Spotify recently released its 'Annual Music Economics Report', revealing the music service had set its own record for the highest annual payment to the music industry from a single retailer at more than $9 billion.
Most notably, artists who are unsigned or signed to an independent label generated nearly half of the total revenue. A first in Spotify’s history.
Independent catalogs generated nearly $4.5 billion in revenue, a fourfold increase since 2017.
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Songwriters, too, are seeing an increase in revenue.
Spotify states that they paid roughly $2 billion in both 2022 and 2023 to people who hold the publishing rights to the music on the service - which is most commonly the songwriters.
According to Spotify, music publishers are seeing around $5.5 billion a year in revenue during the “streaming era”. Comparatively, they saw $2.5 billion in 2001, which adjusted for inflation would be around $4.5 billion in 2024.
In the past, Spotify has been routinely criticized for their influence on the music industry leading, according to critics, to the undervaluation and unfair compensation of artists.
Unlike physical sales or downloads, wherein an artist is paid a fixed price, Spotify’s business operates by paying artists according to their so-called “market shares”. Essentially, Spotify splits up its revenue and pays artists based on how much their music has been played comparatively.
Spotify has also been heavily criticized for its “free” tier, wherein users can access music with ads in-between tracks, without a subscription.
As a result, artists like Taylor Swift, Radiohead’s Thom Yorke, Beyonce, and Adele have in the past either belatedly released their music on Spotify or pulled the music from the platform altogether.
Spotify has since made “changes to its business model to raise royalty rates,” writes Katie Shonk in a Harvard Law blog, and as of 2024, all four aforementioned artists are back with their entire catalogs on the service.