DE LA SALLE UNIVERSITY MANILA

2401 Taft Avenue, Malate, Manila 1004

Bro. Andrew Gonzales College of Education
Department of English and Applied Linguistics

A FEATURE TO ADDRESS THE IMPROPER COMPENSATION

OF ARTISTS ON SPOTIFY

presented to the Faculty of

Department of English and Applied Linguistics
De La Salle University Manila

In partial fulfillment of the requirements for the course

English for Academic and Professional Services

by

BANSIL, Arvel John J.

MEDINA, Ron Edward G.
NICOLAS, Paolo Ian U.
TABORA, Antonino N.

15 December 2018
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Abstract

Spotify is a music catalogue application that services its users with music anytime and
anywhere. As evidenced by their brand tagline, “Music for Everyone”, it sets itself apart from
similar applications through its personalized feature. Spotify believes that everyone from all
ages, gender and backgrounds have an inclination for music and that is what made the
application leading in its industry. As Spotify continues to flourish by providing a music
catalogue service to its subscribers, a lot of improvements are continually added in its
services that are aligned with the changing behavior of the target market. Recently, problems
that are not that apparent to the typical user of Spotify have come to light. These problems are
experienced not by the users, but the producers of the content that Spotify uses -- the artists.
Because of varying circumstances in the business environment, artists are not properly
compensated for their work. This study aims to present a feature that could be added to the
Spotify application to redefine the music streaming experience of users. A survey
questionnaire was utilized to gain insight from the target market to determine its feasibility.
After gathering, analyzing and interpreting the data, the researchers have found valuable
insight that can be considered in the proposal of this feature. Through this, the researchers
believe that the project will be beneficial to all of Spotify’s stakeholders, including the artists
and users.

Keywords: music catalogue, Spotify, streaming royalties, compensation, stakeholders

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INTRODUCTION

Spotify is the world’s biggest music streaming service by boasting a 36% global

market share within the industry and 83 million monthly users (Variety, 2018). Even though

they are the leader in the industry, they are not the leader in properly compensating artists for

their music basing it on how much they pay per stream. There close rival, Apple Music, pays

unsigned artists more at around $12 per 1,000 streams while Spotify only compensates at

$7.50 per 1000 streams according to Sanchez in 2017. This is a concern for aspiring artists

trying to make a living out of music as they are not properly compensated by Spotify and

could potentially hinder artists to pursuing their craft and passion.

This led to the formulation and creation of a possible solution to adhere to this

concerning problem of insufficient compensation. The solution is an additional feature to be

added to Spotify with the working title of “Favorite Artists”. This is a concept wherein users

are to pay an additional subscription fee to subscribe to their favorite artists. This subscription

entails exclusive content about a particular artists to be expounded upon further in this study.

This study aims to provide all the necessary details on why Spotify should adopt this feature

and how is it going to be beneficial for both parties (Spotify and the artists). “Favorite

Artists” is our idea of possibly resolving the issue with insufficient compensation for

intellectual and creative property.

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CONSUMER ANALYSIS

I. Profile of Target Consumers

This project has its target consumer set to be those that would listen to Spotify and

those willing to learn more about the artists they frequently listen to; provided they are

willing to pay extra for the features. Those that are expected to benefit from this feature are

those that see the value provided, and those who find interest in the lives of the artists. In

terms of demographics, the target belongs to those who belong to the generation Z and older

(17+); given those of that age are capable of using these features to its full potential. These

users may either be single or married, and typically live their days listening to music at their

own time.

As for Psychographics, these are typically social class A to C people who are

expected to have attained a higher education. It is also to be expected that their personalities

fall under the explorer type, those who seek discovery. Their lifestyle would include regular

music streaming sessions during their day, interests in discovery of new music, and opinions

on how music can influence one’s day. Lastly for behaviours, the users are in seek of the

benefits provided by the services especially those who are expected to use the service

regularly. With respect to the loyalty status of the user, it is expected that they are loyal to

Spotify as their music streaming service. To conclude, the users are expected to be in the

stage of preference in terms of buyer-readiness.

