Spotify paid $10 billion to the music industry last year

Spotify reported paying $10 billion to the music industry last year, reinforcing its role as a major financial contributor to artists, record labels, and rights holders. The payout reflects the platform’s continued growth and impact on the global music economy, supporting both mainstream and independent creators. This milestone underscores Spotify’s efforts to generate revenue for the industry through streaming, licensing, and advertising, shaping the future of digital music consumption and artist compensation.

Spotify, a leading audio streaming service, announced on Tuesday that it disbursed $10 billion to the music industry last year. The company further stated that its total industry payouts have reached nearly $60 billion since its launch.

This statement comes as part of Spotify’s ongoing efforts to counter claims that it does not fairly compensate artists. However, it is important to note that these payouts also include payments to other industry stakeholders, such as publishers.

A report from the International Federation of the Phonographic Industry (IFPI) highlighted that there are now over 500 million paying subscribers across all music streaming services. As of its Q3 2024 filing, Spotify reported having 252 million paying subscribers, with more than 60% of its users utilizing the free, ad-supported tier.

David Kaefer, Spotify’s Vice President of Music Business, acknowledged that these figures might not resonate with everyone, leading some to question why the company continues to emphasize them. He stated that the current streaming model is proving successful and that the industry should collectively aim for 1 billion paying listeners in the future.

Spotify cited several reports indicating that it accounts for a substantial share of global streaming revenue. The company also revealed that over 10,000 artists now generate more than $100,000 annually from streaming income. In contrast, a decade ago, the number of artists earning more than $10,000 per year stood at 10,000.

A recent report from music financing platform Duetti observed that per-stream earnings for independent artists have stabilized after years of decline. However, it pointed out that Spotify’s payout rate was the lowest among major platforms, at $3.00 per 1,000 streams. In comparison, Amazon Music, Apple Music, and YouTube offered higher rates of $8.80, $6.20, and $4.80 per 1,000 streams, respectively.

Additionally, Duetti’s report noted that while Spotify has gradually increased its subscription prices, the average payout per stream has decreased. The company refuted these findings, dismissing them as inaccurate and based on speculation.

Spotify’s spokesperson strongly rejected Duetti’s conclusions, stating that no streaming platform pays per stream, as such a model would discourage engagement. Instead, the company aims to maximize user interaction, which ultimately leads to higher revenue and payouts for artists.

Another point of concern is Spotify’s Discover Mode, a feature that allows artists to boost their song visibility through algorithmic promotion in exchange for a reduced payout. While this strategy has led to increased streaming numbers, it also means that artists must accumulate significantly more plays to maintain their earnings.

The competition for streaming revenue continues to intensify. According to Luminate’s annual music industry report, an average of 99,000 tracks are uploaded daily to streaming platforms. The report also revealed that total global streams surged to 4.8 trillion, marking a 14% increase compared to the previous year.

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Source: techcrunch‍