How Much Does Spotify Pay Per Stream?.

This is a repost of a Twitter thread recently posted on the Paperchain account. The text continues after the tweet embed.

1/ Interesting post from @digitalmusicnws @a2im.\

There’s a couple of reasons for this floating rate (it rewards artists/catalog that generates the most listener activity).

A result of this has an adverse impact on all artists & labels…

2/ Right now artists & labels simply don’t know how much revenue they made on Spotify yesterday. Or the day before. Or even for all of August.

Payout rates aren’t calculated by Spotify until after the end of month. Streaming activity is priced 15th/20th of the following month.

3/ So there’s no ability to know exactly how much you’ve generated until toward the end of the month.

And even then, it’s at least another 30 days until you’re paid for that. So best case scenario, you August revenue will be paid at the end of October or early November.

4/ One of the first things we built at Paperchain was a learning model to predict Spotify payout rates.

This would allow us to take any catalog, train the model on historical data, and accurately predict the current month’s payout rate.

5/ When we enter new royalty data into the model, re-run, and the output is a new payout rate.

This is the closest you can get to actually predicting your monthly income.

So how are we doing?

6/ This chart shows the difference between our predicted @Spotify payout rate and the actual. For Jun 2020, our predicted rate was off by 0.63%.

On average, there is a 1.6% delta in our prediction model and the actual

paperchain spotify payout rate prediction

7/ Why is this important?

It means when we then predict revenue for @paperchainio users, we’re VERY close to the final number.

You can see below how closely we track.

Jun 2020 = prediction: 88.8k, actual: 87.3k.

paperchain spotify revenue prediction

8/ When we show users the revenue they’ve generated, we want that number to be reliable enough to make decisions on.

And more importantly, we need that number to be corrected because we make payments based on that number.

9/ Remember when I said earlier that in the best case scenario it takes around 2 months to get paid by Spotify?

Well this causes a lot of problems for creators, labels and artist management teams.

10/ The rate of payments no longer supports the rates of creativity and distribution. How can you constantly create when you’re not receiving payments that match that speed?

So that’s why we do take the data and do what we do.

11/ By September 03, we can pay our users for their August revenue. Almost 60 days earlier than usual.

That’s what our announcement was about last week » Paperchain Launches First Round of Advances for Music Labels, Adds Youtube Creator Advances

$160k in payments made already.

12/ On demand payments:

  • cost is 1% per month
  • get paid monthly or bi-weekly (we’re working on daily payments)
  • no credit check, no equity given up
  • you maintain full ownership of your work

13/ We think this is a big deal because we believe it’s about the future of creativity and commerce.

What new opportunities will creators have access to once they receive faster, regular payments?

I can think of a few things…

14/ Things like…

  • easier to get rent-approved (or even a mortgage)
  • improved credit/bank products
  • health insurance
  • 401k

This isn’t just about Spotify payout rates but the future of work.

Because it’s not just about Spotify.

15/ Apple, Google/YouTube, Microsoft, mobile apps, games marketplaces, ad servers, video on demand…

Creators and media companies in these industries or working with these companies all have the challenges on price opaqueness and long payment times.

16/ I believe @spotify has a great vision for a creator-led future and some of the recent product initiatives suggests a big shift in their focus to delivering for this future.

17/ So the payout rate might seem like a small number, but when we can predict it, the flow on effects are enormous and industry-changing.

As an industry we’re very close to crossing the chasm and I’m glad @paperchainio is here to be a part of it. /end