The power of Spotify’s playlists is becoming clear.
Two researchers found that being added to the “Today’s Top Hits” Spotify playlist raised overall streams by almost 20 million, which is worth somewhere between $80,000 to $163,000.
The study, which was done by researchers at the European Commission’s Joint Research Center and the University of Minnesota, showed how the platform can make or break new artists and songs dictating what many consumers listen to.
“Songs remain on Today’s Top Hits for an average of 74.4 days,” the study notes.
The money provided to an artist’s label depends on how much Spotify actually pays out per 1,000 streams. The Recording Industry Association of America (RIAA) estimates that Spotify pays about $7.50 per 1,000 streams. Another estimate, based on data from a major indie label, found the payout to be about $4.00 per 1,000 streams. The study based its estimates on $6 to $8.40 per 1,000 streams.
Yahoo Finance has reached out to Spotify for this story and has not received comment.
Earlier this week, Beyoncé and Jay-Z released a new album that contained a jab at Spotify. In “Nice,” Beyoncé sings: “If I gave two ****s about streaming numbers, would have put Lemonade up on Spotify.”
The researchers looked at the daily top 200 songs on Spotify in 26 countries between 2016 to 2017. They found that being added to “Today’s Top Hits,” which is a curated playlist with 50 songs and 18.5 million followers, “raises a song’s eventual streams by almost 20 million, which is almost a quarter of the average value of streams for songs that make that playlist.”
To examine the effect, the authors took the song “What Ifs” by Kane Brown as an example. The song was added to Today’s Top Hits on October 5, 2017. On or around that date, the playlist followers for the song went from 11.6 to 29.2 million.
Following that, the numbers fluctuated at about 30 million for about a month. When the song was removed on November 2, the number of followers fell from 30.8 to 10.8 million and continued to decline. They used the song to then measure the impact of playlist inclusion on streams.
‘May create a need for scrutiny’
The music platform, which went public earlier this year with a “novel” IPO method, has garnered the ability to decide which new artists and songs will be discovered, according to the study.
Spotify’s “New Music Friday” playlist in particular, which is country-specific, had the effect of promoting music that was not “widely known or even new songs by known artists.” Taking a weekly-curated 50-song playlist, the researchers found that getting on the playlist in the US generates 14 million streams, which is somewhere between $84,000 to $117,000.
The study also noted that while “the major global lists tend to promote major-label and US-origin music, the New Music Friday lists provide heavier coverage of independent and domestic music.”
Given Spotify’s power to influence consumers’ decision-making, the authors warn that with “growing concentration in the streaming market, as well as other markets dominated by one or a few players, [this] may create a need for scrutiny of how platforms exercise their power.”
Primary competitors to Spotify include Pandora, Apple Music, and YouTube. Here is a breakdown of various payouts based on data from a major indie label.
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