Half of Spotify’s Royalties Are Going to Indie Artists

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On Wednesday, Spotify released an update to its yearly “Loud and Clear” report, verifying that once again, around half of its royalty payments went to independent musicians – marking two years in a row for this trend.

Last year, Spotify distributed approximately $10 billion to rightsholders of music, with around $5 billion going to independent labels and artists. The company reported a significant growth of $500 million compared to the previous year (2023).

Spotify disbursed roughly $10 billion in royalties for music rights last year, with around $5 billion allocated to independent labels and artists. The company saw an increase of $500 million from the amount it distributed in 2023.

Sam Duboff, Spotify’s global head of marketing and policy for the music business, explains to The Hollywood Reporter that today’s digital streaming platforms like Spotify open up a multitude of opportunities and choices for artists. Artists can now have more control over their career trajectory, with some opting for major labels and their substantial financial advances and resources, others choosing independent or self-managed paths where they keep all their royalties, and many more finding a middle ground with indie labels offering similar services but with a larger artist share.

The report emerges following Spotify’s first financially profitable year, a significant milestone reached 18 years after its establishment in 2006. In response to this, Spotify introduced the Loud and Clear initiative back in 2021, aiming for enhanced transparency with artists regarding how their music is monetized through the streaming platform. Despite revitalizing the record industry during a period of decline due to piracy in the 2000s, Spotify has faced recurring criticism from artists, particularly independent ones, who argue that they receive minimal earnings from their streams.

Today’s report may not silence many criticisms since most songs on the platform are streamed insufficiently to qualify for monetization. Last year, Spotify upset the songwriter community with its disputed bundling strategy, which resulted in a lower royalty rate for songwriters. The Mechanical Licensing Collective filed a lawsuit against Spotify over this strategy, but a judge dismissed it in January. In the recent Loud and Clear report, Spotify disclosed that they paid $4.5 billion to songwriters and publishers over the past two years.

According to Duboff, the rate at which individuals share music online will always exceed the rate at which new musicians emerge. Duboff’s philosophy is to be as transparent as possible about our role within this ecosystem, hoping that it encourages others to follow suit. So far, no other streaming service has publicly disclosed data regarding their payouts or the number of artists generating varying amounts. There are many stories circulating when discussing royalties, but Duboff believes that in time, facts and data will overpower these narratives.

The recent report from Spotify indicates growing interest in an autonomous music industry from the broader music sector. For instance, at the close of 2024, Universal Music Group, the leading global music company, invested $775 million to acquire Downtown Music Holdings, which owns music distribution platforms like CD Baby and FUGA. Moreover, as The Hollywood Reporter revealed this week, Concord is in negotiations to purchase a share of the music distribution platform Stem too.

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In other parts of the report, it was mentioned that in 2024, 1,500 artists made over $1 million from royalties, which is an increase from 1,350 the previous year. Spotify noted that the number of artists on their platform who earn royalties has more than tripled since 2017.

As a passionate gamer, I’ve noticed that just like how games have expanded their horizons to cater to a global audience, so too has music on platforms like Spotify. Last year, tunes in eight different languages raked in over $100 million – English, Spanish, German, Portuguese, French, Japanese, Korean, and Italian. Back in 2017, it was mainly Spanish and English that were making waves. Interestingly, the languages showing the most growth in royalties last year were Greek, Telugu, Turkish, Polish, and Arabic, according to Spotify.

According to Duboff, there’s an increase in musicians from less established music industries gaining access to the worldwide earnings from royalties, and genres of music are thriving and careers are emerging that would have seemed unlikely 20 years ago.

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2025-03-12 07:24