II. Discussion

Overall, the researchers have found valuable information for the proposed “Favorite

Artists” tab. Given the information gathered about the target market, a survey questionnaire

was formulated with questions that focus on the feasibility of the idea. It is important that the

conceptualization will be based on the insights of the target market as they will be a big
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factor in the success of the proposal. The chosen consumers for the product remains to be the

same as Spotify’s market. However, the researchers believe that a segmented market

comprising users of Spotify who belong to the Generation Z and older. These include people

aged 17 and above who are either of the sexes. 73.4% of the respondents were found to be

active users of Spotify. It is for this reason that those aged 17 and above are fit to be the

target market for this proposed feature as they can maximize the use of the application. These

are also ages of people who are interested in investing time and effort for their favorite artists.

Aside from this, 80% of the respondents were also interested in receiving updates and

special features from their favorite artists. 30% of the respondents also stated that they are

more inclined to use Spotify with this feature, while 50% responded that they are somehow

inclined. Given the current market share of Spotify, these figures are indeed promising and

positive in the potential effects of this added feature to the streaming application’s market

reach. Furthermore, the presentation, analysis, and interpretation of the data gathered from

the survey questionnaire can be located in the Appendix.

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PURPOSE AND NEED

Spotify continues to take the music streaming industry by storm with their promising

deals and features. For a subscription fee, one can access a library with millions of songs

anytime and anywhere. Aside from this, Spotify also allows non-subscribers to access their

library with the limitations of offline use and advertisement-free streaming. Behind this

success, however, are the incessant effects of the business to other stakeholders. This includes

the record label companies, music producers, and artists, who are as important to the business

as the users.

In an article, Roberts (2018) asserts how the profit of streaming companies such as

Spotify is dependent to the licensing companies. This is because most of Spotify’s sales are

spent on licensing fees and royalties. Along with the Music Modernization Act, which

“simplifies how streaming services pay songwriters, and changes how the law deals with

music”, Spotify will have to pay more to licensing companies for longer licenses (Patel,

2018). As a result, the revenue of Spotify decreases which also affects the royalty paid to

artists. Some issues that have emerged from this situation include the withdrawal of artists’

songs in Spotify’s music library and the monopolization of bigger record companies.

Although it could be argued that a company will have to adapt to a competitive

business environment, it is still better to ensure that all the stakeholders are given benefits

from the business. Through efforts for fair compensation and competition, Spotify can avoid

complications with artists and other companies such as the controversy when singer and

songwriter Taylor Swift removed her songs and mentioned that Spotify does not

appropriately value her art (Engel, 2014). Given that Spotify is primarily using the music of

artists, it is only rightful that it gives value to their art and passion for music.
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The proposed ‘Favorite Artists’ feature for Spotify is built on the idea that the

potential market and existing users of Spotify want to have a deeper sense of familiarity for

their favorite artists. This added tab in the Spotify application will include updates about the

artists’ shows and appearances, interesting personal information, exclusive interviews, music

video behind-the-scenes, feature films, and other privileges that only followers can get.

Through this added feature, the researchers believe that Spotify’s current issues can be

solved.

Publicity and Wider Audience for Artists

With this feature added, artists can be appreciated by their fans more. The added

feature will bring benefits to both fans and artists. The subscribers of artists will be able to

know their favorites more and get updates whenever there will be concerts and guestings. The

artists will also get a new platform where they can interact with their fans and gain publicity.

There is also a potential for this feature to serve as an advertising medium because non-fans

can have an insight about the artist, thereby increasing the market reach of Spotify. This

feature is deemed to be essential to the branding of Spotify as it is aligned with the

‘personalization’ of music through the music streaming application.

Increased Revenue Streams for Spotify

The privileges that come with the subscription for an artist will require an additional

subscription fee. With the current problem in the dependency of Spotify’s revenue to

licensing companies, this feature will be of great help in increasing the company’s revenue.

