Spotify's Royalties: Impressive Numbers, But Who Really Benefits?
As Spotify announces impressive payouts to artists and rightsholders, music industry experts question who is really benefiting. While the streaming platform's figures are certainly impressive, the vast majority of that money goes to established record labels and publishers, rather than independent or bootstrapped artists. Additionally, many independent artists complain that the platform's royalty rates are too low and they receive little support from the company in terms of promotion or marketing.
Spotify's annual Stream On event held in Los Angeles on March 8, 2023, introduced a host of new product updates and tools for artists.
The company also published its annual music royalties report, Loud & Clear, which provides insights into how much artists and rightsholders earn from music on the platform.
As a music expert with 20 years of experience in brand strategy management, this report aims to identify the value proposition for bootstrapped artists.
Overview of Spotify's Music Royalties:
Spotify's updated Loud & Clear report reveals that "nearly 70%" of every dollar generated from music on the platform is paid back as royalties to rightsholders, which includes record labels, publishers, independent distributors, performance rights organizations, and collecting societies.
As of 2022, Spotify's all-time payouts to the music industry are approaching $40 billion, which includes both recording and publishing royalties. The company also reported that in 2022, it had paid more than €34 billion ($35.75bn at annual average exchange rates) in royalties to certain record labels, music publishers, and other rights holders since its launch.
Earning Potential for Bootstrapped Artists:
Spotify reported that in 2022, 10,100 artists generated at least $100,000 on the platform alone, up from 4,300 artists five years ago. These artists come from more than 100 different countries worldwide, and streaming has lowered barriers to entry.
Artists who, in the past, might have struggled for opportunities, are now finding their audiences. Additionally, 57,000 artists generated more than $10,000 on the platform in 2022, up from 23,400 in 2017. Of these artists, nearly 20,000 live in countries outside the IFPI's Top 10 music markets. Moreover, 1,060 artists generated more than $1 million on the platform, up from 460 in 2017.
These figures represent revenue generated from Spotify alone. When taking into account earnings from other services and recorded revenue streams, these artists likely generated four times this revenue from recorded music sources overall, plus additional revenue from concert tickets and merchandise.
Key Takeaways for Bootstrapped Artists:
Based on Spotify's updated Loud & Clear report and Stream On event, bootstrapped artists can benefit from the following value propositions:
- Earning potential: Spotify's platform provides opportunities for bootstrapped artists to earn significant revenue from music streaming. The number of artists generating more than $1 million and those generating $10,000-plus has more than doubled over the past five years.
- Lowered barriers to entry: Streaming has lowered barriers to entry, providing opportunities for artists who, in the past, might have struggled for opportunities, to find their audiences.
- Geographic reach: Nearly 20,000 artists live in countries outside the IFPI's Top 10 music markets, indicating that Spotify's platform provides an opportunity for artists to reach audiences globally.
- Revenue streams: Bootstrapped artists can benefit from revenue generated from other services, such as merchandise and concert tickets, in addition to revenue generated from music streaming on Spotify.
Conclusion:
Spotify's updated Loud & Clear report and Stream On event provide insights into the earning potential and value proposition for bootstrapped artists on the platform. Bootstrapped artists can benefit from earning significant revenue from music streaming, lowered barriers to entry, geographic reach, and revenue generated from other services. Therefore, bootstrapped artists should consider leveraging Spotify's platform to reach their audiences and generate revenue from their music.
