Earlier this year, Spotify announced that it had paid out a record-breaking $10 billion-plus to the music industry in 2024, pushing its total payouts to nearly $60 billion since its launch in 2006.
As the world’s largest paid music-subscription service by a significant margin, Spotify asserts that it distributes 70% of its revenue to the music industry—a figure it considers generous for any business.
Additional details from Spotify’s annual “Loud & Clear” music economics report, released today, provide further insights. In 2024 alone, nearly 1,500 artists earned over $1 million in royalties from Spotify alone—part of an estimated $4 million or more across all their recorded-music revenue streams.
Furthermore, independent artists and labels collectively generated more than $5 billion from the platform during the year.
The company highlights that between 2014 and 2024, its annual payouts to the music industry increased tenfold, rising from $1 billion to over $10 billion. It also emphasizes that “there are more artists making more money on Spotify than ever before.”
“In fact,” the report continues, “the number of artists generating royalties at every threshold on this site—from $1,000 to $10 million per year—has at least tripled since 2017. Ten years ago, the top artist on Spotify generated just over $5 million. Today, there are over 200 artists who have passed that threshold.”
While these figures are encouraging, the details reveal complexities beneath the surface.
It is essential to understand that, like most streaming platforms, Spotify pays royalties to rights-holders—typically record labels and music publishers—who then distribute earnings to artists and songwriters after deducting their share and allocating portions to other stakeholders such as producers and music distributors.
This means that the notion of each of the 1,500 artists personally pocketing $1 million (or more) from Spotify, let alone from all streaming services combined, is misleading.
Of particular significance, Spotify reports that in the past two years, $4.5 billion of the more than $20 billion distributed went to music-publishing rights-holders, who represent songwriters. These payouts follow a similar royalty-distribution model.
The company further states that its music-publishing payout “hit a new peak in 2024, seeing double-digit-percentage growth compared to 2023,” and that “songwriters—through their publishers, performing rights organizations, and collecting societies—are generating record-breaking revenues driven by streaming services.”
While these statements may be accurate, they do not change the fact that songwriters remain at the bottom of the streaming economy.
A 2024 report from London-based marketing intelligence and consulting firm MIDIA Research breaks down how the approximate $0.004 generated per stream is allocated: 56% goes to the recording side (including the label, distributor, and artist), 30% goes to the streaming service, and only 14% goes to the publishing side (including the publisher, performing rights organization—such as ASCAP or BMI—and the songwriter).
Of that 14%, the songwriter receives 68%, the publisher takes 17%, and the performing rights organization receives 15%. However, these percentages do not account for the fact that most hit songs today have between three and twelve songwriters, who must split that 68% share of the 14% of the $0.004 per stream.
Additionally, managers and other interested parties may also take a percentage of the songwriter’s earnings. The resulting payout for songwriters is so small that it is nearly incomprehensible.
It is also worth noting that this imbalance is not directly caused by Spotify or any other streaming service.
While recorded-music rates are negotiated between streaming services and rights-holders—often a contentious process during renewal periods—publishing rates are determined by the Copyright Royalty Board through an outdated system that has long been criticized by the publishing industry.
Despite these challenges, songwriting and publishing streaming rates have been increasing in recent years. For the 2023-2027 period, the CRB raised the rate paid to songwriters and music publishers by 23%, bringing it to 15.35% of a streaming service’s U.S. revenue.
However, Spotify has recently come under intense scrutiny—and even legal action—for its music-audiobooks bundle, which Billboard estimates will reduce music industry royalty payouts by $150 million over the next year.
While this move may have pleased shareholders, it represents a significant loss for music creators.
Even though major record labels such as Universal Music Group and Warner Music Group managed to negotiate some improved terms in their recent licensing agreements with Spotify, neither company has publicly disclosed the specifics of the new rates.
This is not to downplay the positive impact of streaming—led by Spotify—on the music industry. Streaming played a crucial role in rescuing the industry after a 15-year downturn that slashed its total value by half. As the streaming economy has grown, so have the earnings of artists.
According to Spotify’s “Loud & Clear” report, over the past decade, the 100,000th-ranked artist on the platform has seen their royalties increase more than tenfold, from under $600 in 2014 to nearly $6,000 in 2024. Even the 10,000th-ranked artist has experienced a nearly fourfold increase in earnings, from $34,000 to $131,000.
While these numbers are encouraging, the payment model that streaming services operate under was devised at a time when the revenue generated was so minimal that the difference between 13% and 15% payouts seemed negligible. However, in today’s landscape, the system is in urgent need of reform.
There is no shortage of proposals and potential solutions for a fairer streaming economy, but those in decision-making positions must prioritize the interests of the people who create the “product”—the music that fuels the entire industry—before catering to shareholders who profit from it.
