Are Spotify’s royalties truly ‘Loud & Clear’?
It’s that time of year again when journalists open their inboxes to find Spotify’s Loud & Clear report waiting for them.
At first glance, the report is easy on the eye, and you can’t miss the countless ‘millions‘ and ‘billions’ scattered throughout, among heaps of positive statistics surrounding record revenues, royalties, and growth.
The Loud & Clear report was launched to ‘provide clarity and transparency‘ following mountains of bad press highlighting concerns about compensation and fairness in royalty distribution for artists.
Some argue Spotify’s payment structure disproportionately benefits major labels and popular artists, leaving independent musicians with minimal earnings despite significant streaming numbers.
Spotify has also been accused of not adequately addressing issues such as the gender pay gap in the music industry and failing to provide clear information about how royalties are calculated and distributed.
In 2023, Spotify noted a record-breaking $9 billion in annual payments to the global music industry, with approximately half of that ($4.5 billion) going to independent musicians.
Royalties generated by Australian artists from Spotify last year reached nearly $275 million, a 10% increase compared to the previous year.
Many artists have no other choice but to rely on Spotify. The platform’s expansive reach offers exceptional access to millions of listeners worldwide they may not otherwise reach.
Artists can utilise various promotional tools on the platform, including Artist Pick to make tracks stand out and the Canvas feature, which lets them showcase a short looping video to increase engagement.
Spotify’s algorithms and playlists can help independent artists get discovered by suggesting their music to users who might enjoy it based on their listening habits. The Swedish-based company has also introduced initiatives to assist female and LGBTQIA+ creators.
However, while a 10% increase in royalties sounds good on paper, it’s important to explore whether this growth adequately addresses the financial needs of artists.
It’s harder than ever for musicians to make a living, with many needing to work long hours, pick up second jobs, or push aside their passion to make ends meet.
According to data from Creative Australia, artists earn an average gross income of $54,000, approximately 26% below the national average. The gender pay gap is also reflected in the arts, with women earning 19% less than their male counterparts.
Just like the rest of the population, musicians are feeling the strain of inflation. However, they’re also facing mounting expenses for their art, including escalating production costs, higher travel expenses, and increased merchandise production.
As a result, many independent artists supplement their income through other means, such as live performances, merchandise sales, and crowdfunding.
It’s hard to find a straight answer when researching how much artists earn on Spotify. Reports state the payout is between $0.004 and $0.007 per stream. However, the platform insists it doesn’t work this way. Spotify pays rightsholders, whether that be the artist, label, or otherwise by distributing funds based on stream share, calculated by tallying the total streams and determining the proportion belonging to a particular rightsholder.
American musician Damon Krukowski is just one of the artists to speak out against the streaming giant. In his own words: “Spotify continually talks down the value of music on their platform – they offer it for free; they tell musicians we are lucky to be paid anything for it; they insist that without their service, there is only piracy and zero income. Most tellingly, they invest nothing back into music. Unlike a record label, publisher, or most anyone else in the music industry, Spotify devotes none of its profits to the development of new recordings.”
In conclusion, as we digest the data on the Loud & Clear report, it’s clear that while the numbers may paint a rosy picture of growth and success, the reality for many artists is far different.
Despite its shortcomings, there is no other platform quite like Spotify. It represents a crucial avenue for artists to reach listeners and advance their careers in an increasingly competitive music landscape.
As listeners, we can play a pivotal role in shaping the industry’s future by advocating for more transparency, supporting artists, and fostering a culture of respect. Only then can we ensure that music remains a source of empowerment and livelihood for those who create it.
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Can you share with us how labels pay artists?
As the first thing that loud and clear goes into is calling out the Spotify pays rights holders and not artists directly.
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