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Spotify Paid $10B to the Music Industry in 2024, $1B More Than Last Year
It's a shame Spotify is just going to get killed by large music groups and anti-competitive platforms from Google and Apple.

Spotify pays out 80% of its money to its creators, but you effectively have large middle men in the way.

Apple and Google don't even need to turn a profit on their platforms, and both of them are hurting Spotify directly by taking 30% of their subscription payments. Neither of them even directly report revenue from their services.

Think about it, Apple or Google make more net profit from Spotify subscriptions than Spotify does.

Meanwhile, TikTok only pays per the number of videos using your music, not the number of times the videos are played. The only worse deal for artists would to not be paid at all...

>> Spotify pays out 80% of its money to its creators

This pisses me off every time I see it. It makes Spotify look great and that's why they share it. It completely ignores the fact that they offer a free plan that a large percentage of their users enjoy.

The important figure in my mind is the per stream rate and when I last checked Apple was paying double the rate Spotify does (because Spotify's per stream rate is dragged down due to its free users).

Artists don't have a way to say to Spotify, only show my music to premium users and pay me a higher rate. It's one (of many) ways in which Spotify takes advantage of artists for its own gain. Another being their new policy to not pay artists who get less than 1000 streams on a track in a 12 month period. They just blanket decided they were going to keep that money for themselves.

Not sure you remember where we were in 2012. We've come a long way from listeners not paying at all to $10B. The system is far from perfect but it is better than it was
Of course, and streaming was always going to be the best solution. But unfortunately it's a market where there are a few big players and they can use that power in an abusive way. Spotify can do better. And puff pieces where they brag bout 'percentage of revenue' or speak in absolute numbers are bullshit and should be called out as such.

I mean this should be criminal given their market power:

> their new policy to not pay artists who get less than 1000 streams on a track in a 12 month period

It may not be much to the individual artists (at most a few hundred $ a year in the extreme cases) but it's a nice chunk of change for Spotify to pocket.

Spotify doesn’t “pocket” the money. Here is their justification, which seems reasonable to me:

> Tens of millions of them have been streamed between 1 and 1,000 times over the past year and, on average, those tracks generated $0.03 per month.

> Because labels and distributors require a minimum amount to withdraw (usually $2-$50 per withdrawal), and banks charge a fee for the transaction (usually $1-$20 per withdrawal), this money often doesn't reach the uploaders. And these small payments are often forgotten about.

> But in aggregate, these small disregarded payments have added up to $40 million per year, which could instead increase the payments to artists who are most dependent on streaming revenue.

> Spotify will not make additional money under this model. There is no change to the size of the music royalty pool being paid out to rights holders from Spotify; we will simply use the tens of millions of dollars annually to increase the payments to all eligible tracks, rather than spreading it out into $0.03 payments.

https://artists.spotify.com/en/blog/modernizing-our-royalty-...

It shouldn't be their decision to make. If someone makes $5 a year and wants to let that accumulate with their distributor until they get $50 why should Spotify get to come in and say "sorry, we're taking your earnings and giving it to someone else"?
Is that Spotify making that decision or the big recording companies?
  • pjc50
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> only show my music to premium users and pay me a higher rate

Don't forget that alternatives which pay artists and labels zero are forever lurking in the wings.

I'm not sure how much I believe this argument. I think the number of people under 30 that can pirate music and manage to load it on to a phone is smaller than you think. Not to mention the fact that being limited to listening to only the music you have pirated (and have storage capacity for) is probably a bizarre concept to younger people who are pretty used to paying a small subscription fee for access to everything.
In the US, 70% of the population have iPhones and that number is greater for the younger skewing population.

First you have to go through the trouble of pirating the music from your computer since you can’t easily do it directly from your phone.

Even if you could, you can’t download music on your phone outside of iTunes and put it into your music library [1]. That means you have to add the music to your iTunes library from your computer and then sync it to your phone.

