"Spotify's Payouts: A Mixed Bag for Artists"

Spotify has long been a lightning rod for criticism from artists and industry advocates, who argue that the streaming giant doesn't compensate creators fairly. The company's latest Loud & Clear report, released on March 12, 2025, attempts to counter these claims by highlighting record-breaking payouts and increased artist diversity. However, the report also reveals that the streaming landscape remains fraught with challenges for many musicians.

Spotify's payouts to the music industry have surged in recent years, reaching $10 billion in 2024 alone. This represents a tenfold increase over the past decade and underscores the platform's role as the highest-paying retailer globally. The company has paid out nearly $60 billion since its inception, with music publishing payouts hitting new peaks, surpassing $4.5 billion to songwriters and publishing rights holders in just the past two years.

The Loud & Clear report also highlights the growing number of artists generating significant revenue from Spotify. In 2024, nearly 1,500 artists generated over $1 million in royalties from the platform alone, and the number of artists earning $10,000, $100,000, and $1 million has at least tripled since 2017. This growth is not limited to a few languages or regions; artists recording in over 50 languages generated at least $100,000 in royalties, while those earning at least $1 million recorded in 17 different languages.

However, despite these positive trends, many artists and industry advocates remain skeptical of Spotify's payout model. The Union of Musicians and Allied Workers (UMAW) has been vocal in its criticism, calling for fair compensation for artists, especially independent and smaller artists who struggle to make a living. Congresswomen Rashida Tlaib and Congressman Jamaal Bowman introduced the Living Wage for Musicians Act in partnership with UMAW, proposing to increase streaming royalties for musicians to one cent per stream.

Spotify's payout model is based on streamshare, meaning the royalty pool is divided according to the proportion of total streams each rights holder accounts for. This method contrasts with the widespread misconception that streaming services pay out based on a fixed per-stream rate. Spotify's Loud & Clear report clarifies that "no major streaming service pays out based on a fixed per-stream rate," emphasizing that "every major streaming service pays out based on stream share."



However, a report from Duetti found that Apple Music pays artists $6.2 per 1,000 streams, while Amazon Music pays $8.8 per 1,000 streams in 2024. Spotify, on the other hand, pays artists $3.0 per 1,000 streams. This discrepancy in payout rates has led to industry perceptions that Spotify may not be compensating artists as fairly as other platforms.

Spotify has also been criticized for not paying a single cent for most of the songs on its service, and for the fact that the lion's share of the royalty pool goes to artists who are already huge. For example, Taylor Swift, the first female artist to reach 100 billion Spotify streams, earns a significant amount of money from streaming. However, smaller artists often do not receive any payouts at all, as many tracks on Spotify do not generate royalties. Since 2024, Spotify has demonetized songs that do not get 1,000 streams a year, affecting a large number of tracks and artists.

In response to these criticisms, Spotify has introduced new policies to better support emerging and professional artists. These policies aim to drive approximately an additional $1 billion in revenue toward these artists over the next five years. One of the key changes is the implementation of charges for labels and distributors when flagrant artificial streaming is detected on their content. This new deterrent follows improved artificial streaming detection technology and the establishment of the Music Fights Fraud Alliance.

Another significant change is the requirement that tracks must have reached at least 1,000 streams in the previous 12 months to generate recorded royalties. This policy aims to consolidate small payments that often do not reach artists due to minimum withdrawal thresholds and bank fees. By doing so, Spotify hopes to increase payments to artists who are most dependent on streaming revenue.

Spotify has also addressed the issue of "functional" genres like white noise, whale sounds, and static being exploited by bad actors who cut their tracks artificially short to maximize royalty-bearing streams. By valuing noise recordings the same way as music, Spotify aims to eliminate this strategy used to game the system.

Despite these efforts, there is still room for improvement. Spotify could explore ways to pay artists directly rather than through intermediaries like labels and distributors. This would ensure that artists receive a more significant portion of the royalties generated from their music. Additionally, Spotify could adopt a user-centric payout model, where the royalties are distributed based on the listening habits of individual users rather than the overall stream share. This model has been proposed as a way to ensure that artists receive fair compensation for their work.

In conclusion, while Spotify's payouts are getting better, the company still faces significant challenges in addressing the concerns of artists and industry advocates. By implementing additional measures to ensure fair compensation and support for artists, Spotify could further enhance its efforts to support the music community.