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Spotify Pays Out 70% of Every Dollar to Music Industry

To date, Spotify has paid nearly $40 billion to music rights holders

Earlier this week, Spotify released their annual Loud & Clear report, highlighting top findings from 2022 data. In the report, Spotify revealed they pay out 70% of every dollar generated from music back to the industry. This revenue comes from subscription fees from Spotify Premium subscribers and advertising fees from the ad-supported tier.

Among the highlights is that Spotify has paid nearly $40 billion to music rights holders to date. This includes record labels, publishers, independent distributors and others. These entities typically receive payments first, deducting their fees before they are passed down to artists and songwriters. Spotify does not pay the artists and songwriters directly.

“Every year, Spotify has paid out more and more money in streaming royalties, resulting in record revenues and growth for rights holders on behalf of artists and songwriters,” Spotify said in their report.

In addition, the number of artists earning $1 million or more has more than doubled in the last five years. For example, in 2017, 460 artists earned $1 million or more. In 2022, that number more than doubled to 1,060 artists over the million-dollar mark.

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More fun facts from Spotify:

  • For the first time, 10,100 artists generated more than $100,000 on Spotify across 100+ different countries. This is an increase of 4,300 artists just five years ago! Spotify says that streaming platforms have lowered the barrier to entry for artists who might not otherwise have a way to reach larger audiences.
  • In the last two years, Spotify has paid out more than $3 billion to publishing rights holders.
  • Spotify estimates that approximately 200,000 aspiring artists generate about 95% of the total royalty pool on Spotify. They contribute about 15% of all tracks uploaded daily to the streaming platform.
  • A lot of artists distribute their music using companies like TuneCore and CD Baby, but others choose to “self-release” their music on the Spotify platform. One-fourth of all artists who self-distribute their work on Spotify have generated more than $10,000 in revenue, a 200% increase over 2017.
  • Available in 184 markets, Spotify helps artists extend the reach of their music. Their top 10 markets include Australia, Canada, China, Italy, France, Germany, Japan, South Korea, the U.S. and the U.K. Of the 57,000 artists who generated over $10,000 in revenue last year, close to 20,000, or 35%, of them lived outside the top 10 countries.
  • Spotify considers “heritage artists” those who have more than 80% of their streaming comes from music that is at least five years old. Last year, nearly 3,000 “heritage artists” generated more than $100,000 on Spotify.

“Our goal is to help professional musicians make a living. It’s something we take seriously. And while not every artist on Spotify will find the same success, we’re working to create opportunities for more artists to reach more fans. From there, listeners ultimately decide who succeeds and thrives,” Spotify said in their report.

Insider Take

This annual report always reveals the most interesting findings, but particularly the impact that streaming music plays on our lives. Sure, record companies still produce vinyl and CDs, but the majority of music is listened to on streaming platforms like Spotify, Apple Music and Amazon Music. It is impressive to see the percent being paid out to rights holders, though there has been controversy on how much artists actually see. Are artists paid fairly for their work? Could platforms like Spotify do more to ensure that fans get access to the music they want at a price that fairly compensates artists and the teams that support them? Considering how much I spent on 45s, LPs and cassette tapes as a kid and teen, $9.99 a month for Spotify seems like a bargain, maybe too much so. We anticipate seeing a rise in prices and, with freemium music services available, we don’t expect price increases to have a significant impact on subscriptions.  

Copyright © 2023 Authority Media Network, LLC. All rights reserved. Reproduction without permission is prohibited.

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