This will create a new source for revenue that will ultimately create a positive outlook for

future operations. This will also reduce the risk of Spotify going out of business since it will

not rely solely on revenue from the premium subscriptions and advertisements. Another

revenue source that Spotify can include is the use of the Favorite Artist tab in including
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promotions for brands and shows that the artists are part of. Spotify not only will help in

advertising, but will also gain profit. By maximizing the Favorite Artists tab, Spotify can

increase sustainability of its operations given that expenses from licensing fees are also

increasing.

Promotion and Support for New Artists

According to Frere-Jones (2013), larger record labels often get a larger portion of the

market leaving smaller ones with few streams. Big record companies also have larger

catalogues that enable famous music from a dead artist to earn as much as a new artist. This

means that artists who are new to the industry often get paid smaller despite a large number

of streams just because they have a smaller record company. With the use of the added

Artists feature, new artists can have more sources of profit from their music.Aside from this,

the feature can also serve as a medium for them to introduce themselves to potential fans and

followers.

Due Credit for Artists

Coffey (2016) mentioned that Spotify has received flak from artists who believe that

they are not receiving enough money from their streams on the music application. According

to Starr (2018), Spotify payed out an estimated value of $0.003 only for streaming royalties

of artists. It is for this reason that Sheehan (2017) believes that Spotify’s only contribution to

artists is their publicity from the application. Through the introduction of this new feature,

artists can now be given the proper credit for their work in the form of streaming royalties.

Aside from the benefits that it will give for fans to enjoy, it will also open new opportunities

for applications in advertising and promoting. Most importantly, it serves as a solution to the

problems that Spotify currently has while considering benefits to other stakeholders in the

process to create a healthier business environment.

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PROJECT DESCRIPTION

New Form of Compensation

In order to address the problem of Spotify that is the improper compensation of

artists, we have come up with the proposition of a feature known as “Your Favorite Artist.”

This feature provides its users the capacity to pay for a subscription to a specific artist. This

subscription will provide its users with features such as an earlier access to the artist’s newly

released songs, interviews conducted by Spotify, in-depth behind the scenes videos of the

daily lives of the artist, the creation of music videos, and many more features that revolve

around the subscribed artist. The artists will then gain a percent of the amount paid in order to

subscribe by the end of the year. The more subscriptions, the greater the potential profit.

The reason we have found the need of this feature is because throughout our deeper

understanding of the operations, we have discovered that artists are not compensated

properly. As discovered by Sehgal (2018), Spotify pays about $0.006 to $0.0084 per stream

to the holder of music rights. These holders consist of the artists, record label, producers, and

everyone else in the production of the work. To put this into perspective, the largest of artists

will profit a total of at least 7,000 USD for every one million streams. Though this amount

may seem appealing at first, one must take into consideration the amount of smaller artists

that do not attain the same amount of streams, or the growing artists who rely purely on

Spotify as their means of profit. Through this feature, the artists will gain a new form of

income that can compensate for the potential profit that was not earned.

Through this feature, artists themselves will be given a new form of compensation to

which would make up for the income gathered through streaming alone. With the added
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benefits of a subscription to a favorite artist, artists are expected to become more active in a

sense to entice more of their market to subscribe to them. Spotify will also gain more

popularity through this added feature as they will be a new means for fans of an artist to learn

more about them. This project is to be deemed effective once 20% of its users will have at

least a single subscription under an artist.

Objectives

Given that this project is done as a planned set of work, we must observe certain goals

to which we are to work towards. This project aims to attain the following objectives when

completed:

• Through this project we expect the problem regarding the improper compensation of

artists to be addressed in a way Spotify will agree to;

• To maximize the potential of Spotify as a platform of exposure for all the artists that

choose to upload their work;

• And to act as a new means of income for Spotify and as a new factor to increase the

subscription rate of the App itself.