Or you can just pay for a streaming service. But even since 2003 when you could buy music from iTunes, pirating just wasn’t worth the trouble. That was even more so after the iPhone and being able to buy music directly on your phone in 2007.

[1] there is one ugly hack using GarageBand.

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Yeah, well y'know what? As a former musician, Spotify is where indies who can't get a record deal go because they aren't marketable. And no one is going to start paying $100/mo or whatever it is that would make the millions of nobody artists profitable. You pay $40 and get global distribution. That's a sick deal. If you can't properly promote shows and generate income, you probably don't deserve it. Not everyone can be famous, not everyone can make a living off of art. 0.1% can and it's always been that way. The expectation that you can toss some music on Spotify and make significant passive income is absurd.
>> Spotify is where indies who can't get a record deal go because they aren't marketable

Maybe as a 'former musician' you're a bit out of the loop? But indies don't 'go to Spotify'. You pay $40 to CDBaby or similar distribution services (DistroKid etc) and they distribute your track to pretty much all streaming services and digital music stores. Then they collect the payments for you. Nobody is picking and choosing which music streaming service to be on.

Right, I know. That's what I use. It's a sick deal.
Spotify is getting “killed” because it was always a bad business to be in when your costs - payments to labels - scale linearly with your revenue. The exact opposite of a normal tech company that has high fixed costs and very low marginal costs.

> Apple and Google don't even need to turn a profit on their platforms, and both of them are hurting Spotify directly by taking 30% of their subscription payments. Neither of them even directly report revenue from their services.

This is not true. Spotify hasn’t allowed in app purchases of subscriptions in almost a decade.

> This is not true. Spotify hasn’t allowed in app purchases of subscriptions in almost a decade.

That is not true either. Spotify's Android app allows purchasing Premium in-app, with Spotify as a payment provider. I believe it's also the case that Apple Music on Android has in-app purchases, with Apple as the payment provider.

That’s true for Android. And Google only takes a 4% cut when using Google payments and a 0% cut when using Spotify. But Spotify doesn’t pay Google 30%

https://www.theverge.com/2023/11/20/23969690/google-spotify-...

So that’s still not a cause for their financial issues.

> Spotify pays out 80% of its money to its creators,

Creators or rights holders? There's a huge difference.

While true, its regularly implied that the creators are being screwed by Spotify when in fact it would be between them and the rights holders and Spotify has nothing to do with that relationship / contract.
Isn't it the creators choice to sell their rights to a publisher? Is anyone holding a gun to their head?
The deal they made 8 years ago that gives the publisher all the rights is figuratively holding a gun to their head, yes.
  • tgv
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> Spotify pays out 80% of its money to its creators

The article says "nearly 70%" in 2023. Like Apple. So they would get to keep $4.2B for themselves. That's quite a lot.

It also matters that Spotify undercut other ways of distributing music, effectively reducing income for artists.

> Meanwhile, TikTok ...

Of course, there's always a worse one.

> effectively reducing income for artists.

Does it though? Revenues are off their 90s peaks, but coming back[1], and keep in mind that in the 90s a _huge_ portion (~50%) of that went to the retail store and physical media manufacturing.

[1] https://www.riaa.com/u-s-sales-database/ [2] https://en.wikipedia.org/wiki/Compact_disc

thank you for providing links and reminding everyone what the world was like before streaming
  • ghaff
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Well, it really wasn't that bad. People were more selective about what they listened to but the average person probably spent about what they do today on streaming.

(Which also probably sets some ceiling on streaming prices and digital entertainment more broadly.)

I'm not sure selective is the right word, there were just far fewer choices. A typical record store would have O(thousands) of different titles, whereas spotify has over 100 million. Obviously much of that is trash, but it's still a huge difference.

It's also worth noting that a big contributor to the 90s spike was people replacing tapes/records with CDs, which were a far superior medium for most usage. The decline after 2000 was not streaming, since that didn't exist, but the wind-down of the upgrade cycle and the rise of file sharing and 0.99 digital track purchases in lieu of $15-20 album purchases.

