TOPLINE
Spotify said it paid out $7 billion in royalties last year to rights holders, in a transparency report released Thursday, following critiques from within the music industry that the streaming service pays artists minuscule amounts.
KEY FACTS
Spotify’s royalty payments increased by $2 billion in 2021, up from $5 billion in 2020.
Instead of paying artists directly, Spotify pays rights holders—record labels, distributors or others—who artists allow to put their music on the platform, and who in turn pay the artists with the money earned on the streaming service.
The streaming service said that for the first time, over 1,000 artists made more than $1 million through royalties on its platform.
Spotify said it paid out over $1 billion to publishing rights holders and $4 billion to major record labels.
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Spotify said that 28% of the artists who self-distribute on the platform, meaning they are not attached to a record label, generated over $10,000.
As of 2021, Spotify said it had paid $30 billion in royalties to the music industry, and the $7 billion paid out last year was more than double the amount paid out in 2017.
BIG NUMBER
$0.0033 to $0.0054. That’s how much money Spotify paid artists (through their rights holders) per stream in 2021, according to Insider. That means it would take roughly 250 streams for an artist to earn $1. Singer and producer T-Pain shared a chart on Twitter in December that showed artists need 315 streams on Spotify to make $1, though it’s not clear what the source of this information is. Competitor Apple Music paid an average of one cent per stream in 2021, according to the Wall Street Journal.
CONTRA
Spotify noted that it does not pay artists per stream, instead paying them based on share of overall streams on the platform, and doesn’t believe rate per stream is “is a meaningful number to analyze.” The streaming service said there are a number of factors that play into why it’s rate per stream ratio seems low, including a high number of streams per listener and its ad-supported subscription free offering. The company believes “artists care more about a larger paycheck than a higher per-stream rate.”
KEY BACKGROUND
Spotify has 406 million active monthly users and is one of the most popular streaming platforms. Despite its popularity with listeners, Spotify has long been criticized by artists who believe they should earn more from streams on it. Last year, a group of independent artists held a series of protests in front of Spotify artists demanding 1 cent per stream be doled out to rights holders, according to the Los Angeles Times. Several mainstream and big-name artists have spoken out against low payments. In 2014, three years after Spotify launched in the U.S., Taylor Swift removed her music from the platform because of how it paid artists, though she later returned and still remains on it. Paul McCartney, Kate Bush and Sting were among the musicians who signed a letter to U.K. Prime Minister Borris Johnson last year urging reforms in the streaming industry, including increased payouts. Last month, Kanye West opted to release his latest album Donda 2 on his own device, rather than streaming services, because of how artists have been “hurt” by the platforms, he said. When joining a growing chorus of creators who removed their work from Spotify last month in protest of comments made by Joe Rogan, singer India.Arie called out the streaming service for paying artists “a fraction of a penny” but paying over $100 million to exclusively distribute Rogan’s show.
FURTHER READING
By Marisa Dellatto, Forbes Staff
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