The Insanity of Spotify Payouts: NELLY’s “Hot in Herre” Campaign

If you have the Internet, chances are you’ve seen that in the wake of his $2.5 million federal tax lien, Nelly (aka that guy that used to make songs) is asking his fans to stream “Hot in Herre” (the song you danced to in 8th grade) some 250,000,000 times to help pay off his debts. Nelly also has some other outstanding state taxes, which could push the total of his debts to nearly $3 million.

The 250,000,000-stream count is a lowball estimate, by the way. I’ve seen arguments that he really needs more like close to half a billion streams to hit his mark.

I seriously wonder whether this will work. Spotify has only 39 million paid users, who apparently account for the highest percentage of their top-tier per-stream payouts (which still averages to half a penny a stream). Those payouts, however, also depend on other factors: what country the paid listener is in, what the currency exchange rate is, and most importantly, what the artist’s royalty rate is between label and publisher.

That last point is critical – it’s not like Nelly will get that full, delicious half-penny per stream. That delectable check has to be doled out between three parties: Nelly, SONGS music publishing, and Universal.

Since Nelly isn’t some underground metal band that can work with indie publishers and distributors on a fair, reasonable deal, I’d imagine that the rates for major companies like SONGS and Universal are pretty hefty, if not totally insane. These are huge companies with large staffs dedicated solely to licensing out music to movies, TV, video games, commercials, NFL games, DJ sets, and everything in between. Spotify, incidentally, was hit with two lawsuits last year that caused it to jack up its royalty rate algorithms for publishers this past May. So now there’s even less of the less money to pay out to our buddy Nel.

To add to this, Universal has been taken to court over illegal digital licensing payouts to its artists, and since Spotify is still a relatively new technology, I would not be surprised if loopholes in payouts are revealed in future litigation.

What a whacky time we live in. I’m curious to hear from metal bands about their experience in distribution of revenue stream payouts – so drop us a line!

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Max is a senior editor and producer of Gear Gods.