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Streaming is the number one source of revenue for the music industry. But this business model does not benefit all performers equally. Only 57,000 musicians earned more than $10,000 in 2022 from Spotify, according to the latest figures from its Loud & Clear site.
Streaming is the number one source of revenue for the music industry. But this business model does not benefit all performers equally. Only 57,000 musicians earned more than $10,000 in 2022 from Spotify, according to the latest figures from its Loud & Clear site.
This figure seems low considering that the Swedish music streaming giant hosts the creations of millions of artists on its platform. However, it has been on the rise in recent years. By comparison, only 23,400 musicians earned more than $10,000 from Spotify in 2017. A similar pattern can be seen for the top earners in music streaming. For example, 1060 singer-songwriters earned more than $1 million in 2022 from having their music available on Spotify, up from 460 in 2017.
The company says this is just the tip of the iceberg. "For a rough estimate, you can multiply the Spotify revenue by four to approximate how much artists generated from all recorded revenue sources in 2022," plus of course revenue from touring and merchandise, the Loud & Clear site states.
Spotify has released more figures showing how its revenue is paid out to artists and how that money is distributed, how "the money flows" in their words. The number one streaming company says 10,100 artists generated at least $100,000 on its platform last year. That compares to just 4,300 in 2017. In addition, the site Loud & Clear claims that 200,000 musicians accounted for 95% of the royalties generated by Spotify's business.
Music in the time of algorithms
The Swedish firm has been highlighting its transparency on the subject since March 2021, when it launched its website Loud & Clear, which specifically explains how much revenue is paid to singer-songwriters and how that money is distributed. But the company's remuneration model is increasingly coming under criticism, as is that of most of its competitors. It is being criticized both by artists, who feel that they are largely underpaid, and by the record companies.
Record labels have called out the algorithmic system of music streaming platforms as threatening their content. "Today, some platforms are adding 100,000 tracks per day. And with such a vast and unnavigable number of tracks flooding the platforms, consumers are increasingly being guided by algorithms to lower-quality functional content that in some cases can barely pass for ‘music,'" said Lucian Grainge, head of Universal Music Group (UMG), in a note to his employees that was published by the specialized site MusicAlly.
These "lower quality" tracks -- which may include lo-fi, white noise, rain noise, etc -- dilute the musical offer and take up a significant part of the listening time. However, the remuneration system of Spotify and other streaming companies consists precisely in paying rights holders the revenues generated by streaming according to the number of listenings. This is why the major labels would like to see songs produced by their artists benefit from a different remuneration ratio than background music.
But not everyone agrees on such an alternative. Some point to the highly subjective nature of what labels call "good" music. "Is it fair for streaming of non-background-noise music to earn more if this is not the dominant music behavior? And what about the whale sounds enthusiast — is their fandom less valid than fandom of Taylor Swift?" asks Tatiana Cirisano, an analyst at British firm MIDiA Research. The subject continues to one with a lack of consensus.
