With over 144 million subscribers worldwide, Spotify has become an unstoppable force in the music industry. Boasting over 50 million songs and 700,000 podcasts, Spotify has quickly become the place for upcoming and established artists to share their work.
If you are wondering about how much Spotify pays your favorite artists, keep reading. (Hint: Surprisingly, not a lot.)
How Do Spotify Artist Payouts Work?
Despite its widespread use, Spotify is notorious for its lack of transparency with how it pays its artists. Contrary to popular belief, the artist payout is not as straightforward as tallying the number of streams.
Several things come into play for Spotify artist payouts like the listener’s subscription tier and country of origin, the number of streams a song has, advertising revenue per market, and distribution contracts.
Because there are many nuances to the Spotify terms, there is no exact formula for how much artists can expect to get paid per stream. Additionally, much of what we know about Spotify artist compensation is data consolidated by third-party companies, not from Spotify itself.
In 2020, iGroove Music reported that the Spotify payout for one million streams varied from $850 in Argentina to $5,479 in Norway. This discrepancy is likely due to variation of the subscription rates across countries. Spotify Premium can be as low as $1.60 in developing countries like India or up to $15.65 in more developed countries such as Denmark.
Average Spotify payout rates have also been steadily decreasing with time. According to The Trichordist, the average payout for artists on Spotify was $0.0052 in 2014. Fast-forward to 2017, Spotify artist payout average was down to $0.00397.
For a rough comparison of artist compensation on other platforms, Open Mic UK reports that BBC radio stations in the UK pay up to £24.27 per minute.
In 2018, music industry legend Mariah Carey had over 10.8 million streams with her ubiquitous single “All I Want For Christmas” on the Christmas Eve Spotify charts. With the 2018 average pay rate of $0.00331, this number of streams would only net her $35,748.
Despite having 3 million creators on its platform, Spotify revealed in an official shareholder document that only 43,000 make up 90% of the streams. Unfortunately, even among these top artists, Spotify does not even guarantee a living wage.
It was £12.34 for 6 months, in other words for around 5-6 million streams https://t.co/VFjJJ8jq53
— Tasmin Little OBE (@tasminlittle) May 18, 2020
In a tweet, classical violinist Tasmin Little with 755,000 monthly subscribers has disclosed earning £12.34 ($17) for five to six million streams.
Also, Spotify consistently takes 30% of all revenue on its platform. How much artists themselves get paid from the remaining 70% is dependent on their royalty structure. But what exactly are royalties?
Royalties in the Age of Streaming
Royalties are the recurring compensation that creators earn in exchange for the licensed use of their music. Depending on the contract, royalties are a percentage of gross or net revenue from the fixed price unit sold, or in this case, online streams.
Aside from streaming, there are also several kinds of royalties that artists can earn from—public performances, digital sales, physical sales, and sampling. Royalties typically last for the entire lifetime of the songwriter and 70 years afterward.
While for a long time, many artists relied on radio rights, CD, or concert ticket sales for their income, streaming has quickly become an accessible way to earn royalties even for less established artists.
On Spotify, the monthly net revenue collected from both ads and subscription fees generates the royalties. After Spotify takes its cut, these royalties are divided between the various people involved in the music creation process: songwriters, publishers, record labels, mechanical rights agencies, sync licensing agencies, distribution companies, and then finally, the performance artist.
More often than not, distribution companies negotiate the payout fees on behalf of artists. Often, well-known artists have labels that manage the distribution for them. On the other hand, independent artists use distribution services that either charge an annual fee or a percentage of the payout.
While it is true that the most popular artists on Spotify with large followings can easily make a lot of money on streaming platforms through royalties, it’s different for many of the new and upcoming performers. Which begs the question, how do we support our favorite artists on Spotify?
How to Support Artists on Spotify
When it comes to supporting your favorite artists on Spotify, you can do more than stream their songs. There are several things you can do to help increase their earning potential as performers. Here are a few of them.
1. Pay for a Spotify Subscription
On Spotify, revenue is generated through ad revenue and subscription fees. Between the two, artists will be paid more through subscription fees in general. If there are artists you wish to support on Spotify, it makes sense to invest in a premium Spotify subscription. While the payouts may vary per country, your favorite artists will significantly benefit from any stream from a paying subscriber.
2. Follow Social Media Pages
Sharing your favorite artist’s release updates and songs will increase the reach of their posts. With increased visibility, their work is more likely to be seen by subscribers who come from countries wherein their streams are worth more. Engaging with your artist’s content is an easy way to help spread the word about their work without spending any money.
3. Watch Live Concerts
For many music lovers, watching their favorite artists live is an experience remembered for the rest of their lives. While not everyone will visit your hometown, make sure to watch when they do. These days, you can even watch your favorite artists on paid, online live stream performances that don’t need you to leave your house for.
4. Buy Artist Merchandise
While it’s not as common to buy CDs anymore, artists still sell other types of merchandise that you can purchase to support them. For example, many artists also sell t-shirts, hoodies, posters, and stickers with their names or logos. To make sure that your favorite artists are compensated fairly for the use of their name, buy only from officially licensed stores or distributors.
Support Spotify Artists
The work of an artist is a difficult one. In such a competitive and complex landscape, it’s no wonder that many talented artists struggle to make ends meet. While Spotify does increase the chances for previously unknown artists to be discovered, it does come with its own set of challenges.
With the rise of music streaming, traditional ways to compute artist royalties and other forms of compensation are brought into question. Many artists are still trying to find their footing with how to best earn from these kinds of platforms sustainably.
Thankfully, there are many ways to support artists on Spotify and outside it. Whether they are a rising star or an already famous household name, Spotify makes sure that anyone can hear them perform.