Spotify just revealed its annual Loud and Clear report revealing some top level numbers with some granular insights from 2023.
There are few big takeaways for me in this. Just last year Spotify paid out $9 billion to the music industry. Of that $9 billion, half went to independent artists and songwriters! That’s huge. Spotify is the most popular streaming service in the world and pays out the most money of any DSP. The fact that half of its money is going to indies, is a big deal. No wonder the majors are getting scared – attempting to rig the system in their favor.
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What also stood out to me was how many individual artists are earning a significant amount from Spotify.
Their report states that over 20,000 artists made over $50,000 from Spotify-only royalties in 2023 alone, and over 50,000 artists made over $16,500 from Spotify-only royalties last year.
This of course doesn’t account for revenue generated from other streaming services (or any other revenue stream such as sync, live, merch, VIP, subscription, patronage, fan club, etc).
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Spotify pays out the most money of any streaming service in the world (estimated around 30% of total streaming revenue).
However, anecdotally, most Western artists see the majority of their streaming revenue from Spotify. Apple Music is a close second (controlling about 14% of the market). Spotify did note that over half of the artists who made at least $10K on Spotify last year are from countries where English is not the first language. Worth noting that other territories have more dominant streaming services such as Deezer in France or Audiomack in Africa.
+ [Variety] Why Spotify’s Payment Model Falls Short For Emerging Artists
As a refresher on how streaming pays, it’s not on a per-stream basis – despite what you’ve seen.
Both Spotify and Apple Music pay out about 70% of their revenue (from music) to music rights holders. And the payment is paid out on a pro-rata model based on “streamshare” as Spotify calls it. What this means is, you get paid on the number of streams you get as compared to the total number of streams on the platform.
So, for easy math, if you got 1,000 streams on Spotify last month and there were a total of 100,000 streams on Spotify last month, that means you got 1% of all streams on the platform (follow me? 1,000 / 100,000). Now, if Spotify made $1M last month, it would have paid out around $700,000 total (70% of total revenue). Since you got 1% of the streams, you’d get 1% of that money. Which is about $7,000.
Now of course, these numbers are completely made up – Spotify gets billions of streams a month and makes hundreds of millions of dollars a month. But I hope you get the idea here.
So when people say that “Apple Music pays more” or “TIDAL pays the most” or whatever, that’s not really accurate. These people are basing it off of the per-stream figures. Since there are far fewer subscribers to Apple and TIDAL and these companies are making far less revenue (from music streaming), each individual stream pays more because the pie is smaller. This is why calculating on a per-stream basis just doesn’t work out here.
If Apple or TIDAL made the same amount of revenue as Spotify and had the same number of subscribers (paying the same for a subscription), then their per-stream rates would be about the same. As the service gets more subscribers, yes it makes more revenue, but the per-stream rate goes down.
It’s not that Spotify is keeping more money. Remember, both Spotify and Apple pay out about 70%. It’s just how you slice it up.
Personally, I’d much rather make more total money than more “per-stream.”
Many have advocated for raising subscription prices so the pie is even bigger which would result in more money earned for the same number of streams. I support this full heartedly. The research shows that raising subscription prices even to $19.99 won’t show much of a subscriber drop off rate. Spotify did raise their subscription price $1 last year, but I think it can go higher. Most people pay for multiple TV streaming services because not every show is on every platform. However “all the world’s music” is on each DSP. Of course Spotify can’t do this without the other DSPs following suit simultaneously (coordination is illegal of course), so it would take the rights holders collectively demanding it, or an act of Congress.
I’ve advocated for a while that this pro-rata system of payment should change to a user-generated payment model. A user-generated payment model means you get your listeners’ subscription fees (less the platform’s commission), split amongst only the artists the listener actually listened to.
So if you had 5 people only listen to your music this month, and those 5 people paid $10 each for a subscription, you would get all $50 of those dollars (less the platform’s commission of about 30%). Even if they only streamed you a few times. With a user-generated payment model it doesn’t matter how many streams you get. It matters how much your music is listened to by your fans. I think this model is far more fair. And encourages fandom and reduces streaming fraud. I discussed this more in my Variety piece from a few months back.
A user-generated payment model rewards fandom.
