Ruby Batcheller
Even though one million monthly listeners on Spotify barely make artists a living wage, hardly any pressure has been put on the streaming service.
If you’ve ever taken a trip to your local record store, you may have noticed the high prices of the albums that fill the store’s shelves. At best, a CD will set you back $9.99, while a vinyl record can be up to $50.
Meanwhile, Spotify Premium costs $9.99 per month, giving you access to millions of songs and thousands of albums…for the cost of one CD per month. How is Spotify able to charge such a low price for their service?
Unfortunately, their methods for providing this service aren’t exactly fair to artists.
Shocker.
According to USA Today, Spotify does not directly pay artists. Instead, they use a system called “stream share,” which allows for variation in pricing due to licensing agreements. Stream share is calculated by taking the sum of streams of music owned by a rights holder in a specific country and dividing them by the number of streams in their genre.
A rights holder, in this case, can be either an indie artist, who owns and has full control over their musical rights, or it can be a record label that an artist signs to.
On average, as of 2020, artists make around a third of a cent per stream. When Vince Staples said, “Listen to your favorite album 1,000, 2,000 times so everybody can get an album sale,” he may have been generous — a third of a cent per stream means that an artist would need 3,000 streams to get a single album sale.
This also means that an artist, solely through Spotify, would need around 800,000 monthly streams to make a $15 per hour minimum wage.
Which begs the question: if 800,000 streams only make you minimum wage, what about smaller and up-and-coming artists? That is the main issue with Spotify’s current artistic revenue system — smaller and rising artists have almost no share of the revenue generated by their music.
Additionally, smaller artists won’t have the media attention to get huge endorsem*nt deals or the fanbase to be able to book arena shows, leaving streams and possibly merchandise as their most likely sources of income. Given the unfavorable pay structure of Spotify and services like it, this can make money extremely tight.
So how can we help?
The most obvious way to support your favorite artists is by buying physical copies or MP3 downloads of their music, as this puts the most money in their pockets if we’re talking strictly about music. Buying merchandise is a very effective way to support artists financially. Going to see them live in concert is another option for how to support artists, as concerts and shows are one of the biggest sources of artist revenue.
I would also encourage you to cancel your Spotify subscription as the vast majority of music available on Spotify is also available for free on YouTube. While I would imagine most people would prefer to use a service such as Spotify to stream their music, the sad reality is that Spotify likely won’t change its pay structure unless its users put pressure on the platform. The most direct form of protest against Spotify’s pay structure is boycotting, which takes money out of their pocket.
If Spotify, the biggest audio streaming company, revamps its pay structure, it will set a precedent for the rest of the industry. It’s time for us as listeners to get artists their fair share.
FAQs
This has led to the fee structure for streaming royalties being the main crux of the issue between artists and music-streaming services. For the last decade since Spotify broke into the mainstream, it has paid artists between $0.003 and $0.005 cents per stream (Aswad 2023).
Does Spotify pay their artists enough? ›
Spotify pays artists between $0.003 - $0.005 per stream on average. That works out as an approx revenue split of 70/30 - so that's 70% to the artist/rights holders and 30% to Spotify.
Why don't artists make money on Spotify? ›
Contrary to what you might have heard, Spotify does not pay artist royalties according to a per-play or per-stream rate; the royalty payments that artists receive might vary according to differences in how their music is streamed or the agreements they have with labels or distributors.
How does Spotify make money to pay artists? ›
Spotify's business model is primarily based on two revenue streams: subscriptions and advertising. The platform offers both a free, ad-supported version and a premium, ad-free subscription service. Revenue generated from these streams is crucial in understanding how artists make money from Spotify.
What is wrong with Spotify for artists? ›
Spotify distributes approximately 70% of its total revenue to rights holders, who then pay artists based on their individual agreements. Multiple artists have criticised the policy, most notably Taylor Swift and Thom Yorke, who temporarily withdrew their music from the service.
Why is Spotify bad for small artists? ›
Even worse, Spotify only pays 0.3 cents per stream, which is a laughable amount. That means for every 1000 streams, the artists will only receive $3. For years, artists have wanted more pay on Spotify, but have been ignored by the large corporation.
Will Spotify stop paying artists in 2024? ›
Change in 2024: Spotify to stop paying artists for tracks with less than 1,000 streams. Spotify expects the new 1,000-play minimum annual threshold will free up more money to a more meaningful percentage of musicians in the royalty pool. Effective Date: The new policy begins January 1, 2024.
Who is the highest paid artist on Spotify? ›
Taylor Swift is still the queen of Spotify, with over 81 million lead streams, putting her total earnings at over $327 million. This is ahead of the most-streamed male artist, Drake at 76 million streams and $304 million.
How is Spotify not making money? ›
The cost of content is really expensive. If you're going to be an effective music streaming service, you really do need to have essentially all of the world's music, and so you have to pay to license that music. Nearly 70 cents of every dollar that Spotify makes from streaming music goes to music rights holders.
How much did Taylor Swift make from Spotify? ›
The estimated $131 million in royalties Taylor Swift's music earned from Spotify is 1.3% of $9.7 billion, so I'll assume she received 1.3% of all Spotify royalty payments. Taylor Swift is paid as both the composer and performer of her music, and also owns the master recordings of the “Taylor's Version” of her albums.
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How much is 1 million streams on Spotify? ›
How much does 1 million streams on Spotify pay? The payment for 1 million streams on Spotify can vary, but it is generally estimated to be around $4,000 to $7,000. This amount is, however, split between the streaming platform and the rights holders.
Why did artists boycott Spotify? ›
Young's boycott was unusual: political in a very practical way, and so personal, given his childhood polio experience. The many artists who have previously stood up to the platform have mostly done so to protest poor financial remuneration for artists: a Spotify stream is worth less than $US0.
Why did Taylor Swift leave Spotify? ›
In November 2014, Taylor Swift spoke out about the affair. She explained that she had decided to do without Spotify to protest against a streaming system that doesn't pay artists what they're worth and almost makes art seem like something that can be systematically consumed for free.
Does Spotify hurt the music industry? ›
Their research also shows that Spotify has helped to decrease the amount of music piracy in the United States and across the globe, but does not do much to help the music industry in terms of net profit (Aguilar & Waldfogel, 2015).
Why are people suing Spotify? ›
THE BIG STORY: Spotify Taken To Court Over Royalties
In a lawsuit filed last week, the Mechanical Licensing Collective (MLC) claimed Spotify had “unilaterally and unlawfully” chosen to cut its royalty payments nearly in half by “erroneously recharacterizing” the nature of its streaming services to secure a lower rate.
