Spotify announced it has sixty million active users worldwide, and fifteen million paid subscribers. The company reported having ten million paid subscribers last year. The significant jump can be attributed to Spotify’s ability to convert a lot of its free users to premium members. Spotify has been under scrutiny lately for their artist payout system. Most notably, country megastar Taylor Swift removed her entire music catalog from the service. She also refused to place her album, 1989, in Spotify’s system. Swift’s label mates followed suite, and removed their latest projects off of Spotify, too. Garth Brooks also refuses to use Spotify’s streaming services. Brooks believes these services are taking away artists, producers, and songwriters. Before Taylor Swift removed her song “Shake It Off,” it had been streamed 46.3 million times. Swift generated between $280,000-$390,000 in payouts.
Contrary to belief, the number of times a song is streamed does not necessarily influence the amount of money an artist generates. Spotify reported that their Premium subscribers‘ streams generate a higher percentage for artist revenue than their free listeners. “Recently, these variables have led to an average per stream payout to rights holders of between $0.006 and $0.0084. This combines activity across our tiers of service. The effective average per stream payout generated by our Premium subscribers is considerably higher.” Spotify receives around thirty percent of an artist’s revenue. The remaining seventy percent goes to the rights holders, which are the record labels, publishers, and distributors.
In 2014, the company paid $1 billion dollars to the record labels. While music streaming significantly increased, digital album sales are down 11.5 percent. Digital tracking sales have also declined. In 2013, 974.6 million track sales were reported, and this number has fallen to 848.5 million sales. While CD sales continue to fall, music streaming have increased by almost fifty-five percent in 2014. Nielsen Music recorded 78.6 billion audio streams last year. Some reports have indicated that a lot of big name artists, who have the power to sell millions of records, did not release an album in 2014. That contributed to the fall of CD sales. This year, a number of mainstream artists are expected to release an album including Adele, Drake, Kanye West, Britney Spears, and Beyoncé.