  • ghaff
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I agree with most of that though I probably had access to better record stores than was the norm. And yeah digital purchases were never huge but a lot of that as you say was because people often bought single tracks. In fact if you did want an entire album it often made sense to purchase a CD and rip it.
>It's a shame

What's special about Spotify in this situation? It's also a behemoth with at-least-somewhat-controversial standing in the music community. It's not like it's the little guy fighting the good fight.

Personally, I think YouTube Music is better anyway.

If you login to Spotify on the website you can get a better deal and then you can sign in on your phone and it will work like normal.

If they got into trouble I assume they’d just make all the users do it that way…

That is an exclusive back door deal with both Google and Apple, that was likely only created because of how much antitrust pressure they were under. Times are changing, I wouldn't be surprised at all if Apple backs out of the deal over time.
they mean that you can pay for spotify without it being through the app store or play store, meaning that Apple and Google can't take a cut, meaning that it's cheaper.

that's not some kind of deal, that's just how it works.

There was never a “back door deal”. Very few of the subscription streaming services allow in app purchases.
> Apple and Google don't even need to turn a profit on their platforms, and both of them are hurting Spotify directly by taking 30% of their subscription payments.

I think you mean just Apple there. Spotify on Android has in-app Premium subscriptions using Spotify as the payment provider (at the same price as Premium on the web).

Google doesn’t pay Spotify anything when you do an in app purchase using Spotify’s payment system and charges 4% when you use Google’s payment system.

So that’s not the cause of Spotify’s trouble either

Not everybody pays for subscription through those platforms afaik
I didn’t even know I could. Not that I want to obviously.
Actually no one does.
Antitrust. Break up big tech next election cycle.

The big companies are suffocating entire industries because their scale is so large that they don't even need to profit in many of their businesses. They just enter new markets, snuff out the competition, and add eyeballs to their platforms.

Amazon is a movie studio and a grocery store and a primary healthcare provider.

Google owns every ingress to the web on every pane of glass.

Apple taxes and polices all activity happening on a platform they tightly control and that due to economies of scale you can't launch a competitor. Their duopoly partner in crime is complicit.

Thanks to big tech:

When a German citizen listens to German music released by a German record label, Google or Apple takes a cut and transfers it to America.

When a French company advertises on social media to French citizens, Google or Facebook takes a cut and transfers it to America.

When a Swedish citizen installs a mobile app from a Swedish company, Google or Apple takes a cut and transfers it to America.

When a British citizen makes a purchase from a British company, Visa or Mastercard takes a cut and transfers it to America.

When a Danish company buys a PC, Intel/AMD and Microsoft take a cut and transfer it to America.

And when an Italian company needs hosting services, there's a good chance Amazon, Google or Microsoft will be providing them - transferring the money to America.

Have you ever considered that so long as it's an American monopoly, bringing in fistfuls of cash in from abroad, there's no need to break up the goose that lays the golden egg?

> When a German citizen listens to German music released by a German record label, Google or Apple takes a cut and transfers it to America.

Unless you are using Apple Music or buying from iTunes. This isn’t true.

> Have you ever considered that so long as it's an American monopoly, bringing in fistfuls of cash in from abroad, there's no need to break up the goose that lays the golden egg?

And yet the Democrats tried to do exactly that and wondered why BigTech that was supportive of them until as recently as 2020 ran screaming to Trump.

No one outside of the tech bubble put anywhere in their priority stack to “break up BigTech”

> And yet the Democrats tried to do exactly that

Some people among the Democrats said some things. Politicians say a lot of things.

It's actions that count. And in terms of actions, there hasn't been any meaningful antitrust enforcement since the Clinton administration.

Lina Khan went after most of the BigTech companies. They also didn’t support American companies when it came to some of the craziness from mostly the EU.
This has absolutely nothing to do with Spotify’s bad business model. Spotify hasn’t allowed in app purchases for almost a decade

Amazon doesn’t wield much power at all in the grocery industry or the movie streaming industry.

