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Spotify paid $7 billion to the music industry last year – and other fun stat brags – Complete Music Update


Spotify

Spotify
In a big week for digital music stats, Spotify followed the publication of the IFPI’s ‘Global Music Report’ on Tuesday by yesterday updating its Loud & Clear website with a bucket load of juicy facts and figures that simultaneously counter and empower the market leading streaming service’s critics.
Spotify launched Loud & Clear a year ago as the whole economics of streaming debate was reaching a peak, especially in the UK with the good old Parliamentary inquiry, but in the US too with the artist-led Justice At Spotify campaign and the controversial song royalty rate reviews in front of the Copyright Royalty Board.
And, for that matter, in many other countries around the world as well, where groups repping artists, songwriters and/or managers have raised various issues with how the streaming business works.
Via the Loud & Clear website Spotify seeks to explain the somewhat complex way in which it interacts with and pays the music industry, as well as directly responding to some of the more common criticisms made about the streaming firm.
In part it does that by answering questions like: “I heard Spotify pays a fraction of a penny per stream – is that true?”; “Why does the ‘per stream rate’ appear lower for Spotify that some other streaming services?”; “Would the user-centric model be more fair?”; and “Spotify is spending millions on podcasts – why isn’t the music industry seeing that money instead?”
Elsewhere, the Spotify site also seeks to counter the narrative that prevails in some quarters that streaming fucked everything up for the music industry and the artist community.
Of course, the IFPI’s ‘Global Music Report’ does a good job of countering that narrative too. After all, it confirms that the record industry has been in growth for seven years now following fifteen years of decline between 2000 and 2015.
And that has been very much powered by premium streaming, which now accounts for 47.3% of global recorded music revenues. And Spotify, of course, was a pioneer of the premium streaming business model, spending billions to get it off the ground in the late 2000s and early 2010s.
But just in case anyone missed that memo, the Loud & Clear site tries to hammer home the fact that – far from fucking everything up – premium streaming was the one business model that turned around the fortunes of a record industry in decline, bringing on the good times.
Among the new stats added this week to back that up are that “in 2021, Spotify paid out $7 billion to the music industry – more than any other service – and set the record for the highest annual payment from any single retailer in history”.
Oh, and “in 2021, streaming revenue alone exceeded total industry revenue in each year from 2009 to 2016”, which means that “major record labels earned over $4 billion in profit in 2021, driven by streaming”.
Of course, there’s another narrative that Spotify is also keen to counter. That’s the narrative that goes: OK, yes, it was premium streaming that took a declining record industry back into growth – but all that growth has only benefited major record companies and superstar recording artists, because the majors and Spotify conspired to build the business that way. Meanwhile, most artists and songwriters are going broke in the streaming age.
In fact, Spotify is keen to stress in its latest stats, more artists are succeeding in the streaming age than ever before. So – not only did more than 1000 artists see their music generate over $1 million on Spotify last year – but over 50,000 artists saw their tracks earn at least $10,000 in Spotify royalties.
Plus, on the songs side, over a billion dollars was paid out last year to music publishers and songwriter collecting societies. And as a result of all that, the music industry is actually less dominated by the superstars in 2022 – or, to quote Spotify, “the industry at the height of the CD era favoured superstars twice as much as today”.
Of course, just because an artist’s music is generating millions – or a more modest $10,000 – doesn’t mean that’s what the artist is getting in their bank account. Artists on conventional record deals are usually only seeing 20-25% of that money, even if they have recouped past advances. And where it’s old music by heritage acts receiving the Spotify payments, the artist is often seeing an even smaller cut.
But, while that may be true in many cases, Spotify insists that “over 28% of artists who generated over $10,000 self-distribute to Spotify”, meaning those artists are likely getting the majority – probably the vast majority – of the money.
But, even where an artist is banking that $10,000 entirely – and they’re a solo act so they’re not having to share it with bandmates – that’s still not a living. Except, of course, Spotify is only one revenue stream for an artist.
And it’s at this point in the back and forth with its critics that Spotify – a bit like the major record companies – has to balance the bragging about being the biggest and the best and the most successful, with the concurrent claim that it’s a relatively small cog in a big machine – artists, after all, have so many revenue streams to tap and so many business partners to choose from in the streaming age. Both positions are actually accurate, but they do seem a bit contradictory.
It’s with that particular balancing act in mind that Spotify’s latest stats also include the claim that – for the artists earning at least $10,000 from Spotify each year – there’s probably another $30,000 of recorded music income coming in from other channels, digital and otherwise. And even if that $40,000 has to be shared between a band of four, let’s not forget all the other music revenue streams beyond recorded music!
Of course, now is both the best time and the worst time to be a music-maker – because it’s so much easier to get your music to market, but as a result there is so much more competition.
Spotify last year said that it had eight million creators on its platform. That figure likely includes podcasters. But, hey, if you’re a musician on Spotify, podcasters are also your rivals now, because they are also seeking to build and monetise a fanbase.
And, however you look at it, Spotify has had a role in both making it the best time and the worst time to be making music. Though on balance, the positives probably do out-weigh the negatives. Which isn’t to say there aren’t legitimate concerns aplenty with the way the streaming business works. There definitely are. And Spotify can’t pass the buck back to the music industry on every one of those issues
That said, many of the criticisms made against the streaming service aren’t entirely fair and much of the push back by Spotify on its Loud & Clear website – both within the stats and the FAQs – is valid. Nevertheless, in isolation, most of the stats can also be used to back up the criticism – including all the unfair criticisms – which is why its critics are simultaneously countered and empowered by the site and its stats.
This is also why the Loud & Clear venture, although admirable, doesn’t necessarily achieve its objective of fixing Spotify’s tarnished reputation. Though, in the wake of the Joe Rogan debacle, the mega-bucks FC Barcelona deal and the ongoing Copyright Royalty Board hearings, fixing that tarnished reputation would probably be a tall order anyway.
Meanwhile, stat fans, go and enjoy Spotify’s latest round of stat bragging, and decide for yourself if the all important message that “Spotify isn’t as evil as they say” is actually being made loud and clear.
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When I wrote that, 2021 wasn’t quite over, so year-end financials weren’t available. They’re available now. According to the Recording Industry Association of America, in