Spotify Payouts: Are They Really Improving?

Spotify’s Royalty Payments Detailed in Annual Report

On Tuesday, Spotify published its yearly Loud & Clear report, providing a comprehensive overview of its royalty disbursements to the music industry. Following an earlier announcement of $10 billion paid out in 2024, this new report presents more detailed figures concerning these payments, aiming to address criticisms regarding adequate artist compensation.

Increased Earnings for Artists

For the first time, artists achieving one in every million streams on Spotify earned an average of over $10,000 in 2024. This represents a tenfold increase compared to the earnings generated by a comparable stream share ten years prior, as detailed in the report.

Industry Concerns and Protests

Despite Spotify’s emphasis on its payments to artists and songwriters, calls for fairer compensation persist. Recently, several Grammy-nominated songwriters boycotted Spotify’s Grammy party for songwriter of the year, protesting the streaming service’s declining royalty rates.

A modification implemented by Spotify last year is projected to result in an estimated $150 million loss for songwriters over a 12-month period, according to Billboard’s analysis.

Comparative Royalty Rates

A recent Duetti report – which Spotify has previously disputed in statements to TechCrunch – indicates that Apple Music provides artists with double the compensation offered by Spotify. The report found that Spotify pays $3 per 1,000 streams, while Amazon Music, Apple Music, and YouTube offer $8.80, $6.20, and $4.80 respectively, for the same number of streams in 2024.

Spotify responded to these claims, telling TechCrunch that they were “ridiculous and unfounded,” and asserting that “no streaming service pays per stream.”

Payout Model Explanation

Spotify’s new report seeks to counter these criticisms and clarify its payout structure. The company details how revenue is distributed to artists and publishers on its platform.

“All major streaming services calculate payouts in a similar manner: based on streamshare – if an artist’s catalog represents 1% of total streams, they would earn 1% of total royalties,” the company explained within the report. “However, misunderstandings regarding ‘per-stream rates’ are still prevalent. Streaming services do not base payouts on a fixed per-stream rate, just as listeners do not pay per song listened to.”

Advocacy for Fair Compensation

The Union of Musicians and Allied Workers (UMAW) continues to advocate for equitable compensation for artists, particularly independent and emerging musicians who face financial challenges. Last year, Congresswoman Rashida Tlaib and Congressman Jamaal Bowman, in collaboration with UMAW, introduced the Living Wage for Musicians Act, proposing to increase streaming royalties to one cent per stream.

Direct Payments to Artists

A UMAW spokesperson stated to TechCrunch, “Spotify makes no direct payments to recording artists.”

“The company maintains that its streaming model does not fall under existing regulations requiring direct payments to musicians – unlike other digital platforms such as satellite radio, internet broadcast, or ‘non-interactive’ streaming, which do provide direct payments. This situation clearly requires alteration. UMAW supports the Living Wage for Musicians Act to rectify this loophole and ensure that streaming services compensate the musicians who create the content,” the statement concluded.

Growth in Artist Earnings

Despite ongoing concerns, Spotify’s report highlights improvements in its payments. The number of artists generating royalties has tripled since 2017.

A decade ago, the highest-earning artist on Spotify received just over $5 million; currently, more than 200 artists have exceeded that amount.

Royalties Across Different Artist Tiers

Over the past ten years, the 10,000th-ranked artist on Spotify has experienced a nearly fourfold increase in royalties – from $34,000 to $131,000. The 100,000th-ranked artist has seen their generated royalties multiply by over ten times – rising from under $600 in 2014 to almost $6,000 in 2024.

Significant Royalty Earners

Last year, nearly 1,500 artists generated over $1 million in royalties solely from Spotify. Notably, 80% of these artists did not have a song featured in the Spotify Global Daily Top 50 chart in 2024, indicating they are not necessarily mainstream stars.

Global Reach of Artists

Spotify also revealed that artists earning at least $100,000 in royalties were recording music in over 50 languages in 2024. Those generating at least $1 million on Spotify recorded music in 17 different languages.