons of my decision: * Spotify has a panda. https://www.facebook.com/s...

  • http://www.quora.com/What-is-it-like-to-work-at-Spotify#comment1041377 Quora

    What is it like to work at Spotify?…

    I feel this: MYTHBUSTING: “SPOTIFY DOESN’T GIVE ANY MONEY TO ARTISTS” http://blog.mediaevolution.se/2012/06/26/mythbusting-spotify-doesn%E2%80%99t-give-any-money-to-artists/...

  • http://www.quora.com/Copyright-Law/How-does-the-content-industry-earn-money-in-a-post-copyright-world#ans1355193 Quora

    How does the “content industry” earn money in a post-copyright world?…

    Kickstarter and it’s spawn will be WAY, WAY bigger in the future. I’m a big believer in the semi-prepaid model that Kickstarter has popularized. Almost exactly two years ago, Diaspora got $200 000 to create a Facebook alternative. I distinclty rememb…

  • Anonymous

    Right, so how much money *are* you making from Spotify?

  • http://tech-news.socialnetworkguide.info/music-streaming-what-do-songwriters-really-get-from-youtube-or-pandora/1681/ Music streaming: what do songwriters really get from YouTube or Pandora? | Technology News

    [...] June this year Kalle Magnusson, who runs the Swedish independent record label Hybris, said Spotify has been a lifeline for the country’s labels, which have suffered immensely in the past decade as record sales bottomed out. He claims four out [...]

  • http://tech-news.ideablog.net/music-streaming-what-do-songwriters-really-get-from-youtube-or-pandora/2637/ Music streaming: what do songwriters really get from YouTube or Pandora? | Tech News

    [...] June this year Kalle Magnusson, who runs the Swedish independent record label Hybris, said Spotify has been a lifeline for the country’s labels, which have suffered immensely in the past decade as record sales bottomed out. He claims four out [...]

  • http://guide.socialwebtips.net/music-streaming-what-do-songwriters-really-get-from-youtube-or-pandora/1651/ Music streaming: what do songwriters really get from YouTube or Pandora? | Web Guru Guide

    [...] June this year Kalle Magnusson, who runs the Swedish independent record label Hybris, said Spotify has been a lifeline for the country’s labels, which have suffered immensely in the past decade as record sales bottomed out. He claims four out [...]

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    [...] June this year Kalle Magnusson, who runs the Swedish independent record label Hybris, said Spotify has been a lifeline for the country’s labels, which have suffered immensely in the past decade as record sales bottomed out. He claims four out [...]

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    [...] June this year Kalle Magnusson, who runs the Swedish independent record label Hybris, said Spotify has been a lifeline for the country’s labels, which have suffered immensely in the past decade as record sales bottomed out. He claims four out [...]

  • http://www.psfk.com/2012/10/youtube-pandora-songwriter-royalties.html Do Songwriters Really Win With YouTube Or Pandora? – PSFK

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  • http://nbcmusic.wordpress.com/2012/11/27/music-streaming-what-do-songwriters-really-get-from-youtube-or-pandora/ Music streaming: what do songwriters really get from YouTube or Pandora? | NBCmusic.

    [...] June this year Kalle Magnusson, who runs the Swedish independent record label Hybris, said Spotify has been a lifeline for the country’s labels, which have suffered immensely in the past decade as record sales bottomed out. He claims four out [...]

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    [...] June this year Kalle Magnusson, who runs the Swedish independent record label Hybris, said Spotify has been a lifeline for the country’s labels, which have suffered immensely in the past decade as record sales bottomed out. He claims four out [...]