How much of Spotify’s $9 billion payout went to artists?

Earlier this year, Spotify announced that it paid out a whopping $9 billion to music rightsholders in 2023. This was shared in the latest version of their Loud & Clear report [x], with some other interesting takeaways:

• $4.5 billion was paid to Indies in 2023. This represents a 4X increase since 2017 and the highest amount Indies have ever generated from a single retailer in one year.
• Spotify has paid out a total of more than $48 billion since its founding?
• The numbers of artists generating at least $10K, $100K, and $1M have nearly tripled since 2017

Unsurprisingly, the $9 billion sum stirred up many sentiments and questions, mostly mirroring these ones: “Big numbers don't mean big money. Artists are not making any money from Spotify in general! Stop lying!” “How much of the $9 billion went to the actual artist?”

Spotify founder Daniel Ek on LinkedIn

Spotify founder Daniel Ek took to LinkedIn to address questions about the Spotify payout. [x] He clarified that:

• Spotify does not payout to artists individually
• Spotify pays out to record companies, publishers, collecting societies
• How much an artist receives depends on the contracts agreed on with their labels and publishers?

On top of this, Spotify announced late last year that they were working on improving their royalty model to better benefit artists – specifically, the ‘professional or professionally aspiring artists’ that amount to about 200,000 out of the 9 million people who have uploaded any music to Spotify. [x] These changes have since gone live as of early 2024. [x]

Spotify payout changes for 2024 include:?

• A song needs to hit a minimum number of 1,000 annual streams before it can generate royalties. According to Spotify, this will redirect at least a total of $40 million per year in ‘tiny payments’ away from ‘recreational artists’ to ‘professional artists’ who are more dependent on streaming revenue.?
• ‘Non-music tracks’ like white noise, static, etc. will require a minimum track length to generate royalties. They will also be valued at a fraction of music streams.
• Labels and distributors will be charged per track if artificial streaming is detected on their content.?

Spotify has also taken steps to increase the visibility of artists’ tickets and merch on its platform to help boost non-streaming revenues for musicians.

So if Spotify isn’t the villain then who is??

As Daniel Ek clarified, Spotify pays out to record companies, publishers, and collecting societies. These parties in turn facilitate the royalties payout to their artists and creators. So how much do the artists get then?

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