We know you have a ton of questions around music streaming economics and we want to make sure to get you the answers. We’ve included the questions we get most frequently from artists and will continue to add to this list as more questions come in.

• Why did Spotify create Loud & Clear? How does this help artists?

  Questions and concerns about artist income from streaming have been around for over a decade. Our aim with this site is to provide a valuable foundation for a constructive conversation. In sharing more information, we aim to answer questions and share useful resources about today’s streaming industry. We hope others will join in the conversation as well.

• What’s new on Loud & Clear this year?

  On March 24, 2022, a year after first launching this site, we added royalty data from 2021, as well as some new features:

  • There’s a lot of information to get through on this site, so we added a Top 10 Takeaways of 2021 section at the top;
  • We added more detail to the Revenue Generation Over the Years section — specifically, the number of artists crossing the $2 million and $5 million level in revenue generation; and
  • We included a new section around publishing to the Industry Context section of the site.
• Wasn't the music industry better off before streaming?

  Spotify plays a leading role in a healthier music industry, as a sort of radio station and record store all rolled into one — but without their limitations. 

  With radio, artists can reach lots of listeners. However, there’s limited space in a radio station’s rotation of songs — they typically stick to the top 40, making it harder for artists to break through. And in some markets, not all talent is compensated for their music being played. 

  Artists benefit from a high purchase price in record stores, but physical and digital sales don’t generate money from all of an artist’s fans — only those willing to spend money to download tracks or purchase a full album.

  Spotify solves these challenges with streaming. Streaming is where fans come to put their favorite artists on repeat, but it’s also where casual fans discover new music or rediscover old favorites. And revenue is generated from both types of listening — from fans who pay for Spotify Premium to advertisers that fund Spotify’s Free tier. 

  Based on our analysis of RIAA data, the music industry in the CD era favored superstars twice as much as it does today. At the peak of the CD era, 25% of US sales were accounted for by the top 50 artists. In 2021, only 12% of US streams on Spotify were of the top 50 artists — meaning that revenue opportunities now reach far beyond the biggest stars.

  When Spotify launched in 2008, the global recording industry was being ravaged by piracy — spiraling downward from 1999’s peak of over $24 billion in revenue to the industry’s low point in 2014, when the combined market of physical and digital sales was $14 billion. 

  Since then, streaming has powered the resurgence of the music industry. In 2021, Spotify paid out $7 billion to the music industry — more than any other service. That’s more than double what we paid out in 2017 ($3.3 billion) and represents a big part of the $30 billion we’ve paid to rights holders since our founding. Even adjusting for inflation, that $7 billion total is the largest sum in history paid to the music industry in one year by one retailer — including any single retailer at the height of the CD or digital-download era. 

  When you consider the growth of the overall royalty pool paid out to rights holders and the expanding number of artists succeeding thanks to streaming, we believe the future is incredibly bright for artists’ careers. The IFPI’s 2022 report showed that the global recorded music industry in 2021 has officially surpassed the 1999 peak — reaching $25.9 billion as an industry.

• Is streaming only helping music’s biggest stars?

  No. Streaming has fundamentally changed the music ecosystem — lowering barriers to entry and democratizing access to audio for listeners across the world. Artists no longer need big budgets to create, distribute, and amplify their music around the world. 

  Across 2020 and 2021, over 150,000 artists were added to Spotify playlists for the first time, the large majority of which were discovered through Spotify for Artists’ playlist pitching tool, which is freely available to all artists. 

  More artists are sharing in today’s thriving music economy compared to the peak of the CD era. In the heyday of CDs, nearly 25% of US sales were accounted for by the top 50 artists. On Spotify in 2021, only 12% of US streams were from the top 50 artists –– meaning that today, revenue opportunities reach far beyond the superstars. Further, in 2021, more than 28% of artists who generated over $10K from Spotify are self-distributed, and 34% live in countries outside the top ten music markets.

• There are millions of artist profiles on Spotify, yet only a small fraction are generating money. Shouldn’t a higher percentage of all artists on Spotify be making money? Aren't there 8 million of them?

  Our mission is focused on creating opportunities for professional artists to make a living through their work. Every artist is different, and success is not the same across the board.

  It’s true that eight million people have ever uploaded a song to Spotify — but just like uploading a video or two to YouTube doesn’t mean that person is trying to be a professional YouTuber, releasing a few songs on Spotify doesn’t indicate a career in music. For example, of the eight million people who have distributed any songs to Spotify, 5.4 million of them have released fewer than ten tracks all-time. Many of these artists are likely early in their careers, hobbyists, or may not be leveraging streaming as part of their career paths.

  We estimate that there are around 200,000 professional or professionally aspiring recording acts globally. We see this in Spotify data: 165,000 artists have released at least ten songs all-time (meaning they have a body of work to earn from) and average at least 10,000 monthly listeners (meaning they have been able to attract an audience). We also see this through our integrations with Songkick, Ticketmaster, and dozens of other live and virtual ticketing partners: 199,000 artists had any gig, event, or virtual event listed at some point during 2019 (the last year not impacted by pandemic cancellations), demonstrating commercial activity outside of streaming.

