Spotify paid more than 9 billion dollars to the music industry in 2023

Spotify paid more than 9 billion dollars to the music industry in 2023

Turns out Spotify wasn’t quite done announcing big numbers this week after it released its latest financial results on Tuesday.

“Spotify paid the music industry more money than ever in 2023: $9 billion,” the company announced in a statement this morning. “This figure has nearly tripled over the past six years and represents a large portion of the $48 billion+ that Spotify has paid out since its founding.”

The figure was released ahead of the next update on Spotify’s ‘Loud & Clear’ statistics website, which the spokesperson said would be updated with more details on the 2023 royalty payments in the coming weeks.

Time for some analysis. This week’s financial results revealed that Spotify’s annual revenue last year was €13.25 billion – about $14.27 billion at the current exchange rate. This means that Spotify paid about 63% of its revenue to the music industry in 2023.

We can also track the growth of these payments, using the figures revealed in 2022 on the ‘Loud & Clear’ page. They have grown from $3.3 billion in 2017 to $5 billion in 2020, and then more than $7 billion in 2021.

More math? We have some. When Spotify updated its website last year, it said 200,000 artists generate 95% of its payments, despite accounting for only 15% of its daily song uploads.

That’s an average annual salary in 2023 of about $42,750 for each of those 200,000 artists. Not that this number tells us much. Those at the bottom – hi Taylor! – will have earned much, much more. And those in the end much less.

Also, remember that these are payments generated by the work of these musicians for the holders of their rights. However, much of what they end up with depends on label and publisher deals, as well as how many people split.

Spotify’s latest payout figure also gives one of its rivals a new target to aim for.

In 2022, YouTube said its payments to the music industry for the 12-month period from July 2021 to June 2022 were $6 billion.

YouTube has openly stated its ambition to overtake Spotify and become (in the words of music chief Lyor Cohen) “the #1 revenue contributor in the industry by 2025.” There is now an update on what the current top contributor is paying.

Finally, one of the hot issues of 2024 in the music industry is streaming fraud, and we can make some preliminary calculations – with important caveats – using Spotify’s payout figure.

Last January, France’s National Music Center published a study on music streaming fraud based in part on data from Spotify.

After the report was released, Spotify revealed that it had detected “signs of artificial streaming” in 1.14% of total streams. With $9 billion in annual payouts, that could mean $102.6 million for fraudsters.

We say ‘might’ because that’s where the caveats come in, and not just that this data was from a single country (France) in 2021. 1.14% of streams were ones Spotify identified AND “mitigated” (ie blocked from receiving of payments).

In other words, the calculation is that Spotify could have prevented $102.6 million in payments to fraudsters in 2023, if that 1.14% figure had been the same that year.

Anti-fraud startup Beatdapp has regularly claimed that at least 10% of DSP streams may be fraudulent, which would be $900 million + if this were true for Spotify. But this is really pure speculation.

Sticking to the facts, Spotify paid more than $9 billion in 2023 and more than $48 billion since its inception in 2008.

At a time when TikTok is embroiled in a dispute with Universal Music Group in part over royalties, it’s hard not to also see Spotify’s announcement as a well-timed broadside against a disruptive rival — one that, remember, has released its own streaming service.

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