Since the inception of Jay Z’s music streaming service Tidal, one of the biggest advantages the mogul has repeatedly emphasized is that his platform is structured to pay artists a better percentage of royalties than competitors such as Spotify.
Thanks to a recently leaked copy of Spotify’s contract with Sony Music obtained by The Verge, we now know if Hov has been telling the truth about Tidal or just blowing lots of hot air.
According to the contract, Spotify paid a hefty $42.5 million advance to Sony and agreed to receive 5% of certain ad sales revenue “off the top” in exchange for granting Sony a “Most Favored Nation” clause which guaranteed Sony a better deal than all other labels for the duration of the contract.
In relation to how much artists got from the deal, The Verge explains:
Sony Music is likely getting considerable payouts from Spotify each year, but what it does when it gets that money — and how much of those payments actually make it down to the artists — is still unknown. Some artists have clauses in their contracts to get a larger share of the streaming revenue, and some artists are still operating under CD-era contracts that only give them 15–20 percent of their streaming revenues.
When Jay Z conducted a Q-and-A session about Tidal with students from New York University this past April, he referenced Aloe Blacc’s claim of being paid inadequately by Pandora.
“You guys may have seen some of the stats like, Aloe Blacc had a song that was streamed 168 million times and he got paid $4,000,” Jay said to the students. “For us, it’s not us standing here saying we’re poor musicians. If you provide a service, you should be compensated for it. And not just artists — just think about the writers and the producers.”
With recent claims that other services have engaged in a smear campaign against Tidal in part because of the differences in pay, Jay says one of his goals is to force the hand of the other companies into having a “better pay structure” for artists.
“If just the presence of Tidal causes other companies to have better pay structure, or to pay more attention to it moving forward, then we’ve been successful in one way,” he said. “So we don’t really view them as competitors. As the tide rises, all the boats rise.”
Per the Sony/Spotify contract, artists are to be paid $0.00225 per stream where as a recent Tidal royalty statement that made it’s way to the internet reflected that it pays twice as much to artist. Soon after a Tidal representative stated that figures in the leaked Tidal statement were off and that Tidal pays $0.024 – $0.028, which amounts to about ten times Spotify’s royalty rate.