Spotify does not pay minimum wage
In a recent video, Mary Spender revealed her Spotify revenue does not even pay minimum wage.
This got me thinking. Instead of Spotify's model of paying out based on a fraction of all subscriptions, musicians should be paid based on each listener's activity.
Below are some quick ideas for a better alternative that maintains convenience for the listener while compensating artists to a fairer degree. I’m sure you can spot errors and problems with this, so please form your own solutions.
Listening to an artist irregularly automatically adds a discovery charge (e.g. 0.99) is automatically added to their bill.
There could also be a single charge option (e.g. $2.99) that is of higher value now but does not charge again for future listens of that release. The app should suggest this option to the listener for releases that they listen to regularly. It could even deduct previous discovery charges for the release so the listener never pays more than the single charge amount. By manually reviewing submissions, artists cannot re-release songs multiple times to workaround this deduction.
This pay-as-you-play model is a fusion of the old CD and current streaming models. Call the app 'Fusion' if you like.
Musicians are rewarded by repeat listeners (a.k.a fans) in a similar way to live tickets and merchandise sales, which currently make up the largest portion of most musicians' incomes.
It creates a fairer system for listeners where they can comfortably browse and discover new music and control their monthly bill. With an itemised bill at the end of the month, each listener can see which musicians have rightfully received their pennies. Listening to a random playlist one time should trigger fair compensation. Listening to your favourite musician for the 100th time should trigger fair compensation.
There should be a fixed monthly charge for the app (e.g. $0.99) to cover running costs. The app does not receive any other charges so it has no internal incentive to favour one musicians over another. Record labels will undoubtedly apply external pressure.
Discovery charges must be summed and then rounded up to the nearest penny.
Listeners should set a cap on their monthly bill (but with a reasonable minimum e.g. $30) to safeguard them from overspending. They cannot play songs that add discovery charges or single charges until their next billing period.
There should be a cap per artist (excluding single charges) on the monthly bill (e.g. $6). Artists cannot use multiple names in the hopes of increasing their payout.
Record labels looking to get more payouts can only do so by signing more musicians that get repeat listeners. Basically, they have to find more of the best.
Essentially a pay-for-what-you-use Patreon.
Existing record label contracts will not swing in favour of artists. But, the potential for a reasonable payout might be enough for musicians to ignore record labels and independently submit releases to the app.
Such a tiny fraction of artists are paid at least minimum wage by Spotify. Therefore, Spotify is not a sustainable or significant income for the vast majority of musicians. But listeners get value from its recommendations.
The technical conundrum is how to recreate Spotify's graph of related music.