Spotify paid $7 billion in royalties to rights holders — primarily labels and publishers, but also distributors, performing rights organizations and others — in 2021, the company announced on Thursday in its annual “Loud and Clear” report.
That total is more than any other service — with more than 180 million paying subscribers, Spotify is the top paid-subscription music service in the world by far — and sets the record for the highest annual payment from any single retailer in history, including during the height of the CD era, according to the announcement. (Because Spotify’s data is proprietary, it is not possible to cross-check all of these numbers with accuracy — see the full report here.)
The report also states that in 2021, for the first time, more than 1,000 artists generated over $1 million on Spotify for rights-holders. Some 450 artists generated more than $2 million on Spotify, 130 artists generated more than $5 million — and more than 50,000 artists generated $10,000 from Spotify alone.
However, it is important to note that unless the artist or songwriter is the rights holder, these payments went directly to labels and publishers and other entities listed above, which then divide them according to the artist or songwriter’s contract. Spotify breaks down how that money is distributed in this video:
In Thursday’s report, Spotify says it has paid more than $30 billion to rights holders since it was founded in 2006 (which goes a long way toward explaining its aggressive move into podcasting: a music-only model is unsustainable under current circumstances). In 2021, streaming revenue alone exceeded total industry revenue in each year from 2009 to 2016, although those were the years when the industry bottomed out, as CD sales plummeted and illegal downloading was rampant.
The turnaround began when Spotify launched in the U.S. in 2011 and industry revenues began to rise in the following years. In 2014, recorded music generated $14.2 billion from all areas (streaming, physical sales, sync, downloads, performance rights); in 2021, recorded streaming revenue alone exceeded $16.9 billion, according to the report.
It notes that more than 28% of those artists who generated over $10,000 self-distribute to Spotify, many via distributors like DistroKid, Tunecore, CDbaby or others that assist artists in self-releasing their music. It says those 15,140 artists represent a 171% increase since 2017.
On the other hand, major record labels — Sony, Universal and Warner — earned $12.5 billion from streaming recorded revenue alone, with Spotify payments representing approximately a third of that streaming total: around $4 billion.
The report states that Spotify also paid out more than $1 billion to publishing rights holders for the second year in a row — significantly less than they paid labels. But it is important to note that Spotify’s payouts for recorded music dwarf what they pay to publishers — Spotify says the ratio is 75-80% vs. 25-20% — due to the way the labels structured their original deals with the company.
It also notes that although streaming usually generates less money per user than CDs did, it is more equitable by nature — rather than being limited to a CD or other physical product by a single artist, fans generate smaller revenue for a much larger range of artists. The report notes that at the peak of the CD era, nearly 25% of U.S. album sales were accounted for by the top 50 artists. On Spotify in 2021, only 12% of U.S. streams were of the top 50 artists — meaning that revenue opportunities now reach far beyond the superstars.
Read the full report here.