Action Plan

On the topic of how this feature is to be produced, the first step to be taken will be the

formulation of all the features provided with the subscription. To follow would be the

preparation and presentation of the feature to Spotify. Assuming that Spotify agrees to the

added feature, Spotify will then begin the process of creating the service and making it

available to all of its market. Other than the programming portion of the feature, Spotify must

also get into connections with all their artists and inform them of the added feature. Assuming
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the artists are in compliance with it, they will be included to the list of artists one may

subscribe to. Once everything is set, Spotify may begin the beta testing of the feature for its

first year, and observe if the feature gives a better compensation for the artists, as well as

granting Spotify greater profit. Assuming it does, Spotify themselves may begin to grant

more features and develop the system even further; thus granting greater profits and better

compensations. The reader may refer to the timeline on the next page for a more in-depth

explanation of the process of development of the feature “Your Favorite Artist.”

FIGURE 1. Timeline for the development of the feature

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SUPPORT / BUDGET

The specificity of the budgeting and the support for this feature proposal is yet to be

actually finalized and determined due to certain factors like the number of artists willing to

contribute and take part with the “Favorite Artists” feature, record label regulations, and

Spotify’s actual funds needed for the overhaul their application’s program and marketing

campaigns. An extremely rough estimate of successfully jumpstarting operating this feature

proposal would be around $50,000 to $100,000 exclusive of the amount possibly needed for

the licensing of exclusive content. This said amount is the estimated costs for additional

programming and marketing campaigns for the new feature “Favorite Artist”. The final

amount would ultimately depend on if Spotify’s biggest streaming artists like Ed Sheeran,

Drake, and Justin Bieber would be willing to contribute to actualizing the feature’s main

purpose and how much more compensation they would ask for their exclusive information to

be displayed in Spotify. Recently Spotify has been trying to license music and content

directly from the artist and their managers in an attempt to cut costs for both Spotify and the

artist (Nicolaou, 2018). It is also stated that Spotify pays some artists $15,000 in advance for

their music. This would ultimately be a deal-breaker on how much funding “Favorite Artists”

would need.

In essence, it would actually be a case-by-case scenario on how artists would agree

upon if they would be willing to contribute to “Favorite Artists”. There are two possible

scenarios when dealing with an artist. The first scenario is that they would allow access to

their own exclusive information for free in the sense that it would already part of any

licensing deals for their music beforehand and would only take in a share from the

subscription revenue that them being a “Favorite Artist” would incur. The second scenario is

that the artist would ask additional charge for the exclusive information that they would be
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willing to contribute to make the feature worthwhile. This would be the worst-case scenario

for the proposal as this would inflate the budget and support needed.
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CONTACT INFORMATION

BANSIL, ARVEL JOHN J.

+63908 888 2267

arvel_bansil@dlsu.edu.ph

Block 30lot 39 Amberwave St. Phase l , Hacienda Royale Angeles City Pampanga

MEDINA, RON EDWARD G.

+63 915 979 3920

ron_medina@dlsu.edu.ph

6845 Milagrosa Street, Clarmen Village, Sucat, Paranaque City

NICOLAS, PAOLO IAN U.

+63916 303 0938

paolo_nicolas@dlsu.edu.ph

40 B Luxembourg Street Better Living Subdivision Paranaque City

TABORA, ANTONINIO N.

+63905 321 4585

antoninio_tabora@dlsu.edu.ph

15 Imelda Street BF Homes Almanza Dos Las Pinas City

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REFERENCES

Coffey, A. (2016). The impact that music streaming services such as Spotify, Tidal and Apple Music
have had on consumers, artists and the music industry itself. Retrieved from
https://scss.tcd.ie/publications/theses/diss/2016/TCD-SCSS-DISSERTATION-2016-027.pdf

Engel, P. (2014). Taylor Swift Explains Why She Left Spotify. Retrieved from
https://www.businessinsider.com/taylor-swift-explains-why-she-left-spotify-2014-11

Frere-Jones, S. (2013). If You Care About Music, Should You Ditch Spotify?. Retrieved from
https://www.newyorker.com/culture/sasha-frere-jones/if-you-care-about-music-should-you-
ditch-spotify

Nicolaou, A. (2018). Spotify shakes record labels by dealing directly with artists. Retrieved from
https://www.ft.com/content/f1b27624-6e68-11e8-92d3-6c13e5c92914

