Spotify has made a name for itself as one of the world’s top audio streaming services. People can stream music from Spotify for free, or they can spend a small price each month for ad-free streaming. The system is also available on multiple devices.
But one question to note involves how much money people who place their music on Spotify can get off of the service. People are not buying their tracks or albums directly, but instead are streaming individual songs or albums through the Spotify platform.
So, how much does Spotify pay per stream? Let’s look at some of the intricacies surrounding Spotify and how artists earn money. These totals can be high, but they might also be concerning to some people.
Understanding the Concept
To understand the value of Spotify, it helps to look at what it provides. Spotify is a service that allows people to stream music from various artists from the past and present. Spotify works on multiple devices, including mobile phones and tablets. People can even use Spotify in a car, on a smart TV set, or a PlayStation or Xbox video game console.
The platform has been trendy over the years. Estimates suggest that more than 250 million people throughout the world use Spotify each month. About 125 million of those users pay for premium subscriptions.
A Complicated Value
There’s no particular set value for how much an artist will earn for each Spotify stream. A pro-rata approach works when paying out artists and others associated with the music. Soundcharts reports that Spotify and most other streaming services use this model for distributing royalties.
The pro-rata effort entails a few steps for figuring out what people can receive:
- Spotify calculates the money it generates over a month.
- The money for the artists will be gathered after calculating the operating expenses for Spotify.
- The listening time for artists is calculated. The time includes a look at how often people stream the music, and how many times people complete those streams. Plays that last for a few seconds do not count.
- The people who are streamed the most and listened to the most will earn the most money.
Let’s say that Harry Styles made up about 3 percent of the streams for one month. Styles and the others who have a share in his music would earn about 3 percent of the money that Spotify will pay its artists.
This point has become a criticism of Spotify and other streaming services. While Drake or Billie Eilish will earn thousands from Spotify each year, a smaller artist that doesn’t get as much exposure will not receive as much. Still, a newer artist who is looking to gain exposure can earn money off of Spotify streams, but it would take an extra bit of effort to make one’s work more noticeable.
The Specific Total
The most noteworthy part of Spotify is that while the pro-rata approach works for how much artists earn, that doesn’t mean there’s a set value for what they will get for each stream. The specific money per stream varies by source:
- Business Insider states that an artist will earn about $0.003 for each stream.
- Investopedia and Digital Music News report that Spotify has been working to increase what artists earn. In 2019, artists were getting $0.00437 per stream.
- Songtrust says that the total is closer to $0.0038 per stream.
For the Sake of Comparison
While the totals artists get from Spotify might seem minimal, it does help to compare that total with what others offer. Soundcharts says that Spotify is right in the middle when it comes to how much people will earn off of streaming services. Soundcharts calculated the totals that were recorded by multiple sources and found that Spotify artists on average receive more per stream than what they’d get off of Pandora, YouTube, UMA, or Yandex.
An artist would only get $0.00151 per stream off of Pandora. Meanwhile, an artist gets $0.00164 off each YouTube stream.
There are plenty of streaming sources that pay more money. Amazon Music Unlimited pays $0.01196 per stream, while Tidal pays $0.00989 per stream. But those services aren’t as popular as Spotify, not to mention they don’t have as much to stream as what Spotify offers.
How Artists Get Their Money
The streaming nature of Spotify makes it to where people will listen to music without buying anything. Think of it as something where people can temporarily loan the music out to listen. The subscriber doesn’t own the music, but that person has the option to listen to it as often as one wishes.
There are three points for how payments come out from Spotify:
- Artists earn mechanical royalties from the right to reproduce one’s work.
- Public performance royalties come from how the streamer will listen to what is essentially a public performance. The streamer doesn’t have ownership of the music, just like the person who is listening to a performance.
- The owner of the recording will get a payout, as that person’s work will be accessible to many users.
Where the Money Comes From
The money will come from two critical sources. First, there is the ad revenue that Spotify collects. People who use Spotify for free will have to listen to or see various advertisements in between songs.
Second, there are subscription fees. People can spend $9.99 per month for ad-free streaming, or $14.99 per month for a family account with parental controls.
Dividing the Total
One other point about what artists get comes from how many people will have to share the royalties they get off of Spotify. The actual artist might not get all the funds one is hoping to earn.
The Planetary Group states that the streaming payouts from Spotify and other services are divided up between many people. These include:
- The publisher or record label that releases the music, if there is one
- Any writers outside of the original artist
- Any entities the artist is a member of, including ASCAP or BMI
- The actual artist or performer
- Anyone else who has a financial interest in the final product
In short, the artist will have to share all those royalties with other people. The artist’s total royalties won’t be as high unless that artist releases the music on one’s own or doesn’t hire other parties to assist in the writing effort.
An Issue Among Many
Many artists have been heavily critical of Spotify over the years. Much of this comes from how those artists aren’t earning as much money as they wish. The greatest concern from artists is that Spotify is not issuing enough of its revenue to the artists and rights holders. The people who work for Spotify get much of the money, while the people who supply Spotify with the music that makes it run get hardly anything. The issue is compounded further by how streaming services are cutting into album and track sales.
DJ Mag states that Spotify earned $7.44 billion in revenue in 2019. But as TechCrunch also reports, Spotify only gives 70 percent of its revenue to artists and music companies for royalties. The disparity makes it to where Spotify’s employees will receive immense amounts of money while the artists don’t get much.
Spotify has to cover substantial operating expenses. The Verge writes that Spotify has only turned a quarterly profit a few times in its existence. The third quarter operating profit in 2019 was worth about $60 million. But there are concerns among some artists over how much money Spotify spends on keeping its operations up, not to mention how people who are more popular have a better chance of earning money.
These points have caused many artists to refuse to make their music available to Spotify. Taylor Swift and Thom Yorke both removed their music from Spotify in protest over how artists earn money, but they have since put their music back on the platform.
Many artists still refuse to allow their music to appear on Spotify. Some of these artists refuse out of principle or fairness. Others are uncomfortable with the idea of allowing their music on such services. Artists like Garth Brooks, Bob Seger, and Joanna Newsom refuse to allow their music to appear on Spotify. Meanwhile, some artists like Led Zeppelin and Tool have a change of heart and allow their music to appear on Spotify. Some artist discographies don’t become available until after their deaths, the most noteworthy instances being for Prince and Aaliyah.
People can get paid a good deal of money off of Spotify, but the way how the money goes around should be noted.
The money that an artist will earn is minimal, but it can rise if someone gets more streams. But the total amount that people receive could be a concern, especially considering how much money Spotify earns.
But Spotify does provide more money per stream than some other options, but even that could be an issue when the money Spotify regularly brings in, and its expenses for work come into play.