Spotify paid over $10B US to the music industry last year. How much actually makes it to the artists?
In late January, Spotify made headlines by announcing that it had paid out a record $10 billion US in royalties in 2024, marking the largest payout to the music industry in a single year. This significant increase represents a tenfold jump from the $1 billion US paid out in 2014. The Swedish streaming giant shared further details in its Loud & Clear report, revealing that nearly 1,500 artists earned over $1 million US in royalties from Spotify last year. The report also highlighted how the number of artists generating royalties has tripled since 2017.
While Spotify has undoubtedly revolutionized the music industry by providing artists with exposure and assisting them in building their fanbase, this does not always translate to financial stability, as noted by music publicist Eric Alper. Spotify does not directly pay artists and songwriters, and the amount they receive is contingent on their agreements with rights holders. After navigating through various revenue channels, artists may only receive a small percentage of the total earnings.
The debate surrounding the fairness of royalty payouts to artists and songwriters continues to persist. Many artists, particularly songwriters, struggle to see substantial earnings from streaming platforms, even if their songs garner millions of plays. The flow of money within Spotify’s ecosystem involves payment to rights holders, who then distribute earnings to artists and songwriters based on their agreements.
Dr. Charlie Wall-Andrews, a creative industries professor, emphasizes that the compensation received by music creators and publishers from streaming platforms is minimal compared to the value their music contributes to these platforms. Last year, Spotify faced a lawsuit alleging underpayment of songwriting royalties for millions of songs. Additionally, Grammy-nominated songwriters boycotted a Spotify awards event following the platform’s decision to reduce royalty rates for songwriters and publishers on premium-subscription streams.
The Loud & Clear report also sheds light on music publishing payouts exceeding $4.5 billion US to songwriters and publishing rights holders over the past two years, with significant growth observed from 2023 to 2024. While the report showcases success stories of artists earning substantial royalties, the reality for many artists remains challenging. The majority of artists still receive minimal compensation per stream, making it difficult for mid-level and emerging artists to sustain themselves solely through streaming income.
Alper suggests that Spotify should consider shifting to a fan-powered, user-centric model where subscription money directly supports the artists listeners engage with. This model could potentially boost earnings for independent and niche artists, providing them with a more equitable share of streaming revenue. While Spotify has played a pivotal role in transforming the music industry, there is a need for ongoing adjustments to ensure that all artists, especially songwriters, can thrive in this evolving landscape.
