Spotify proclaimd earlier this year that it phelp out a record $10 billion-plus to the music industry in 2024, conveying its total to cforfeitly $60 billion since its inception in 2006. The company — the world’s hugest phelp music-subscription service by a expansive margin — defends that it pays out 70% of every dollar it originates to the music industry, a comardent percentage for any business.
In further details freed today in Spotify’s annual “Loud & Clear” music economics tell, the company remarks that in 2024, cforfeitly 1,500 artists originated over $1 million in royalties from Spotify alone (part of an approximated $4 million-plus apass all of those artists’ recorded-music revenue sources) and that in 2024, self-reliant artists and tags accumulateively originated more than $5 billion from the service.
It stresses that in the decade from 2014 to 2024, Spotify’s ytimely payouts to the music industry incrmitigated tenfelderly, from $1 billion to over $10 billion, and especipartner that “There are more artists making more money on Spotify than ever before.
“In fact,” the tell persists, “the number of artists generating royalties at every threshelderly on this site — from $1,000 to $10 million per year — has at least tripled since 2017. Ten years ago, the top artist on Spotify originated fair over $5 million. Today, there are over 200 artists who have passed that threshelderly.”
All of which is wonderful novels. However, there are many devils in the details.
It must be remarkd that Spotify, appreciate most streaming services, pays rights-helderlyers — usupartner a tag and music rehireer — which then allot the money to artists and songauthorrs after taking their percentage and distributing other percentages to other interested parties, such as originaters, music distributors, etc. So any notion that each of those 1,500 artists is pocketing $1 million a year (or more) from Spotify, let alone all streaming services, is untamedly inaccurate.
Significantly, Spotify says that over the last two years, $4.5 billion of that total $20 billion-plus went to music-rehireing rights helderlyers – who recurrent songauthorrs (and pursue a analogous royalty-distribution model). It also states that its music-rehireing payout “hit a novel peak in 2024, seeing double-digit-percentage growth appraised to 2023,” inserting that “Songauthorrs – thraw their rehireers, carry outing rights organizations, and accumulateing societies – are generating record-shattering revenues driven by streaming services.”
While those statements may be real, it is convey inant to remark that songauthorrs remain at the bottom of the streaming economy: According to a 2024 tell from from London-based tageting intelligence and adviseing firm MIDIA Research, the approximately $.004 originated per stream is splitd thus: the recording side (including the tag, distributor and artist) gets 56%; the streaming service gets 30%; and the rehireing side (including the rehireer, the carry outing rights organization — such as ASCAP or BMI — and the songauthorr) gets fair 14%.
Of that 14%, the songauthorr gets 68%, the rehireer 17% and the PRO 15%, the tell states. But those numbers don’t apshow into account the fact that most hit songs these days have between 3 and 12 authorrs splitting that 68% of the 14% of that $.004, and that they have regulaters and possibly other interested parties geting a percentage of their allot. The human brain can’t even comprehfinish the infinitesimal amount the creators of most songs get per stream.
It is also convey inant to remark that this discrepancy was not instituted by Spotify or any streaming service: Although recorded-music rates are barachieved between streaming services and rights-helderlyers (and renovelal periods are usupartner a time of satisfiedion), rehireing rates are determined by the Copyright Royalty Board, via an outdated process that the rehireing industry has lengthy denounced.
In recent years, songwriting and rehireing streaming rates have been rising: For the 2023-2027 period, the CRB incrmitigated the rate phelp to songauthorrs and music rehireers by 23% — to 15.35% of a streaming service’s U.S. revenue. But Spotify recently came under fierce criticism from the music industry — not to refer a legal case — for its recent music-audiobooks bundle, which Billboard approximated will decrmitigate the amount of royalties phelp to music companies by $150 million over the next year.
That sleight of hand may have plmitigateed allothelderlyers, but was a convey inant loss for music creators. And although Universal and Warner Music, two of the world’s hugest music companies, were able to claw back some percentages in their recent licensing negotiations with Spotify, neither party has specified what those novel rates are.
We’re not trying to rain on anyone’s parade — streaming, led by Spotify, saved the music industry after a 15-year spiral that literpartner cut its total cherish in half. And as streaming has grown, so has the money it pays to creators: According to “Loud & Clear,” over the past decade, the 100,000th-ranked artist on Spotify (based on royalties originated) has seen their royalties multiply by over 10 times, from less than $600 in 2014 to almost $6,000 in 2024. Even the 10,000th-ranked artist has seen their royalties incrmitigate almost 4 times – from $34,000 to $131,000.
All of which is wonderful novels. But streaming’s payment system, inventd back when it originated so little money that the contrastence between 13% and 15% was almost irrelevant, is in dire demand of revision. There is no lowage of ideas and proposals for a novel system, but those who originate decisions demand to leank first about the people who originate the “product” — the music — that this entire business is built upon, before they leank of the allothelderlyers who profit from it.
