Spotify paid out $10 billion to the music industry in 2024 — some $1 billion more than last year, the previous record — making its total around $60 billion since it was founded in 2006. The company made the announcement in a blog post Tuesday morning.
While that figure may seem questionable considering how little many musicians make from streaming, it’s important to bear in mind that Spotify (like most streaming services) pays rights-holders, usually a label and music publisher, which then distribute the money to musicians and songwriters, after taking their percentage. While the streaming economy leaves much to be desired in terms of compensating creators, the blame is not entirely on streaming services.
In 2023, the company said it pays out nearly 70% of every dollar it generates from music back to the industry, generating its music revenue from two sources: subscription fees from its Premium platform paying subscribers, and fees from advertisings on music on its Free tier. Those rights holders include record labels, publishers, independent distributors, performance rights organizations and collecting societies.
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The news also comes two days after Spotify reached a new deal with the world’s largest music company, Universal, that sees more-favorable royalty payments to musicians from the service’s audiobooks-music “bundle” announced last year, which significantly reduced payments to songwriters.
In Tuesday’s announcement, Spotify VP of music business David Kaefer notes just how far the industry has come since streaming essentially saved it from a 15-year tailspin of illegal downloading.
“In 2014, the music industry reached a low point when global recorded music revenues hit $13 billion,” he writes. “Spotify’s annual contribution at the time was around $1 billion, with around 15 million paying subscribers. In 2024, Spotify alone paid out a record $10 billion to the music industry — totaling nearly $60 billion since our founding.
“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.”
He goes on to state that Spotify is the highest-paying subscription streaming services as well as the largest (a claim Variety cannot independently verify).
“There are a few things specific to Spotify that make it not only the most popular subscription streaming service but also the highest paying,” he continues.
“1. Retention is priority number one, and retention is driven by personalization, curation, and product innovation. Fans like the recommendations, the expert editorial curation, and surprise-and-delight moments like AI DJ, daylist, and Wrapped, as well as the access to non-music content…
“2. We offer an ad-supported free tier, while some services don’t. Beyond the ad dollars this generates, more than 60% of Premium subscribers were once free tier users. Bringing in users who don’t expect to pay for music, and deepening their engagement, means they’re more inclined to become subscribers in the future.
“3. We’re available in more markets and at local price points, meeting people where they are. A decade ago, there was a widely held view that you couldn’t monetize certain markets. But the journey of getting the world to pay for music means making long-term investments. Today, we’re seeing tremendous growth across markets like India, Brazil, Mexico, and Nigeria. These are places where our investments are paying off.”
Spotify also estimates that “in 2014, around 10,000 artists generated at least $10,000 per year on Spotify. Today, well over 10,000 artists generate over $100,000 per year from Spotify alone.”
The company stated in 2023 of its royalty distributions: “These figures represent revenue generation from Spotify alone. When taking into account earnings from other services and recorded revenue streams, these artists likely generated 4x this revenue from recorded music sources overall.”
While further details were not immediately available, the company said they will be shared in its annual Loud & Clear report, which will be updated in the coming weeks.