Poor Royalties: Spotify Isn't The Problem, It's Music Business Itself

Helsingin Sanomat wrote an article on A.W. Yrjänä, the head of a successful Finnish rock band CMX, and how much money they made on Spotify and through record sales. Yrjänä is a multi-talent. Not only does he write and sing the vocals for their songs, but he also writes poems and books. He shares with us that Iäti, their album that came out in September 2010, wasn't really a huge success financially even though it shot to number one on the charts.

Linnunrata single, a song also on the album, was listened to 400 000 times on Spotify. Sounds like a lot, but this yielded the band €50 in royalties which in turn is about 0,000125 euros per one play.

However, it's not the bad payments from Spotify the musicians have to suffer from, but the business model of the industry. Being one of the most successful rock bands in Finland, CMX still had to sell north of 10 000 albums in traditional CDs before earning any royalties. The album sold 10 800 in total in the year it came out, 2010 (mind you it's just a couple of months), and it earned Yrjänä some 3000 euros. 3000 euros from 800 albums is about €3,75 per album €0,28 per all albums sold.

This spells unsustainable future for not only artists, but also record labels. They need to begin to embrace new technologies and harness them even though they might disrupt their industries seriously. Fighting to keep the status quo as it is, is not the way to become successful in the new world.

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Jaska January 20, 2012

I wish Yrjänä tried our Favor-platform. We designed it to address this very issue.

For example wtih this release (http://iwanouz.favor.org/2012-01-12-21-50/ ) a relatively unknown artist has earned $0.0741 per visitor. That is more than 500 times CMX earned with Spotify.

Matti A. January 23, 2012

10 000 album threshold is probably based on having to earn out the monetary advance given on the album by the record company.

So money was probably made by Yrjänä on those sales as well but neglected to mention in the article.

wampus January 31, 2012

There is only a sustainability issue if you consider Spotify to be retail -- like Amazon or iTunes. View it as a promotion opportunity and the landscape changes.