Spotify Paid Over $4.5 Billion to Music Publishers Over the Last Two Years, So Why Are Songwriters Struggling?

Spotify announced earlier this year that it paid out a record $10 billion-plus to the music industry in 2024, bringing its total to nearly $60 billion since its inception in 2006. The company — the world’s largest paid music-subscription service by a wide margin — maintains that it pays out 70% of every dollar it generates to the music industry, a generous percentage for any business.

In further details released today in Spotify’s annual “Loud & Clear” music economics report, the company notes that in 2024, nearly 1,500 artists generated over $1 million in royalties from Spotify alone (part of an estimated $4 million-plus across all of those artists’ recorded-music revenue sources) and that in 2024, independent artists and labels collectively generated more than $5 billion from the service.

It stresses that in the decade from 2014 to 2024, Spotify’s yearly payouts to the music industry increased tenfold, from $1 billion to over $10 billion, and especially that “There are more artists making more money on Spotify than ever before.

“In fact,” the report continues, “the number of artists generating royalties at every threshold on this site — from $1,000 to $10 million per year — has at least tripled since 2017. Ten years ago, the top artist on Spotify generated just over $5 million. Today, there are over 200 artists who have passed that threshold.”

All of which is great news. However, there are many devils in the details.

It must be noted that Spotify, like most streaming services, pays rights-holders — usually a label and music publisher — which then distribute the money to artists and songwriters after taking their percentage and distributing other percentages to other interested parties, such as producers, music distributors, etc. So any notion that each of those 1,500 artists is pocketing $1 million a year (or more) from Spotify, let alone all streaming services, is wildly inaccurate.

Significantly, Spotify says that over the last two years, $4.5 billion of that total $20 billion-plus went to music-publishing rights holders – who represent songwriters (and follow a similar royalty-distribution model). It also states that its music-publishing payout “hit a new peak in 2024, seeing double-digit-percentage growth compared to 2023,” adding that “Songwriters – through their publishers, performing rights organizations, and collecting societies – are generating record-breaking revenues driven by streaming services.”

While those statements may be true, it is important to note that songwriters remain at the bottom of the streaming economy: According to a 2024 report from from London-based marketing intelligence and consulting firm MIDIA Research, the approximately $.004 generated per stream is divided thus: the recording side (including the label, distributor and artist) gets 56%; the streaming service gets 30%; and the publishing side (including the publisher, the performing rights organization — such as ASCAP or BMI — and the songwriter) gets just 14%.

Of that 14%, the songwriter gets 68%, the publisher 17% and the PRO 15%, the report states. But those numbers don’t take into account the fact that most hit songs these days have between 3 and 12 writers splitting that 68% of the 14% of that $.004, and that they have managers and possibly other interested parties earning a percentage of their share. The human brain can’t even comprehend the infinitesimal amount the creators of most songs earn per stream.

It is also important to note that this discrepancy was not instituted by Spotify or any streaming service: Although recorded-music rates are negotiated between streaming services and rights-holders (and renewal periods are usually a time of contention), publishing rates are determined by the Copyright Royalty Board, via an outdated process that the publishing industry has long criticized.

In recent years, songwriting and publishing streaming rates have been rising: For the 2023-2027 period, the CRB increased the rate paid to songwriters and music publishers by 23% — to 15.35% of a streaming service’s U.S. revenue. But Spotify recently came under fierce criticism from the music industry — not to mention a lawsuit — for its recent music-audiobooks bundle, which Billboard estimated will decrease the amount of royalties paid to music companies by $150 million over the next year.

That sleight of hand may have delighted shareholders, but was a major loss for music creators. And although Universal and Warner Music, two of the world’s largest music companies, were able to claw back some percentages in their recent licensing negotiations with Spotify, neither party has specified what those new rates are.

We’re not trying to rain on anyone’s parade — streaming, led by Spotify, saved the music industry after a 15-year spiral that literally cut its total value in half. And as streaming has grown, so has the money it pays to creators: According to “Loud & Clear,” over the past decade, the 100,000th-ranked artist on Spotify (based on royalties generated) has seen their royalties multiply by over 10 times, from less than $600 in 2014 to almost $6,000 in 2024. Even the 10,000th-ranked artist has seen their royalties increase almost 4 times – from $34,000 to $131,000.

All of which is great news. But streaming’s payment system, devised back when it generated so little money that the difference between 13% and 15% was almost irrelevant, is in dire need of revision. There is no shortage of ideas and proposals for a new system, but those who make decisions need to think first about the people who create the “product” — the music — that this entire business is built upon, before they think of the shareholders who profit from it.