Because Apple and Google are abusing their power to tax and dictate the shape of all modern digital businesses.
Apple doesn’t “tax” Spotify. Spotify doesn’t allow in app purchasing, neither does Netflix. Apple is not getting 30% from Spotify
I think the big entities you should be directing your anger towards are the big media companies, not tech companies. When it comes to streaming, Media companies have the Tech companies balls in a vice grip.
Yep, big tech sounds like they are in a dire position right now /s
  • skord
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Kids don't care about corporate ethics or artist respect, they care about where their friends are and where their playlists and memories live. Spotify is the soundtrack of their lives and my own kids love their sort of curated history of music. Moving their playlists isn't going to happen, asking them to switch to my Apple One subscription would be like asking them to rewrite their social identity. My own household would be in open revolt if I asked them to switch to anything else.
  • ghaff
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Do your kids pay for Spotify themselves? If I had a family Apple One subscription I wouldn't be very inclined to pay for an essentially redundant music streaming service.
Disinclined, but I would like to publicly thank my parents for a CD Budget that was far too high for a teenager. I was probably averaging 1-3 CDs/month in the 90s, that's a ton of money!
So your kids run your household?
We're talking about a likely inconsequential amount of money for a thing that might be of high importance to a member of the household. What are you talking about?
I’m talking about training kids early that life is about choices and budgeting so when they are grown and operating on a limited budget they aren’t paying for unnecessary subscriptions.
  • Y-bar
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I think Spotify's payment model is flawed, not the large number they pay out, but how they distribute it.

If I pay them EUR 10 per month and listen to 200 songs by seven artists/bands, I would like Spotify to first take what they need to run the service (and make a profit) from the money. Then I would like the rest of my payment to be divided among the artists of the songs I listened to.

Because Spotify seems to pool all payments into one large sum, if an artist has some fans who listens 500x each to their songs then those fans will "siphon off" my payment to their favourite artist.

Do they pay podcast creators from the same pool?

It really sucks if my subscription money goes to Joe Rogan because some dummy listened to him 10x more than I listened to music.

Joe Rogan and the people Spotify have a contract with sign a contract for a fixed amount.
  • ghaff
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Companies may pretend they have buckets of money but, at the end of the day, it all comes down to the same bottom line. So, effectively yes, the same pool.
So each listen would have a variable payout depending on how much else you listened to that month? If you only listened to 1 song, the rights holder would receive all of your monthly payment (sans Spotify’s cut)?

That seems overly complex and more volatile. My guess is that there is no pressure from the artists or rights holders to do this. It’s revenue neutral for Spotify after all. Tidal is the most “artist-friendly” service and they don’t work like that.

  • Y-bar
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> So each listen would have a variable payout

Each listen have a variable payout already. If Spotify has EUR 100M in subscription and ad payments this month and 30B listens it will be a different amount paid per listen compared to a month where they had 110M in income and 24B listens.

> That seems overly complex and more volatile

How so? The current system incentives bot activity to game the system by paying for one account, using that to listen to one or two artists thousands of times, netting those artists more than what the account paid Spotify. With my requested system the payout from bots would never be profitable and therefore reduce volatility (and reduce overhead needed to analyse traffic for bot behaviour).

> If you only listened to 1 song, the rights holder would receive all of your monthly payment (sans Spotify’s cut)?

There is no downside at all here, but it seems you think so?

It would help solve bots absolutely, but there are other ways to approach fraudulent activity. I don’t see a huge downside personally, but I’m not in the industry. Given it’s a large, competitive market and this change appears revenue neutral, I think there must be underlying reasons neither of us are aware of.

If the majority of artists and labels wanted this system I don’t see why they couldn’t lobby and negotiate for it?

Wait what? So people that use the service more support their artists more? That's unfair. I pay the same 10 euro's per month as they do. My use should have nothing to do with it.

