In December 2024, Spotify released its Quarter 4 report for the year, proudly announcing that, in 2024 alone, they paid out a record 10 billion dollars to “the music industry,” totaling a payout of 60 billion dollars overall since the company began. On their own website, the Founder and CEO of Spotify, Daniel Ek, announced that revenue in the 4th quarter of 2024 climbed by 16 percent to an annual total earnings amount of 4.22 billion Euros (4.613 billion dollars).
Their active yearly paying subscriber count increased to 263 million people, and their monthly listenership increased to 675 million people. Additionally, they claim that 2024 was the first year Spotify ever actually made a net profit. Yay.
So if Spotify had a good 2024, achieving its first-ever net profit and a payout to the music industry of a record 10 billion dollars, why isn’t everyone super stoked? Shouldn’t shareholders and artists be pounding Cristal together? Why does your average working musician still see the name Spotify and defiantly shout, “Show me the money?"
Where is the Spotify money really going?
Looking over financials is super boring to me, but I did it anyway, and lo and behold, it was still super boring. It revealed nothing much to me that I didn’t already expect. There was nothing deeply conniving or born from the deep reaches of the dark arts. Spotify seems to be open about what it made and what it spent.
But the truth is that even though Spotify presents its quarterly reports with a fun and artsy party invitation-type spreadsheet that looks like it was created on Canva, I can pretty solidly claim that about 3 percent of next to no one will actually read it. Musicians most definitely will not.
But in order to stand up and defiantly shout “Show me the money” (or “Show THEM the money” as fans should be saying), it is helpful for everyone who cares about music in our modern streaming era to understand how this all plays out and how Spotify does things. In my opinion, Spotify is not evil, but it certainly is not artist-friendly and should never claim to be.
Simply put, artists are upset and flummoxed about not getting adequate royalty payments from Spotify. Fight the powers that be and all that. There are plenty of other streaming services, but Spotify seems to be in the hot seat, so I’m writing this article specifically about Spotify’s systems and algorithms (which is a hot word right now, too).
Perhaps that’s because Spotify claims to pay back to the artists more than any other streaming service, and as such, they seem to claim the title as the golden harbingers who, as Daniel Ek says in his Q4 report, “deliver creativity to the world.” In other words, Spotify feels we should all be grateful to Spotify because Spotify alone is responsible for saving music. Kind of a bold assertion.
Spotify is not evil, but it certainly is not artist friendly
But there is a cohesive disgruntlement bubbling to the surface in the chatter of musicians and producers in the record industry right now. It’s visceral and palpable and Spotify is being called out. We all want to hold Spotify’s feet a little closer to the fire and are starting to speak up a bit more about it. But is it Spotify’s feet that need to be held closer to the fire or someone else’s? We’ll find out at the end of this article. Ooooooo...the hook.
We all feel that royalty payouts from Spotify are borderline absurd and need to change dramatically. Truly Spotify’s payout structure is super absurd, but most artists and fans have no idea how Spotify has it all set up. So let’s explain it (in a bit of a floral way):
At the end of the day, we lovers of music love listening to music, and we want to listen to what we love over and over and over again. We also get extra fuzzy feelings in believing we are part of a narrative that supports the musicians we love, trusting that those musicians are earning enough money to make a living to create more music for us to listen to and love more and get more extra fuzzy feelings about.
But the truth is, Spotify’s payout structure is developed in such a way that, though we are listening to and supporting the artists that we love, we actually end up financially supporting artists that we don’t…unless you exclusively love the top 10 artists on the planet in which case you needn’t feel weird about this scenario.
Most of the next bit of information is found in a fascinating video from Tony Van Veen, CEO of Disk Makers, which he posted in Feb 2025. It is based on reports by Nielsen, which is more or less the “global leader in audience measurement, data, and analytics” for all types of media. It is also corroborated by just about any other article and video you can find online.
How is the Spotify artist payout system structured? You may be surprised to learn that no artist who has their songs available on Spotify is paid “per stream” at an exact fixed rate. Musicians are paid some amount based on a shifting average of what Spotify deems a stream is worth, which is based on an unknown and unquantifiable number of variables.
The most important of these variables is, of course, how much money Spotify makes annually, which is based on the number of people who have subscriptions, how much they are paying for their subscriptions, and where in the world they live and have their subscriptions. But, for all intents and purposes, royalty on a song averages out to about $0.002-$0.003 per stream. Yikes.
Spotify says no song that has less than 1,000 streams will receive any royalty payment
Here is a kicker that most people don’t realize at all (musicians pay close attention): in November of 2023, Spotify announced that it wouldn’t pay royalties on ANY track that is streamed less than 1,000 times. So, of the 202,200,000 songs (yes, 202.2 million songs) currently streaming on Spotify right now, no song that has less than 1,000 streams is getting any royalty payment at all.
“Well,” you might say, “most artists gotta be getting at least 1,000 streams." No, they are not. In fact, few are. Statistically, 87 percent of ALL the songs on Spotify—a mind-boggling 175.5 million songs—have fewer than 1,000 streams.
In simpler words, on Spotify, 175,500,000 songs are bringing no money whatsoever to the artists who created those songs. Zero dollars. The artists who wrote those songs are not getting paid for their contributions (work). Only 13 percent of all the music on Spotify is receiving any portion of that $10 billion Spotify claims to be paying to the record industry. That all sort of seems a bit unbalanced.
But don’t think that Spotify is actually keeping that money. It’s not. Spotify has a heart. Right?
Those 175.5 million songs on Spotify (remember, the number of songs streamed fewer than 1,000 times) still generate royalty revenue. By law, that revenue has to go somewhere. It’s just that the amount of royalty revenue generated from those 175.5 million tracks (which totals about $46.9 million) is not paid to anyone whose songs fall into that 87 percent piece of the Spotify pie.
