Spotify’s new 2023 Loud & Clear report sheds light on the financial landscape of the music industry, revealing the arduous journey artists undertake to achieve substantial earnings on the streaming platform. According to the report, reaching the coveted seven-figure income bracket on Spotify necessitates amassing a substantial audience, with artists typically requiring 4-5 million monthly users or 20-25 million monthly streams.
The report underscores Spotify’s significant financial contribution to the music industry, with the streaming giant disbursing over $9 billion in streaming royalties in the past year alone. This figure represents the highest annual payment to the music industry by any single retailer, marking a remarkable tripling of royalties over the past six years.
Despite Spotify’s vast catalog boasting over 100 million tracks contributed by tens of millions of uploaders, surpassing the $1 million mark in annual royalties remains a rare feat. In 2023, only 1,250 artists managed to hit or exceed this benchmark, highlighting the immense competition and challenges artists face in monetizing their music on the platform.
However, the report also reveals a broader spectrum of earnings, with 11,600 artists achieving $100,000 in royalties and a significant 66,000 music makers cashing royalty checks totaling $10,000 or more last year. This indicates that while reaching the upper echelons of Spotify earnings may be elusive for many artists, there remains a sizable cohort benefitting from the platform’s royalty payouts.
Spotify royalties
Spotify’s royalty payment structure is fueled by a revenue pool generated from advertising sales on the platform and subscription fees from premium users. The company made significant policy changes last fall aimed at refining the distribution of royalties to artists and creators. These changes raise the threshold for eligibility to earn royalties, ensuring that only tracks streamed a minimum of 1,000 times over the past 12 months qualify for payouts.
Previously, tracks with fewer than 1,000 streams generated minimal royalties, often insufficient to cover even the associated banking fees for distributing payments. Under the revised policy, the revenue from these sub-1,000 streamers remains in the pool, benefitting higher-output artists who meet the minimum stream threshold.
Charlie Hellman, Spotify’s Vice President and Global Head of Music Product, emphasized the need to prioritize artists who rely on streaming as a primary source of income. By directing royalties towards creators committed to building careers in music, Spotify aims to support emerging and professional artists who depend on streaming revenue for their livelihoods.
Spotify’s Loud & Clear report underscores the impact of these policy changes, highlighting a record year for royalties distributed to DIY artists and those signed to independent labels. In 2023, half of the $9 billion in royalty payouts, totaling $4.5 billion, went to indie creators. Additionally, Spotify emphasizes the diversity among content creators on its platform, noting that over half of the artists who earned at least $10,000 in royalties last year hail from countries where English is not the primary language.
Overall, Spotify’s efforts to refine its royalty payment structure reflect a commitment to supporting artists and creators while fostering a diverse and inclusive music ecosystem. By prioritizing those artists most reliant on streaming income, Spotify seeks to empower musicians to pursue their passion and build sustainable careers in the music industry.
Taylor Swift among top Spotify artists
Despite the dominance of top-tier artists like Taylor Swift, Bad Bunny, and The Weeknd, who garnered billions of streams on Spotify in 2023, the streaming giant reveals an intriguing trend: half of the 1,250 creators who earned at least $1 million last year did not have a single song featured in Spotify’s Global Top 50.
This data challenges the perception that high-earning artists on Spotify are solely established legacy acts capitalizing on past hits. In fact, over 1,000 artists in the million-dollar club began their careers in 2010 or later, highlighting the platform’s role in fostering success for emerging talents.
Spotify attributes the surge in royalties to the exponential growth in streaming activity among its 600 million listeners. As evidence, the platform notes a substantial increase in the number of streams required for a song to rank among the top 10,000 tracks. For instance, while a song needed only 9 million streams in 2017 to secure a spot on this list, the threshold skyrocketed to 35 million streams in 2023.
This shift underscores the evolving landscape of music consumption and the democratization of success in the industry. With the rise of streaming platforms like Spotify, artists have greater opportunities to connect with audiences worldwide and earn revenue, regardless of their level of mainstream recognition. As streaming continues to shape the music industry, the platform’s data offers insights into the diverse array of artists finding financial success and recognition through their music on Spotify.