How do artists get paid by Spotify: A Complete Saga

Streaming music has become one of the biggest revenue sources for musicians in 2024. But how much does streaming on Spotify earn the artists and musicians?

Since it was invented in 2008, Spotify has revolutionized the music industry. Since it came into the industry, the reliance of artists on radio airplay, charts, and DVDs to get listeners and money has reduced drastically. As of today, over 100 million tracks are available on Spotify, and with the biggest market share, it is now the biggest audio streaming platform on the internet.

With such a broad range of music available on Spotify, this allows users to experience everything from Taylor Swift to Guns N’ Roses, as well as a single recorded in the basement from a small band that is trying to make it out in the industry.

How much does Spotify pay artists?

Spotify has come out and said that the platform has paid artists a total of $9 billion in 2023 alone. It has also claimed that since its founding, the platform has paid artists $48 billion. Now, given the fact that an average Spotify user listens to more than a hundred artists every year, the hefty payouts are not limited to just industry names. The Loud & Clear report for 2023 claims, "If you were to list out all of the artists on Spotify, in order of how much money they generated, even the 50,000th in rank generated at minimum $16,500 from Spotify alone."

Spotify uses a pro-rata model to pay artists on the platform. Based on how it works let’s see what artists like Bad Bunny and Taylor Swift might have made based on their lead and feature tracks.

    • Taylor Swift earned over $328 million from more than 85 million streams 

    • Drake earned around $304 million from more than 77 million streams 

    • Bad Bunny made more than $288 million for over 72 million streams

Spotify’s royalty system

Spotify has figured out a clever pro-rata model to distribute monetary gains among artists. In this, the platform’s royalty system plays a major role which can be divided into two parts. They are -

    • Recording royalties - This is the kind of royalty that is paid to record labels or distributors when they are the license holders of the uploaded tracks. 

    • Publishing royalties - This is the kind of royalty Spotify pays to music composers. It is for publishers and is paid according to where the music is played.

Also Read: Spotify's Algorithm: Effective Streaming Hacks for Music Artists

Spotify’s pro-rata model

To pay artists, Spotify uses a pro-rata or platform-centric model. This means the revenue generated through Spotify royalties is based on the following four factors.

    • The platform’s total revenue streaming pool. 

    • A percentage of that payout is the negotiated global payout. 

    • The total stream numbers of the platform. 

    • The number of total streams you have in total on the platform.

Here is how Spotify’s pro-rata model works -

    • Spotify first ads up all the money generated from platform advertisements and subscriptions. 

    • It then calculates the total share of royalty payments. 

    • Royalty holders then get their payment based on how many times their tracks have been played on Spotify.

Spotify’s ‘pay per stream’ model

This is as simple as the name suggests. The ‘pay per stream’ is the rate of every play. Every time someone streams your song on Spotify, you get paid. Performance royalties and Mechanical royalties are the two kinds of royalties that are calculated in this ‘pay per stream’ model. Spotify pays artists based on how many times their songs are played. This means, the more streams you get on one song, the more you are going to get paid on Spotify. Per track, the platform pays between $0.003 and $0.005 on average. This is why when an artist has a lot of listeners, they get paid more. Spotify pays -

    • Around $3 – $5 for 1,000 monthly listeners. 

    • Around $30 – $50 for 10,000 monthly listeners. 

    • Around $300 – $500 for 100,000 monthly listeners. 

    • Around $3,000 – $5,000 for 1,000,000 monthly listeners.

Factors that can affect Spotify’s royalty rates:

How much you get paid for every stream on the platform depends on several factors. They are -

    • Distribution partner -

You will get music royalties from Spotify based on the deal you have with your record label or distributor. This means the amount you will be paid per stream is directly linked to the distributor you are working with and how much they take commissions.

    • Listeners’ country -

Every country pays a different amount for streaming songs on Spotify. The American listeners pay $0.0039 per stream, while the Portuguese listeners pay $0.0018 per stream.

    • Listeners’ Spotify account -

As Spotify has two kinds of accounts, a free account and a premium account, premium account holders bring in more money. This also means if you have more premium listeners, you will get more money per stream.

Promoting your music is a fantastic way to increase your listener base on Spotify. If you are serious about earning money from the platform, focus on the quality of music and bringing in more listeners.