It’s how Spotify is cutting its costs. Spotify doesn’t want to send a bunch of $3 checks to millions of artists worldwide. So, that money gets bundled up, absorbed into the algorithm machine that spits out a valuation of how much a stream is worth, kicked back out, and handed over to those other artists whose songs fall into the remaining 13 percent of the Spotify pie (tracks that have been streamed more than 1,000 times).
Of the more than 200 million songs currently streaming on Spotify, only about 26 million are actually generating any royalty money for artists. And that number gets broken down even more. In the full history of streaming music on Spotify (meaning not just in 2024 but since whenever the song was uploaded to Spotify's catalog), these are the numbers:
- 175.5 million songs are streamed fewer than 1,000 times. ($0 payout)
- 24 million songs are streamed from 1,000 - 100,000 times. ($3 - $300 payout)
- 2.1 million songs are streamed from 100,000 - 1 million times. ($300 - $3,000 payout)
- 492,000 songs are streamed from 1 million - 1 billion times. ($3,000 - $3,000,000 payout)
- 296 songs are streamed more than 1 billion times. (yay for them)
A song is only considered an official "stream" if it is played by a unique listener for more than 30 seconds. And of course, as I’m sure you know, if the song stops getting streamed over time, money stops getting generated, and the artist stops getting checks.
Most of those 296 tracks belong to your predictable Billboard Top 10 artists, such as Taylor Swift (duh), Bad Bunny, The Weeknd, Drake, Billie Eilish, Benson Boone, and Sabrina Carpenter. And that’s largely because they have giant promotional teams at their record labels with endless resources backing them up and driving streams.
I am not saying these artists don’t deserve to be streamed this much. They are all fantastic artists with amazing songs and have worked very hard to achieve this milestone. Some even do front flips on stage in the middle of a song which is in every way awesome.
But those massive juggernaut pop icons are also doing pretty ok through other revenue sources such as tour appearances, radio play, merch sales, and sync. In contrast, your typical artist whose music falls into that 87 percent of streamed tracks that are not getting anything from Spotify, are not doing pretty ok.
On top of all that, the Spotify algorithms that determine which songs rise to the top through various Spotify curated playlists ensure that those songs that fall into the 87 percent category will have a very difficult time getting heard more than 1,000 times. This ultimately means the artists who create those songs will have a hard time ever getting paid for their work at all…let alone getting paid enough to buy a Happy Meal.
“Travesty!” you now say. Well, I don’t really think so. I mean, kind of, but that’s just the way it is now. And this coming from a songwriter with tons of my own music on Spotify (many of which are in the 87%). But, we are in a post-Napster era, and, for the large part, there is no going back to the previous times. Spotify and other streaming services are how music gets heard and discovered now.
But we have to understand that these music streaming service businesses (Spotify, Apple Music, Amazon Music) are completely built on the backs of unknown indie artists to build their catalog so they can make more money.
Yes, they will eventually pay that money out—just not to those artists whose backs they have been building their businesses upon. It’s weird, it doesn’t really seem to favor all artists equitably, but when has the record industry ever been known to take care of all artists equitably?
Corporations like Spotify will continue building their empires by freely using material someone else creates
Is it worth it to get all grumpy and flummoxed at Spotify specifically? Probably not. Is their system of not paying artists until they achieve higher than 1,000 streams per song lame? Yes. Is it important to keep large music streaming companies like Spotify accountable to fair pay for fair play standards so the disparity between what an artist gets and what an artist deserves doesn’t get way too out of control? Absolutely. Now, guess where you gotta go to make that happen…
Music streaming companies, by law, are required to pay artists, but exactly how much these companies have to pay artists is a decision that comes down from Congress. If we want to see artists get more pay, we need to know how Spotify and other streaming services structure their systems and then convince Congress to make those companies pay out more appropriately because, right now, what artists get paid is inappropriate.
So, who do we need to hold closer to the fire? Congress. Now, if getting Congress to change anything seems implausible, then we as listeners and fans need to think up new ways to get money directly into the hands of the artists that we dig into.
These days, artists have no real choice but to acknowledge that streaming services only exist as a way to get heard and found. They should never expect to see royalties generated from streaming as a viable option to earn a living. It will never be that. Ever.
Corporations like Spotify or whatever comes next will continue building their empires by freely using material someone else creates with the return promise that what they created may or may not be heard by 675 million people around the world, all the while literally banking on the fact that it’s likely fewer than 1,000 people ever actually will.
Living wages won’t come from online streams, they will come from fans. And that's where you come in (yes, you who have made it this far in this super dry article).
Of course, listen to your heart’s delight on Spotify, but also “like” songs and add songs to a playlist. Then go to that artist’s merch store and buy a freaking t-shirt or tin cup or trucker cap. One of the reasons I actually like Spotify is that it allows artists to link directly to their merch store from their artist page.
I can earn more from one hoodie purchased online than I can from my song being listened to 10,000 times by 10,000 different people (literally—which I hope by now y’all understand). If you really want to be a game changer, find an artist that you think deserves an opportunity to make some money and help them cover the cost of printing vinyl to sell at shows.
And even better…just go to their shows. Shout loudly and wildly in support of them while they play their musical guts out for you live. And if you have the energy, get word to Congress and help change things from the top down. You can do so via this website shared with me by my buddy who wrote the Paw Patrol theme song (yes, even he thinks things need to change).
If you have any other ideas I would LOVE to read them in the comments section. And so would many other musicians and songwriters reading this profoundly astute article.
So, In spite of what Ek says in Spotify’s 2024 Q4 report, it’s the artists themselves that “deliver creativity to the world”. Not his company. Mr. Daniel Ek, CEO of Spotify, please at least give the artists that.