  That data suggests a population of between 165,000 and 199,000 artists, but to account for a margin of error in our methodology, we consider 200,000 to be a reasonable estimate — though of course, we acknowledge the difficulty in assuming any artist’s professional intent just from data.

  Based on this estimate, you could calculate that more than a quarter of professional or professionally aspiring artists generated $10,000 in 2021 from Spotify alone (and likely over $40,000 across all recorded revenue sources).

• I heard Spotify pays a fraction of a penny per stream. Is that true?

  In the streaming era, fans do not pay per song, so we don’t believe a “per stream” rate is a meaningful number to analyze. Spotify, like every major streaming service, pays royalties based on an artist’s share of overall streams across the platform. We call this “streamshare.”  

  Spotify is focused on maximizing the total size of the payments we are able to make to rights holders — those that pay artists and songwriters — and the data on this site reflects our progress. We pay out more than any other streaming service; in fact, in 2021, Spotify paid out $7 billion to the music industry and set the record for the highest annual payment from any single retailer in history.

  And our incentives are aligned with artists — the more revenue we generate, the more payouts for artists. 

  Still, we understand that artists find it useful to calculate an effective “per stream” rate — dividing the total size of the royalty pool on Spotify by the total number of music streams on Spotify. We dig into that in the “Why does the ‘per stream rate’ appear lower for Spotify than some other streaming services?” question on this page.

  Our model drives more fan engagement and generates revenue from more places, which means larger total checks from Spotify to rights holders. That’s why we pay more than any other service. We make some choices that decrease the effective “per-stream rate,” but we believe we are maximizing overall revenue and generating the most possible money for rights holders and their artists and songwriters.

• If an artist has millions of streams, why don’t they earn more?

  Spotify has been around for more than a decade. We now have over 406 million listeners, streaming more songs per month than ever before, which means the activity on the platform increases exponentially. 

  And streaming services pay based on streamshare, not a per-stream rate.

  Spotify pays rights holders on a monthly basis, but our app shows all-time streams, not how many times a song was streamed this year or this month. Therefore, these all-time stream counts do not correlate with the monthly payout an artist receives from their rights holders. 

  Because of streaming’s growth and the increase in engagement per user, the meaning of a million streams has changed over the years —  lots of tracks are reaching a million streams, and more often than you think. In fact, 718,000 songs have now surpassed a million streams, and 238,000 songs received a million streams in 2021 alone. Over 230 songs have even reached a billion streams. To get a better sense of the Spotify ecosystem, you can play around with the interactive tool on this site, which reflects data as of December 2021.

• Why does the “per stream rate” appear lower for Spotify than some other streaming services?

  In the streaming era, fans do not pay per song and no major streaming services pay per stream, so we don’t believe that a “per-stream rate” is a meaningful number to analyze. Still, we understand that artists find it useful to calculate an effective “per stream” rate or, in other words, a revenue-to-streams ratio — dividing the total size of the royalty pool on Spotify (the numerator) by the total number of music streams on Spotify (the denominator). Both of these numbers are growing incredibly quickly every year.

  There are a number of factors that contribute to that ratio looking small, which we understand can seem problematic. We don’t believe it is; we are confident our model is maximizing revenue for everyone. And the proof is in the results: In 2021, Spotify paid out $7 billion to the music industry — more than any other service — and set the record for the highest annual payment from any single retailer in history.

  There are three key business decisions we make to maximize revenue to rights holders. Even though they decrease the effective per-stream rate on Spotify, we believe artists care more about a larger paycheck than a higher per-stream rate.

  High Streams per Listener: First, the average subscriber to Spotify listens to more music per month than on other services. That means more listeners discovering more artists, more opportunities to deepen engagement with listeners, and more chances to convert listeners into fans who buy tickets and merch. This engagement — as well as the millions of new Spotify listeners signing up every month — impacts the denominator of the revenue-to-streams ratio. 

  More Global Audience: Second, Spotify is more popular in countries with lower prices, which makes our revenue-to-streams ratio look lower compared with services not focused on those markets. Meeting listeners at an affordable price for them is the way to generate revenue from these markets that wouldn’t have been captured otherwise. Growing into these territories increases total revenue for the industry and for artists, which increases the size of the royalty pool for rights holders. This impacts the numerator of the ratio. 

  Ad-Supported Tier: Third, unlike most of our competitors, Spotify runs both a Premium subscription service and a free ad-supported service — so looking at Spotify’s revenue-to-streams ratio next to subscription-only competitors isn’t a direct comparison. While the ad-supported service doesn’t generate as much revenue per user as the Premium service, we’ve conducted extensive testing that consistently shows that when we take the free service away, those listeners turn to non-revenue-generating alternatives, meaning the collective music industry would miss out on revenue. The 2022 IFPI report found that across the industry, revenue from ad-funded streaming increased 31% (to $4.6 billion) in 2021 and now rivals revenue from sales of physical formats. This also impacts the numerator of the ratio. Offering an ad-supported service is also one of our most useful mechanisms for getting listeners to pay for music: Roughly 60% of Premium subscribers were once Free tier users. Again, this means we are maximizing the revenue for everyone.