Spotify, the streaming music giant, is preparing to go public. The company recently filed their initial public offering (IPO) for $1 billion to be a part of the action on the New York Stock Exchange. While investors will likely be rushing to obtain a part of this very popular stock, the actual company isn’t so popular with many artists and songwriters. They have quite the varied opinion of the Swedish company, valued at $19 billion. The company’s structure compensates artists with royalties where the more popular artists receive the greatest payments. Many older and less known artists don’t receive as much compensation and generally dislike this structure. However, those artists at the top have little to complain about as they can see massive payments. Spotify pays about $7 for every 1,000 songs that are streamed. This accounts for quite a payday for top artists. For example, Ed Sheeran accumulated 6.3 billion streams in 2017 for a nice payment of more than $44 million. On the other hand, David Crosby, a veteran rock artist, accumulated 2.2 million streams for his “Lighthouse” album in 2016, and he didn’t receive any compensation. Again, this is due to the unique structure.
Regardless of opinions, the company will likely continue to see a stream of income. Estimates indicate that Spotify could make about $23 billion due to the IPO. Record labels would see dividends as well with top labels such as Sony Entertainment, Warner, and Universal estimated to receive about $1 billion each. Record labels also use their company’s unique structure to determine payment which, again, usually goes more towards the popular artist. These industry-leading labels have confirmed that the earning would be shared with their artists. Perhaps at least the record labels will treat artists fairly or maybe not.