TO BE PAID: Is Spotify Paying Artists Enough?

In 2019 Fortune Magazine declared that “Spotify has saved the music industry”. While it is true that streaming has changed the landscape of music forever, not all is well behind the scenes of Spotify’s interface…

Does Spotify underpay musicians?  

While the company has generated a revenue of over 9 Billion dollars in 2021 alone, an increasing number of artists have criticised the platform for giving low pay-outs to musicians. The recent controversy over the Joe Rogan podcast and the hardships faced by many artists during the pandemic has only added oil to the flame. 

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So why aren’t musicians making more money off Spotify?

It all goes back to Spotify’s fee structure: The streaming platform doesn’t pay artists per number of streams, but by “market share”. This means that the amount of money paid out to the artist doesn’t just depend on how often their songs are streamed, but how this number relates to the number of total songs streamed on Spotify in a particular month. In short: As the platform and the total number of songs streamed each month grows, the market share of most artists is bound to decrease. 

Another reason why artists don’t make too much money off Spotify is that most of them don’t hold the full rights to their music. So, while Spotify distributes a total of around 67% of their revenue back to right holders, only a fraction of that money goes directly to the artist. Instead, the money is usually split between the label, the music publisher, the songwriter, and the artist. The exact distribution therefore depends not only on Spotify’s fee structure, but also on the deal between the artist and their record company. 

To put these numbers in perspective: While there are currently over 8 million creators on Spotify, only 2% of them make more than 1000 dollars per year. And it seems that as the number of artists contributing to the platform grows, the profits will continue to dilute among an increasing number of players.  

What’s really at stake is the future of music

Streaming platforms like Spotify have revolutionized the music industry. Music has never been as easily accessible and democratically shareable. While making it in music without a record deal (and radio attention) used to be unthinkable, platforms like Bandcamp, Spotify, TikTok and YouTube have allowed musicians to take matters into their own hands. 

But as the Spotify-controversy shows, there is a much deeper issue at play: As a whole generation has grown up in a world, where paying for music is optional at best, it is becoming increasingly difficult for musicians to live from their art. The pandemic (and resulting cancellation of live gigs and tours) has only added to the hit musicians are taking. 

Whether Spotify will give in to artist’s demands or continue its current path remains to be seen. But one thing is without question: What’s at stake isn’t the Joe Rogan podcast. It’s the future of music.