Music creators want royalty hikes from Spotify but streaming service profits are thin

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the american stream
Last week, Variety reported that Spotify, Google, Pandora, and Amazon (Apple Music was notably absent) were appealing a ruling by the Copyright Royalty Board (CRB) granting songwriters a 44% increase in payouts from streaming services.

National Music Publishers Association (NMPA) President & CEO David Israelite was quick to blast the music streaming services’ attempts to “sue songwriters in a shameful attempt to cut their payments by nearly one-third.” Israelite’s comments stirred up an outcry from music industry insiders.
 

Spotify isn't suing anyone

On Monday, Spotify issued a statement in response to criticism of their CRB appeal. Notably, Spotify clarifies that the company is not suing songwriters -- Spotify is appealing the CRB decision because they believe there are flaws in how the payout rate was determined. 

The appeal should not come as a surprise, as the decision would cut into the profits of the streaming services (which are razor thin in Spotify's case). 


Why can't we be friends?

Although Spotify would certainly prefer to be in the good graces of the music industry, the fact of the matter is that music industry is increasingly dependent on streaming services for revenue -- in the first half of last year, streaming made up three-quarters of all music industry revenue:
That being said, the cut that artists, producers, and writers take home from streaming is absurdly small -- about $.005 per play.

Unfortunately for music creators, it’s unclear where the money for higher royalty payments would come from.

Despite bringing in billions, Spotify is barely profitable (their first profitable quarter was last month) because of how much it already pays back to creators, labels, and publishers. 
It's the big labels (namely Universal, Sony, and Warner) who are profiting the most from streaming. Which explains why Spotify wants to act as a label-like platform, allowing artists to own and distribute their own music without having to give labels a cut.
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