Spotify To Expand Paid Artists Services, But Can Most Musicians Afford Them?

Spotify is pleased with the early adoption of its first paid artist marketing tool Marquee and will soon add more paid services, the streamer shared in an earnings call Wednesday.

“Sponsored recommendations, our first promotional service for artists and labels, have performed impressively, and we’re encouraged by both the creator and user response, said CEO Daniel EK. “One example of the potential of this tool in creating awareness and scale for an up-and-coming indie artist is the recent success of Caroline’s Trippie Redd, who leveraged sponsored recommendations and opened at No. 1.”

Money Is The New Gatekeeper

While it would seem unlikely that Spotify For Artists will start charging for the artist services that it currently provides, early indications are that the streamer is not concerned with charging more than most artists and small labels can ever afford.

Marquee, Spotify’s sponsored recommendations, reportedly cost 55 cents every time a user clicks on the release announcement, and Spotify is recommending a $5000 minimum buy-in. That means that for $5000, potentially 9000 people will stream to the new track or album.

Even if effective, most independent artists and labels don’t have $5000 to spend, particularly if they’re looking at direct return on investment.

Using indie artist Zoe Keating’s latest Spotify payment rate of $0.0036 per stream, $5000 spent using Spotify’s paid recommendation service would earn $32.40 in gross royalties. Even assuming the release was an album and every one of those 9000 clicks resulted in a 10 track album being streamed, that’s a $5000 spend to earn at most $324.

Haves vs Have-Nots

Spotify’s plans will help strengthen the major label system at the expense of indies. In other words, labels with deep pockets can promote in ways that crowd out organic growth by unaffiliated artists.

“Spotify is saying, ‘we want you to pay us to display your records.’ All this does is continue what payola always has done – the major labels, which have the most money and the most frequent releases, get the most play, consolidating the amount of art that is put out there, ” George Howard, a professor of music business at Berklee College of Music told Rolling Stone.

Undeterred. Spotify envisions a new profit center – already worth $33 million according to Ek – collecting cash for service from artists and labels.

“You saw (recently acquired beats marketplace) Soundtrap, said Ek. “You saw some strong subscriber growth there. You saw us acquiring SoundBetter as part of our marketplace offering.”

“So it’s really a portfolio of different services that are the makeup of this, he continued. “And as we come into 2020, you will certainly see us invest more and launch new products and offering.”

MORE: Spotify’s Paid Promotion Tool Is Called Marquee and Artists, Indie Labels Can’t Afford To Use I