Spotify’s Payments to the Music Industry Nearing $40 Billion
Spotify announced Wednesday that its all-time payouts to music-rights holders are approaching $40 billion.
The company said it pays out nearly 70% of every dollar it generates from music back to the industry, the announcement continues. It generates its music revenue from two sources: subscription fees from its Premium platform paying subscribers, and fees from advertisings on music on its Free tier.
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These rights holders include record labels, publishers, independent distributors, performance rights organizations and collecting societies, the announcement detailed. It is important to note that the payments go to rights holders first — which is rarely the artist or songwriter —which then take their fee or percentage and pay the creators their share.
It detailed that it paid out more than $3 billion to publishing rights holders, PROs and collection societies that represent songwriters over the last two years.
With 205 million paying subscribers, Spotify remains by far the world’s largest paid music-streaming service by far, with the U.S. its biggest territory.
These announcements, made at the company’s “Stream On” conference, come as major music companies call for Spotify to raise its subscription prices, as Apple Music and Amazon Music already have. Spotify’s U.S. streaming subscription prices have not risen since the company launched in the country nearly a dozen years ago.
In further details, company also reports that nearly 3,000 heritage artists on Spotify — those with more than 80% of their streams coming from tracks over five years old generated “significant passive income” on their catalogs.
The company says that the number of artists generating more than $1 million annually, as well as those generating more than $10,000, has more than doubled in the past five years, with around 1,060 artists (up from 460 in 2017) in the million category and approximately 57,000 (up from 23,400 in 2017) in the $10k.
It also says that more than 10,100 artists generated at least $100,000 on Spotify alone, up from 4,300 in 2017.
“These figures represent revenue generation from Spotify alone,” the announcement details. “When taking into account earnings from other services and recorded revenue streams, these artists likely generated 4x this revenue from recorded music sources overall.”
It noted that more than 25% of the artists who generated over $10,000 self-released their music to Spotify via distributors like DistroKid, Tunecore and CD Baby.
Finally, it noted that as of Dec. 31, 2022, 360 songs on the platform have more than 1 billion streams, 13,000 have more than 100 million streams, and 914,000 have more than 1 million streams.
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