Spotify's payment system to artists has come under scrutiny with the release of this year's Spotify Unwrapped, revealing surprisingly low compensation rates even for artists' biggest fans.

Photo Credit: Spotify

The 2023 Spotify Wrapped has faced criticism for providing less detailed information compared to previous years, removing popular features like listener geography data, top genres, and location-based music styles. Users have expressed frustration with the replacement of clear genre classifications with AI-generated labels like "Mallgoth Permanent Wave" and "Coastal Grandmother Jam Band."

A case study using the Spotify Unwrapped calculator reveals the stark reality of artist compensation. For example, a user in the top 0.05% of Burna Boy's listeners, who streamed his music for 5,593 minutes:

• Annual Spotify Premium subscription cost: £143.88 ($182.82 USD)
• Amount paid to Burna Boy: £3.77 ($4.79 USD)
• Percentage of subscription fee reaching the artist: 2.62%

The payment structure varies significantly:

• Independent artists receive approximately 90% of the reported return
• Label-signed artists may receive between 5% to 50%, depending on their contract

This compensation model means that a single merchandise purchase or album sale typically generates more revenue for an artist than hundreds of streams on the platform.

The platform's recent layoffs have also impacted the quality of this year's Wrapped experience, with many users noting a decline in the depth and presentation of listening data compared to previous years.

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