Patel, N. (2018). How the Music Modernization Act will help artists get paid more from streaming.
Retrieved from https://www.theverge.com/2018/10/2/17927852/
Music-modernization-act-streaming-monetization-meredith-rose-vergecast

Roberts, J. (2018). Why Spotify Will Never Make Money. Retrieved from
http://fortune.com/2018/05/03/spotify-earnings/

Sanchez, D. (2017, August 22). What Apple Music, Spotify, and YouTube Are Paying Musicians.
Retrieved from https://www.digitalmusicnews.com/2017/08/21/apple-music-spotify-youtube-
riaa/

Sehgal, K. (2018). Spotify and Apple Music should become record labels so musicians can make a
fair living. Retrieved from https://www.cnbc.com/2018/01/26/how-spotify-apple-music-can-
pay-musicians-more-commentary.html

Sheehan, R. (2017). Independent Music Artists in a Digital World. Retreived from

http://cardinalscholar.bsu.edu/bitstream/handle/123456789/201013/A385_2017SheehanRyan
-combined.pdf?sequence=1

Variety (2018). Apple Music Gains Global Market Share, but Spotify is still far ahead. Retrieved
from https://variety.com/2018/biz/news/apple-music-global-market-sharestreamingspotify-
1202942424/
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APPENDIX A

WORK DONE PERSON-IN-CHARGE

Abstract Ron

Introduction Arvel

Purpose and Need Ron

Project Description Anton

Support/Budget Arvel

Consumer Analysis (Target Consumers) Anton

Consumer Analysis (Discussion) Ron

Interpretation of Data (First Half) Paolo

Interpretation of Data (Second Half) Anton

Conclusion Anton
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APPENDIX B

Figure 2: Results of Survey Questionnaire on Users & Non-Users of Spotify’s

Awareness on Artists’ Compensation

This shows that there is a minimal number of people that are aware that artists are not

properly compensated by Spotify. Only 16.7% of the total respondents said that they are

aware of this issue that artists not receiving proper compensation for their original content

and this is highly evident with small artists in general who do not rake in a significant number

of streams.
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Figure 3. Ages of Respondents

This shows that the age of the respondents are not too far apart. The age of the

respondents range from 15 to 21, where majority are aged either 17 or 18. This information

can be used in order for us to prove what generation majority of the users belong to.

Figure 4. Field of Education/Work of Respondents

This shows that the respondents are coming from different fields of work and

education. With this information we are able to show that there are multiple kinds of people

that have taken the survey and that there are multiple kinds of users of Spotify.
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Figure 5. Gender of Respondents

This graph shows that majority of our respondents are Female. With this information

we can expound on the diversity of the respondents and prove that there are multiple

perspectives when the survey was distributed and answered.

Figure 6. Percentage of respondents that use Spotify

This graph shows that all of the respondents are familiar and use Spotify. With this

information we are able to prove that all the information to be gathered will be from the

perspective of a user of Spotify.

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Figure 7. Spotify Premium v.s. Spotify Free

This graph shows that majority (90%) of the respondents are premium users of

Spotify. With this information we are able to prove that users are willing to pay for given

added features provided by Spotify, a minor source to back up our claim on respondents

willingness to pay for added features.

Figure 8. Percentage of respondents that wish to gain added features regarding their favorite

artists
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This shows that 80% of the respondents are willing to gain added features regarding

their artists. Through this graph we are able to gain a source to prove the capacity and

potential of the project to be done.

Figure 9. Percentage of users that are willing to subscribe to an artist

It can be interpreted through this graph that majority of the respondents are willing to

subscribe to an artist if given the option. This information is crucial in determining the

potential and feasibility of this project.

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Figure 10. Percentage of respondents that would use Spotify more with the added feature

Through the graph above we can say that there is a fair amount of respondents that are

willing to use the feature and Spotify more once it is implemented. It is visible that most of

the respondents are not sure, though more said yes to those that said no.