Spotify’s Loud & Clear website has had its annual overhaul, and this year’s big headline stats bang is that the streaming service’s total pay out to the music industry topped $10 billion last year, a ten fold increase on what it paid over in 2014 when the record industry was at its lowest ebb.
Nearly 1500 artists earned more than a million dollars from Spotify in 2024, with over 200 artists earning more than $5 million (comparisons to Ek’s $376 million earnings through share sales in 2024 are probably best kept for another day). But it’s not just about the megastars, the streaming service is keen to stress, insisting that “there are more artists making more money on Spotify than ever before”.
These are just some of the stats published on the latest iteration of Spotify’s Loud & Clear website. That’s the website that aims to provide some information about how Spotify works, and how artists and songwriters get paid, while also telling us that Spotify is altogether brilliant, amazing, single handedly saving the world, nice to its mum and kind to small animals. Which means you have to filter out the propaganda to access the useful information and data.
One of the most interesting things about Spotify’s annual update of Loud & Clear is the insight it gives into which of the negative narratives about digital music – and Spotify itself – have got under the streaming giant’s skin. Of course the focus is usually on negative narratives that are either based on misunderstandings or which Spotify can destroy using data.
That means that criticisms about Spotify freezing early stage artists out of the royalty pool or using loopholes in US copyright law to reduce payments to songwriters aren’t tackled. Because neither clarifying the business model nor pointing to the data works to make an effective justification of those practices, which only benefit Spotify’s shareholders and billionaire founders (and in some cases its major label partners).
One negative narrative Spotify does deal with this year is the idea that it pays a much lower per-stream royalty rate than its rivals. Rate cards regularly do the rounds on social media that set out each service’s per-stream rate, and those rate cards usually tell us that Apple pays more than Spotify, and either Tidal or Napster probably pay the most.
But, of course, there are no per-stream rates. “Major streaming services all calculate payouts the same way – based on streamshare”, the Loud & Clear website explains. You can all but hear the sighing and eyerolling.
What that means is that each track is allocated some money based on the percentage of total streams it accounted for and that allocation is then shared with the relevant labels, distributors, publishers and collecting societies.
Spotify, as the biggest player in streaming, may have revenue share arrangements that work slightly more to its favour than its competitors, but most services are usually paying 65-70% of their total revenues over to the industry.
From a Spotify perspective, the problem is that at the end of each month you can calculate an average ‘per-stream payout’ and the Spotify average usually comes out lower than some of its key competitors.
Though that’s mainly the impact of the ad-funded free tier – Apple Music, for example, has no free tier (though makes regular and heavy use of with-device free periods or hefty promotional discounts) – and Spotify, due to greater market penetration, has higher numbers of users in markets with lower subscription prices.
There’s also the possibility that the average Spotify user might listen to more music each month, meaning overall there are more streams being generated per million users than via other services. All of these things contribute to an overall lower ‘per-stream’ rate.
Loud & Clear spells that out for us, saying, “Across services, each subscriber contributes roughly the same amount to the royalty pool. So, a higher ‘per-stream rate’ just means that users are streaming less”.
Over-simplifying things a little, it adds, “if a service had a ‘per-stream rate’ of $1, that would mean each subscriber, on average, only streams about ten times per month. Clearly, a service like that isn’t providing much value, making it unlikely that users would keep paying for it”.
That, of course, assumes that you buy into the argument that people’s primary motivation for signing up to a streaming service is to consume as many streams as they can in any given timeframe, and that streaming subscription value to consumers is predicated by the volume of content they can consume.
Obviously with the slightly ludicrous ten streams per month example the user isn’t getting much value, but there are plenty of lower-level streaming subscribers who still feel they are getting decent value from their subscriptions.
While Spotify leads with the big stats in the billions, it’s also keen to stress that artists at all levels are seeing their annual pay outs increase. Which, indeed, you’d hope would be the case as streaming matures, the number of subscribers increases, and new territories begin to deliver meaningful revenue.
To make the stats a little clearer, Loud & Clear breaks up artists into groups based on the amount of revenue they have generated and then provides stats for things like the “100,000th ranked artists” and the “10,000th ranked artist”.
We’re then told that the 100,000th-ranked artist on Spotify has seen their royalties increase tenfold in the last ten years, “increasing from well under $600 in 2014 to almost $6000 in 2024”. Meanwhile, the 10,000th-ranked artist has seen a fourfold increase “from $34,000 to $131,000”.
That said, Spotify’s revenue in 2014 was just €1.08 billion, versus €15.673 billion in 2024 – a more-than fifteen fold increase – while it went from a loss of €165.1 million to profit of €1.14 billion over the same period.
And of course, context is everything: that $6000 earned by the 100,000th ranked artist has to be shared with business partners like a label or distributor, as well as management. And if the artist is a band, that money has to be split between the band members.
And even though 100,000 artists are earning more than $6000, Loud & Clear also reveals that nearly 12 million artists are now uploading tracks to the streaming service, so in percentage terms a tiny proportion – just 0.83% of all artists using Spotify – are making royalties in excess of $6000.
But, Spotify is keen to stress, “streaming has allowed millions to easily share their music globally”. Adding, “the sheer volume of uploaders means the fraction who find success appears smaller over time”, it argues that “thanks to streaming, more artists than ever before are generating royalties at every career stage. More than at any time in music history. And we think that’s what really matters”.
Another narrative Loud & Clear tries to counter is that it’s the major record companies that have benefited most from the streaming boom.. Of course, the majors are the big winners, but Spotify is keen to stress that the indie sector has benefited too.
“In 2024, independent artists and labels collectively generated more than $5 billion from Spotify – representing about half of total Spotify royalties for another year”, Loud & Clear declares.
Which is notable. Although, it’s important to also note that this includes independent artists and labels working with the distributors that are owned by Universal, Sony and Warner.
And with the majors, and especially Universal at the moment, seemingly keen to buy up as much of the independent sector’s infrastructure as possible, an ever bigger slice of that ‘indie’ revenue is going to flow through the major label system each year, along with all the valuable data and insights that this gives the major record companies.
That’s not Spotify’s fault, of course. And all the issues and disputes over how the $10 billion that flows into the music industry is shared out between artists, labels, distributors, songwriters and publishers isn’t really its fault either, even though – as the biggest player – it sometimes gets criticism for those issues too.
It is true that Spotify was very much involved in putting in place a streaming business model that favours the biggest recording rightsholders over everyone else. Though, in the original deals, the major labels had a very strong negotiating hand, and – despite having billions to get the business model off the ground – Spotify couldn’t have done it without the major-controlled catalogues.
It’s always been difficult for Spotify to loudly shirk the blame – founded or unfounded – regarding how the money is shared out, given that doing so would inevitably involve criticising the majors, which are among its most important licensing partners.
Instead, Loud & Clear points people to its existing videos explaining how the money flows through the system, and where its responsibilities lie and end. Spoiler: it’s not Spotify’s fault.
More pointed criticism can undoubtedly be directed at Spotify for allowing the majors, and especially Universal, to rewrite the rules for sharing out the money to their advantage, to the detriment of whole swathes of the artist community and the wider independent sector.
Loud & Clear very much steers clear of that debate, and is – for all its bombastic chest beating on other matters – remarkably silent on those issues. Though, perhaps, as the Universal-centric approach to streaming gains more momentum and impacts increasing numbers of those 12 million artists who upload their music to Spotify, Loud & Clear in future years may have to start addressing how those new rules work for the millions of artists and rightsholders not involved in setting them.