Spotify paid over $9 billion to the music industry in 2023, bringing its total payments to rights holders since its founding to $48 billion, the company announced Thursday (Feb. 8).
At $9 billion a year, Spotify accounts for a significant share of the global music market. While it’s too early in the year for 2023 global industry data to be released, rough estimates based on existing data give a clue about Spotify’s immense value. The global value of music copyright was $41.5 billion in 2022, according to music economist Will Page. If the global value of music copyright rose 10% in 2023 — not an outlandish assumption given recent trends — Spotify would have accounted for roughly 20% of label and publishing income worldwide.
The $9 billion in royalties — an amount paid for both recorded music and publishing rights — likely makes Spotify the single-largest source of music revenue globally. YouTube paid out $6 billion to rights holders in the last 12 months, the company announced on Feb. 1. Apple is also a major source of revenue with its Apple Music subscription service and iTunes downloads, while Amazon is another major player with its various streaming services, download store and physical sales. Although Apple and Amazon are publicly traded companies, their massive sizes — 2023 revenues of $383 billion and $575 billion, respectively — precludes them from breaking out the details of music services that represent a small portion of their overall businesses.
Spotify’s share of the broader global music business is far smaller, however. Through its licensing agreements with labels and publishers, Spotify pays out nearly 70% of revenue from subscription fees and advertising to music rights holders. But music royalties are only part of a bigger pie that includes concerts, merchandise sales and licensing. Spotify has an indirect impact on those revenues through its in-app concert and merchandise listings that lead users to buy tickets and concerts outside of the Spotify app.
Amidst stiff competition from numerous well-funded tech giants, Spotify is by far the largest music subscription platform. MIDiA Research’s Q3 2023 Global Music Subscription Market report, released Thursday, gave Spotify a 31.7% share of a total of 713.4 million global subscribers, up from 31.3% a year earlier. “So, for all the flak Spotify has thrown at it, it outgrew the market in 2023,” wrote MIDiA’s Mark Mulligan.
The report, which has Spotify at 226 million global subscribers in Q3, put the company well ahead of No. 2 Tencent Music Entertainment with 102.7 million, No. 3 Apple Music with 89.8 million, No. 4 Amazon Music with 78.9 million and No. 5 YouTube Music with 69.1 million (YouTube also generates significant revenue for rights holders through advertising on its free service). Spotify ended the fourth quarter with 236 million subscribers, according to its latest earnings results.