Spotify spills beans on how much it pays, adds ticket and merch options

Spotify spills beans on how much it pays labels
Spotify gives a little into the moment like its standing at the edge (it knows)

Spotify has added some new analytics features that give a better idea of how much money it pays out to artists and labels when their music is streamed through the service.

The popular music service says it has now paid out over $1 billion in royalties, with $500 million of that being paid out in 2013 alone. For context: in March, Spotify announced it had paid out $500 million to date since it began business in 2008.

As well as new number crunching facilities, Spotify announced that you'll soon be able to buy tickets and merchandise from artists' Spotify listings too, both on desktop and iPhone.

Concert tickets have been added now via Songkick's tech, while Topspin will be helping Spotify roll out merchandise listings in the coming months.

Fire in the disco

Spotify has also developed an Artist Analytics dashboard which gives bands and their managers a much better view of what's going on with their music.

The company has long been under fire for reportedly paying artists peanuts for their music, even when it's streamed millions of times.

The truth of the matter is that no one really knows how much money ends up in artists' bank accounts. There are many reasons for this, but the main one is that Spotify pays royalties to music labels, who then portion it out to the music-makers as per their own internal agreements.

Mo money, mo data for fiscal year 13/14

For the first time, Spotify has described how it works out how much money to pay out to each label.

Spotify keeps around 30% of its income from subscriptions and advertising and the remaining 70% is split among song rights holders. The way Spotify portions royalties out is based on the popularity of the artists' music on the service, calculated by dividing the total number of Spotify streams by each artist's song streams.

There's no exact figure for how much each stream of a song is worth because there are so many variables here, but Spotify estimates that the average payout per stream is between $0.006 and $0.0084.

Daft Punk's breakout song-of-the-summer Get Lucky was streamed 78.6m times on Spotify between June and August, so using Spotify's not-perfect per-stream figures, it should have earned Daft Punk's label somewhere between $471,600 and $660,240 in that same time period.

That's between £287,000 and £400,000, or AU$519,557 and AU$727,400.

That's great for big hitters, perhaps, but not so lucrative for a mid-sized band that racks up streams in the thousands rather than millions.

This complicated situation, as well as anecdotal evidence from artists themselves who say that they aren't seeing great returns from the streaming service, has led to high profile Spotify black-outs and rants.

Most recently, Radiohead's Thom Yorke voiced his concerns, describing Spotify as poisonous to new artists and "the last desperate fart of a dying corpse", thus launching a thousand ponderous blog posts on the matter.

News Editor (UK)

Former UK News Editor for TechRadar, it was a perpetual challenge among the TechRadar staff to send Kate (Twitter, Google+) a link to something interesting on the internet that she hasn't already seen. As TechRadar's News Editor (UK), she was constantly on the hunt for top news and intriguing stories to feed your gadget lust. Kate now enjoys life as a renowned music critic – her words can be found in the i Paper, Guardian, GQ, Metro, Evening Standard and Time Out, and she's also the author of 'Amy Winehouse', a biography of the soul star.