This move is part of Spotify's strategy to counter claims that it doesn't fairly compensate artists. It's important to remember that these payouts also cover payments to other partners, like publishers.
A report from the International Federation of the Phonographic Industry (IFPI) highlights that there are over 500 million paying music streaming subscribers globally. Spotify boasts over 252 million subscribers according to its Q3 2024 report, with more than 60% of its users on the ad-supported free tier.
David Kaefer, Spotify’s VP of Music Business, mentioned in a post, “For a lot of people, those numbers might go in one ear and out the other. And they’d perhaps ask why Spotify keeps shouting about it. It’s because the system we’ve built together is working, and where we are now is only the beginning. Today, there are more than 500 million paying listeners across all music streaming services. A world with 1 billion paying listeners is a realistic goal we should collectively set.”
The company shared various reports indicating that Spotify plays a major role in global streaming revenue. They also noted that over 10,000 artists make more than $100,000 annually from streaming, a significant increase from 2014 when over 10,000 artists earned more than $10,000 a year.
Earlier this month, a report from music financing platform Duetti pointed out that per-stream rates for independent artists are stabilizing after a decline. However, Spotify had the lowest payout at $3.00 per 1,000 streams, while other platforms like Amazon Music, Apple Music, and YouTube paid $8.80, $6.20, and $4.80, respectively, per 1,000 streams in 2024.
The report highlighted that even though Spotify has been increasing prices for its subscription plans over the years, the average payout to artists has actually gone down.
Spotify pushed back against Duetti’s assertions, challenging the figures in the report and calling out the “unattributed guesses” throughout.
“These claims are ridiculous and unfounded. No streaming service pays per stream because that approach would incentivize streaming services to minimize streams. It would mean low engagement, fewer artist connections, and lower overall payouts. Instead, we take the opposite approach. We want users to engage more so that they pay more — both by sticking around and choosing premium,” a spokesperson for the company stated.
Additionally, the report pointed out that Spotify’s Discover Mode, which helps artists get more visibility through algorithms while accepting a lower payout, is leading to a rise in the number of streams. This means artists need to be streamed a lot more just to make the same amount of money.
There's also growing competition for streaming revenue. Luminate’s annual music report revealed that an average of 99,000 tracks were uploaded to streaming platforms every day. The report also mentioned that global streams reached 4.8 trillion, marking a 14% increase from the previous year.