+[Variety] Here’s How to Stop Streaming Fraud Right Now
Another big takeaway for me is the artists who generated at least $1M from Spotify royalties in 2023, 80% of them did not have a “hit.”
Meaning they didn’t have a song reach Spotify’s Daily Global Songs chart. Which is notable because it’s not just the biggest stars making millions from streaming revenue. One benefit of the streaming era is the ability to find your (niche) audience. Like how TheFatRat is doing it.
+[NMB] From Gamer to Billion Stream Club as a DIY Artist/Producer
Something Spotify highlighted in this report is, a top-40 radio station spins just 40 artists, a record store carries just a few thousand artists. Last year over 50,000 artists generated over $16,500 from Spotify alone.
Now, I’m not going to pretend that it’s all roses and sunshine out here for indie artists. I would argue it’s harder now to be an artist than it’s ever been because artists have to wear all the hats traditionally worn by other team members and there are no clear pathways to success.
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The artists with mostly superfans and very few passive listeners are not better off under this system.
If an artist has 10,000 superfans who streamed the artist’s music, let’s say, even 100 times each this year, that’s 1 million streams. Today, that’ll get that artist around $3,500. Not livable. Not sustainable. Even with that many superfans.
However, previously, if an indie artist had 10,000 superfans who bought their record and the artist made $10 per sale (net profit), that would earn that artist $100,000. Liveable. Easily.
There’s a nifty calculator as part of this report which indicates that over 12,000 artists have 1 million+ monthly listeners. That’s encouraging or depressing however you look at it. According to Spotify’s own numbers, having about 1 million monthly listeners throughout the year will net you about $100,000 in Spotify royalties.
It’s worth noting, that if you’re not earning as much money as you think you are, it’s either because 1) your label or distributor is taking a cut 2) your publishing isn’t registered in all the right places
Spotify also claims that even though there are 10 million “uploaders” that have uploaded at least 1 song, only 225,000 are “Emerging and Professional Artists.”
Spotify arrives at this number by taking the number of artists who have released at least 10 songs, get 10,000+ monthly listeners or have played at least 1 show at some point in 2023. According to BandsInTown, Ticketmaster and other ticketing platforms. Apparently 210,000 artists had at least one gig in 2023.
Despite what Spotify says, there are many professional artists with fewer than 10,000 monthly listeners. I know many of them personally. And yes, many of these artists make their livings on the road and don’t play the Spotify game – praying to the algorithm or playlisting gods. I don’t appreciate when Spotify states “at least 10,000 monthly listeners (meaning they have been able to attract an initial audience).” According to Spotify’s metrics it’s “an initial audience.” But what if those 10,000 monthly listeners were superfans? We’d have no idea. What if those 10,000 streamed the artist, and only the artist, last month? We’d have no idea.
And what if the artists with hundreds of thousands of listeners only have those listeners because they have a few songs on some popular playlists? Those listeners have no idea who they’re even listening to! They’re not fans of the artists. They’re fans of the playlist (or the algorithm). Merely passive listeners. But those are real listeners (usually). And those are real artists (sometimes). And that’s real money.
Spotify is still pretty out of touch with how middle-class artists operate. There are artists with 1 million monthly listeners that can’t sell 50 tickets to their hometown show. And there are artists with 10,000 monthly listeners that can sell out venues across the country. And there are “fake artists” with millions of listeners because they got their tracks included on popular playlists.
Success on Spotify only indicates success on Spotify.
But I digress.
The biggest takeaway for me is that there are actually artists (and a good number of them) earning a decent amount of money from Spotify royalties.
So when someone says “streaming doesn’t pay,” you can correct them and send them this post. It’s not that streaming doesn’t pay, it’s that it’s paying a certain type of artist with lots of (mostly passive) listeners.
But the question is how the f do artists actually tap in and make some of this revenue from Spotify without playlists? Of course TikTok has dominated the conversation over the past 4 years, but if you don’t like playing the lottery and don’t want to be a constant “creator” in this hamster wheel, I’d encourage you to check out the Ari’s Take Academy Streaming & Instagram Growth course where the artist Lucidious (300+ million streams) teaches you how to use direct digital marketing to grow your streams and earn some of this money.
Now go get it!
