It's not the Spotify model that is responsible for this, but the scammy way which record companies have approached the Spotify model.
They offer artists a similar 'royalty' on Spotify revenue as they did on record sales. In other words, where they used to give artists 10-20% of a CD sticker price, with much of the rest going to retailer markup, manufacturing costs, etc. they now keep 80-90% of the Spotify money, when they have zero per-unit costs and are simply passing the money through to the artist.
Artists who are working with Spotify outside of this system are able to make money from streaming, just as YouTubers who own their own content are able to make money while musicians typically see tiny amounts from YT.
However, the record company are essentially a bank who fund firstly recording and development costs, and second (both important and very expensive) marketing costs. So to be able to license directly with Spotify you have to already have a bunch of funds.
They offer artists a similar 'royalty' on Spotify revenue as they did on record sales. In other words, where they used to give artists 10-20% of a CD sticker price, with much of the rest going to retailer markup, manufacturing costs, etc. they now keep 80-90% of the Spotify money, when they have zero per-unit costs and are simply passing the money through to the artist.
Artists who are working with Spotify outside of this system are able to make money from streaming, just as YouTubers who own their own content are able to make money while musicians typically see tiny amounts from YT.
However, the record company are essentially a bank who fund firstly recording and development costs, and second (both important and very expensive) marketing costs. So to be able to license directly with Spotify you have to already have a bunch of funds.