Spotify paid out record $9 billion in music royalties in 2023, report reveals
1,250 artists earned over $1 million each in recording and publishing royalties in 2023; 11,600 made over $100,000 and 66,000 made over $10,000
Spotify, the music streaming giant, paid $9 billion in royalties in 2023 the company revealed in its latest 'Loud and Clear' report.
The report, which started in 2021 after criticism about Spotify's transparency, highlighted record achievements, including the highest annual payment from any retailer to the music industry. Charlie Hellman, the vice president and global head of music product at Spotify, said: "This is everything we know about how much is being paid out, how many artists are achieving different levels of success."
He said that everyone can access this information to stay updated with the state of the industry. The data showed that 1,250 artists earned over $1 million each in recording and publishing royalties in 2023; 11,600 made over $100,000 and 66,000 made over $10,000 - figures that have almost tripled since 2017.
More than half of those 66,000 artists were from countries where English isn't the first language, reflecting the increasingly global music scene. The report also revealed that "indie" artists - self-distributed acts and those on independent record labels - accounted for $4.5 billion, half of all royalties paid out by Spotify.
"There are millions of people who've uploaded a song at least once but that doesn't really speak to whether they're an artist, or if they're doing this more as a hobby," Hellman says. Spotify focuses on artists who have "at least put up an album's worth of music once they seem to have some indication that they're trying to build a fan base."
He thinks there are "about 225,000 professionally aspiring artists" on the platform. "They have a little bit of a following. They might, you know, have gigs listed on Spotify or things like that," he adds.
In December, Spotify said it was cutting 17% of its global workforce, which is the third time in 2023 that it has let people go to save money and try to make a profit. The month before, Spotify decided it would stop paying for songs that get less than 1,000 streams a year, starting in 2024.
"Songs that generate less than a thousand streams in a year would be generating pennies, a few cents in royalties," Hellman explains. "So what we're seeing was that there was an increasing amount of uploaders that had $0.03, $0.08, $0.36 sitting there."
For those making music at home, there's a minimum amount they need to make before they can take money out - it's $5.35 at DistroKid and $1 at TuneCore, which are two companies that help with this. Hellman says the fees to get your money would be more than the money you made from the songs.
Spotify and other streaming services pay royalties to musicians when their songs are played. They work out how much to pay by using "streamshare." This means they look at how often a rights holder's music is played and compare it to all the plays on the platform.
So, if a rights holder has lots of music being played, they get a bigger share of the money. But just because you listen to one artist a lot doesn't mean they get a big chunk of your subscription money.
Hellman explained why they changed things: "All those pennies sitting in bank accounts all over the place was siphoning money away from artists that were really doing this, as an aspiring professional. And so, those royalties are now being put in the pot so that they can be redirected to artists that are getting more than a thousand streams a year."