If I decide to only listen to one song, then the proceeds of my 10 euro's should go to that artists. At least, I'd find that logical.

I wish I didn't know what you just wrote, but thanks for mentioning it anyway.

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Yup, there are a few more variables[1] going into it, but that is the cliffs notes.

1. https://releese.io/article/how-are-royalties-calculated-on-s...

Wow, that’s a back rub of a puff piece even for a trade rag. Hix In Stix Love Context-free Stats might be a better title. It conflates data from multiple, unrelated years, makes no mention of how their traffic or revenue grew during those years and tries to pass blame onto amorphous “rights holders” who are the ones really taking too much money.
You can argue back and forth over how much they pay and how its distributed.

For me personally its a black and white divide. I pay for Spotify and something gets put back in to the industry or we all pretend its 2005 again and start sailing the high seas so nothing goes back.

I'm sure with a 1gb up/down home connection its easier than ever.

secret third option: I like a band so I sail the high seas and then buy merch, or join a patreon, or some other way of cutting out at least some of the most egregious middlemen and directly supporting artists.
Funny enough, my wife and I are going from the US to London this summer and part of our plan is to see Lionel Richie while we are there…
  • ghaff
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Most people don't have a home connection like that but I'm not sure it really matters.

The mainstream has generally accepted a music streaming subscription as a much more convenient alternative to routine piracy and has mostly gotten out of the habit of purchasing music whether digital or on-disc. Yes, there are exceptions--probably more than in the population here--but they're certainly not the norm.

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> Most people don't have a home connection like that but I'm not sure it really matters.

It doesn't. Even on a rough 4g connection you can download a full song in about a second and upload one in about 10 seconds.

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A lot of people here vastly overvalue a very high speed internet connection when it rarely matters past some (relative low bandwidth on a reliable link) connection for most.
It's not black and white when there are other platforms that do a better job at distribution.
I'll admit ignorance in this area.

Can you name me one that will do unlimited everything, no adverts, PC and mobile for about £9 a month?

Apple, Deezer, Tidal and Spotify are all about the same price (Spotify is £11.99 in the UK, Tidal is 10.99) and they all have all of those features.

Tidal claim to distribute more to artists than the other big ones, and Deezer claim to do so as well, or have a better compensation model, or something. AFAICT from using Spotify, Deezer and Apple they all have access to the same library, with more or less the exact same gaps.

This is not to say any of them are perfect, but it does give us room to say “Spotify have flaws with how they spend our subscription money, you can choose not to use them” without implicitly or explicitly encouraging piracy. Some artists I like have encouraged people to switch away to the other services because of what they see as unfair practice from Spotify.

Currently I use Apple because I bundle it with other Apple stuff. Plus on top of those features I can also sync my own mp3 collection and use that from wherever (in theory, in practice the sync is partially successful, which is somewhat frustrating).
>> In 2023, the company said it pays out nearly 70% to the industry

Does not stop there; there are tiers of middlemen: https://youtu.be/kVY7-Ti77UQ?si=2neBSw4yJL7qGdxX&t=441

Ignoring the 425M free users (where ad revenue comes in), given that Spotify has 250M paying users, that it translates to $3.33/month/user being paid to the music industry. This isn't a lot. And in maybe a more benevolent world where automatic tipping a coffee's amount of money to a weighted-distribution of your favorite music artists every month is a thing (think: one dropping change money into the hat / empty guitar box of a performing street music artist), that we could not only have way better open music clients but also have this $3.33/month go directly to the artists. This is predicated on benevolence, as in this case music will be free to download in the first place.
  • _bin_
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Q2'23: 343mm MAU

Q2'24: 393mm MAU

They have 114% the users and paid 111% the royalties. Seems reasonable.

A much better model would be that Spotify split the monthly revenue from each user amongst the artists they listened to that month.
I don't use Spotify at all, I still buy my music (direct from the artist if I can) so I have the mp3s. No messy bs with some streaming service that can cut off my music.
Spotify is part of the music industry.
thats it?