Business

Spotify Has Paid Over $23B to Rights Holders, Launches Website on Artist Payouts

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Last year 7,800 artists generated recording and publishing royalties totaling over $100,000, according to the Loud & Clear website.

Spotify has launched a new website called Loud & Clear intended to increase transparency around how the service pays rights holders. The website includes a look at how much revenue artists on Spotify have generated over the past four years, how many artists have reached different earnings milestones — ranging from $1,000 to $1 million — and an interactive tool that will show artists where their streams and monthly listeners rank in the pantheon of artists on Spotify.

“We’re talking about this stuff all the time, but I think externally we've been too quiet on the topic, and not said as much as we could have,” Charlie Hellman, Spotify vp and head of marketplace, tells Billboard. “That's one of the main reasons that we wanted to get this out there. I think artists deserve more clarity about how the music streaming economy works.”

According to the website, last year 7,800 artists generated recording and publishing royalties totaling over $100,000, 1,820 artists earned more than $500,000, and 870 artists topped $1 million. The number of artists reaching each of those milestones has grown by more than 80% over the past four years, Hellman says. As of last year, Spotify says it had paid over $23 billion in royalties to rights holders, and the company accounted for nearly 20% of recorded music revenue in 2019.

It’s clear that Spotify is trying to control the messaging around its influence and contributions to the industry. The streaming service is routinely criticized by artists and managers for not paying enough for their music, and in a video on the website called “How The Money Flows” Spotify highlights — in giant letters — that “it does not pay artists or songwriters directly” before moving on to describe the number of ways an artists’ revenue from Spotify can be split up by rights holders, managers, collaborators, and others before making it to their pockets.

The move comes days after an international protest over Spotify’s per-stream rate from unions representing musicians. The protests took place at Spotify offices in 31 cities around the world. Spotify is also the subject of a probe from the U.K. Parliament to determine whether musicians are fairly compensated by streaming platforms including Spotify, YouTube, Apple Music, and Amazon Music.

“While streaming is a growing and important part of the music industry contributing billions to global wealth, its success cannot come at the expense of talented and lesser-known artists,” said Julian Knight, chair of Parliament’s Digital, Culture, Media and Sport (DCMS) committee last October. “We’re asking whether the business models used by major streaming platforms are fair to the writers and performers who provide the material.”

Spotify’s business model is also being challenged by its competitors after SoundCloud changed its payment structure for independent artists to a user-centric payment structure, one long-favored by smaller artists who feel the current “pro-rata” model — which pools subscriber revenue and pays out earnings to the artists who brought in the most streams — isn’t fair to artists with limited yet engaged fanbases.

Despite its many challenges, Spotify remains a behemoth that generates a significant amount of revenue for artists, and additional transparency is always an improvement. “We have to acknowledge that our work is nowhere near done,” Hellman says. “We keep investing in Spotify to try to generate more subscribers, more revenue for everybody, and we know that we're not done.”

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