Spotify Paid $10 Billion to Music Industry in 2023

Spotify Reports $10 Billion Payout to Music Industry

Spotify, a leading audio streaming service, announced on Tuesday a disbursement of $10 billion to the music industry during the previous year.

Since its establishment, the company has distributed a total of approximately $60 billion to rights holders within the music sector.

Addressing Artist Compensation Concerns

This announcement represents a further attempt by Spotify to counter narratives suggesting insufficient remuneration for artists. It’s important to recognize that these payouts encompass financial contributions to various industry partners, including music publishers.

Data from the International Federation of the Phonographic Industry (IFPI), a representative body for artists, indicates that there are currently over 500 million subscribers to paid music streaming services globally.

As of its Q3 2024 report, Spotify boasts over 252 million subscribers. Furthermore, the company revealed that more than 60% of its user base utilizes its ad-supported, free tier.

Spotify's Vision for Growth

“The significance of these figures may not immediately resonate with everyone,” stated David Kaefer, Spotify’s VP of Music Business, in a recent post. “However, it’s crucial to understand that the system we’ve collaboratively built is functioning effectively, and our current position is merely a starting point.”

Kaefer continued, “With over 500 million paying listeners across all streaming platforms today, achieving a global audience of 1 billion paying listeners is a realistic and achievable objective.”

Revenue Contribution and Artist Earnings

Spotify highlighted reports demonstrating its substantial contribution to overall global streaming revenue. The company also noted that over 10,000 artists now generate more than $100,000 annually through streaming royalties.

In 2014, the number of artists earning over $10,000 per year from streaming was also reported to exceed 10,000.

Per-Stream Payout Rates

A recent report by music financing platform Duetti indicated that per-stream rates for independent artists have begun to stabilize following a period of decline.

However, Spotify offered the lowest payout rate among major platforms, at $3.0 per 1,000 streams. In comparison, Amazon Music, Apple Music, and YouTube provided $8.8, $6.2, and $4.8 respectively, for the same volume of streams in 2024.

The Duetti report also observed that despite price increases for Spotify’s subscription plans, the average payout to artists has decreased.

Spotify Disputes Duetti’s Findings

Spotify refuted Duetti’s claims, challenging the accuracy of the report’s data and characterizing its conclusions as “unattributed guesses.”

A company spokesperson asserted, “These allegations are demonstrably false and lack any foundation. A per-stream payment model would incentivize streaming services to limit stream counts, resulting in reduced engagement, fewer artist connections, and diminished overall payouts.”

“Our strategy is the opposite: we aim to increase user engagement, leading to greater revenue through sustained subscriptions and premium plan adoption.”

Impact of Discover Mode and Increased Competition

The report also emphasized that Spotify’s Discover Mode, which prioritizes song discovery through algorithms in exchange for a reduced payout, is contributing to a higher volume of streams required to achieve the same level of earnings for artists.

Competition for streaming revenue is also intensifying. According to Luminate’s annual music report, an average of 99,000 tracks are uploaded to streaming platforms daily.

Global music streams reached 4.8 trillion, representing a 14% year-over-year increase.

This article has been updated to include Spotify’s response to the Duetti report.