Business

Pays to Be Popular: Breaking Down Spotify's 2020 Artist Payouts

Republic of Spotify Earnings

Data released by the service shows the music business is as hit-driven as ever.

If Spotify were a country, its population of 4.47 million acts with at least one monthly listener would rank just above Panama as the 128th largest in the world.

Economic power is highly concentrated, though. In Spotify’s home country of Sweden, those in the 80th percentile of income make 4.1 times as much as those in the 20th percentile, according to the Organization for Economic Co-operation and Development, while in South Africa — the OECD-tracked country with the highest inequality — income in the 80th percentile is 37.6 times larger than that of the 20th.

In Spotify, as measured by monthly listeners, that multiple is 78. The median act, in the streaming service’s 50th percentile, has just 16 monthly listeners. The power is all at the top: Acts in the 90th percentile have 7,100 monthly listeners, while acts in the 99th percentile still have just 99,000.

On March 18, amid a U.K. Parliament inquiry into the fairness of streaming royalties, Spotify released a trove of data on the online microsite Loud & Clear "to increase transparency and shed light on the complicated economics of music streaming," according to CEO Daniel Ek. Those economics can be unforgiving. Spotify, and the streaming model it helped popularize, turned the industry around, and last year, the service paid out $5 billion — 20% of all global recorded-music revenue. While equality is improving, however, only 7,800 artists — 0.17% of that 4.47 million — earned over $100,000 in recording and publishing royalties in 2020.

The business of popular music has always been driven by a relatively small number of superstars, for better and for worse. And although some executives expected that the "long tail" of digital availability would even out popularity, this hasn’t been much help to most working musicians. It’s still a long way to the top if you want to rock'n'roll.

Where The Streams Flow

Of the 4.47 million artists on Spotify with at least one monthly listener, just 71,000 have over 50,000 listeners a month — the bottom vertical limit of the graph below, which shows how many artists reach how many listeners each month. Only about 1,000 artists have over 5 million monthly listeners, and audience numbers narrow more from there.

The Great Divide

A streaming service isn’t a real-world economy, but comparing popularity to income distribution in different countries shows how much "wealth" goes to the top. In the "Republic of Spotify," the 90th percentile of artists, as measured by monthly listeners, gets 91 times the monthly listeners of the 50th percentile, while the 80th percentile gets 78 times that of the 20th percentile.

Top Of The Class System

While Spotify is paying more musicians more money every year, those at the top get more still. Spotify had 4.47 million artists with more than one monthly listener in December. During the entire year, 13,400 made over $50,000, and just 870 exceeded $1 million.

This article originally appeared in the April 3, 2021 issue of Billboard.